Confused About Lead Times?
If you were sitting in front of an investor or customer, and they asked you a simple question like: ‘How quickly can you make 10,000 widgets’ – how long would it take you to answer them?
Are you able to see your current production demand, customer expected ship dates, material lead times and workforce manning to come up with an accurate answer? Would you just be guessing?
Many companies (especially sales people) either guess, or tell the customer/investor what they think they want to hear. Short lead times and low prices. How much trouble is your company going to be in when product is delivered 4 weeks late at 20% higher price? Worse yet, the customer cancels the order, or you have to eat the additional 20% because you didn’t allot for employee overtime or expediting materials?
These issues are generally easily handled with a well designed, well implemented ERP System.
Track material lead times, production times, load level your production floor, accurately track employee time per job and track actual production costs.
The next time you are asked how long it will take, pull out your phone and pull up your ERP system — have an accurate answer in 30 seconds.
IS MY MANUFACTURING FACILITY READY FOR ERP?
Are your employees overwhelmed, confused, annoyed and aggravated when someone asks them a seemingly simple question?
- What is the Available to Promise Date for these items if I order them today?
- Can you get me the balance sheet this afternoon (even though today is the first of the month)?
- How many orders have we had for this product in the past 3 years?
- Do you have shipment tracking information for something that shipped out 6 weeks ago?
We don’t have a line in the sand that dictates whether or not you need an ERP solution at your manufacturing/distribution facility. These are just some indicators that will help you identify whether you may need ERP.
#1: Your Production Manager can’t keep a schedule 2 days in a row
You walk out of a meeting with your sales manager, controller, production manager and purchasing manager – you finally have a handle on the next 10 days of your production schedule.
CSR gets a phone call while you are in the meeting. The customer says that you either deliver their order in the next 5 days, or they are cancelling their $200,000 order. You look at the schedule, their order isn’t even listed in the updated schedule you finished 3 minutes ago.
The above scenario happens nearly every day, leaving scheduling anything near impossible. This means that you have to carry too much inventory to cover for emergencies, you have reduced cash flow and now you are getting behind on payments to suppliers.
Might be time for ERP Software.
#2: Your Controller is ready to quit
Is your controller working 100 hours a week trying to reconcile bank balances, post journal entries for sales, making adjusting entries for accounts payable and can’t accurately tell you what the AR balance is today?
Having multiple, segregated systems makes the controllers job all but impossible. There are probably a dozen excel spreadsheets she has to look at (if none of them have lost their links to other data), then has to talk to someone else to get additional data to enter into her complicated excel spreadsheet she designed to make her job easier.
But wait, she can’t quit. Nobody knows how she gets any of her numbers for the balance sheet and it is due at the bank tomorrow.
If this sounds familiar, you might be ready for ERP Software.
#3: It takes forever to track information
- Your shipping department can’t accurately track packing slips and shipment tracking information without going through two file cabinets full of papers.
- A customer wants a copy of an invoice they swear they paid. You can’t find the invoice, but are pretty sure they didn’t pay. Does someone have a list of checks we received 2 months ago?
- One of your suppliers stops your next shipment due to nonpayment or past due invoices. Your AP department didn’t realize the link in their Excel spreadsheet wasn’t updating open payable invoices for the controller to pay. Oh no! That means the balance sheet we sent to the bank yesterday is wrong!
#4: Your sales manager overpromises, customer service can’t resolve complaints.
Your sales manager has no way of determining lead times or pricing on products you manufacture or purchase. He didn’t know that it takes 16 weeks to get a special material required to manufacture the item -and you are out of stock.
Your customers call in to complain about not having their items, and your CSR can’t give them an accurate update. They have probably been told to just tell all customers it will be two weeks before the items ship (realistically, it will be 8 more weeks).
If you can’t calculate manufacturing lead times, material acquisition, production scheduling or available to promise dates without calling everyone in the company to find out what they know, it is probably time for ERP Software
#5: Nobody understands your entire system
All of your systems have become so segregated and customized, that it takes multiple employees and consultants to figure out how to fix a problem.
This excel sheet links to that excel sheet that pulls data from this database if Alice remembers to export the data out of the accounting system. Sound familiar?
If you can’t upgrade hardware or software anywhere in the company, because you don’t know what it will break, it is a pretty good indicator that you are ready for a completely integrated ERP Software Solution.
Contact us today so we can help analyze your processes and find a solution for your company.