Choosing manufacturing software is a very important decision that every business owner faces at some point of their career.
First of all, identify weakness of the system that you are using Fishbone Diagram now and what you want to improve by acquiring the new software.
If you are using a non-integrated system and would like to replace it with the system that will cover all areas of business, then you have to consider every small detail and every bottle-neck that your business is facing and look for the system that provides the best possible solution for each nuance.
If the business is small you might not want to look in to the overcomplicated solutions that have features that will never be used. There are hundreds of effective software solutions for different types of businesses on the market, so it is possible to choose the one that is right for you.
Second, identify your budget. Your budget must include the cost of the software itself, the cost of implementation and training the staff to use the new system. Additional costs may include annual maintenance fees, as well as updating your hardware and other internal costs.
The budget that you initially keep in mind is not necessarily the same budget that you will end up with. Is Kenya Good For Business It will be affected by many different things that you do not know until you start your research.
Finally, identify the type of software that is suitable for your company: desktop application or web application. Each type has its own pros and cons that have to be carefully evaluated before you make a final decision.…
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COST MANAGEMENT: Squeezing the (NON)VALUE Out of Overhead – An Activity Analysis Approach
In the Pleistocene era of manufacturing cost accounting (actually, only about one hundred years ago – it just seems longer), product costs were classified as: Labor, Materials and, Overhead – in that order. The order was not haphazard; it connoted the relative importance in dollar size of each. Labor was then the highest cost component, materials was next and overhead was a poor third. Well, now at the dawn of the twenty-first century and actually around the middle of the twentieth century, the order is reversed. Overhead is the most expensive component of the cost equation. In fact, as labor declines to third in the cost hierarchy and materials costs begin to stabilize in some of the mature manufacturing companies, the management of overhead spending can be the strategic management element in the profitability success equation. Knowing that overhead is the major component of manufacturing spending and putting aside the arcane methods for its accounting and allocation, how then can the senior management of manufacturing companies discern value in overhead in relation to its cost? Let’s take a look at some of the options and combine them into an overall program to find the value and reduce the costs.
What really is manufacturing overhead?
In plain managerial terms, manufacturing overhead is that agglomeration of expenses that don’t “add value” to the products made by the enterprise. Non-value-added activities, now the bogeyman of the era of Lean Manufacturing, are those activities that customers wouldn’t pay for if they knew the extent to which they existed. The most cited example of non-value-added activity is a quality inspection function. The customers would be saying to themselves, why would I want to pay for this when you the manufacturer should have been able to get it right the first time? The strategic implication being, of course, that if we were able to reduce or eliminate non-value added activities; the customer would not have to pay for them through lower prices. The potential for lower prices is largely a near term marketing issue but, in the long run, the costs incurred for products have a structural impact on a company’s and an industry’s prices and profitability. Recognizing that all non-value-added activities can’t be eliminated, some are placed in the category of “non-value-added, but necessary.” These are typically those that are driven by regulations (e.g., GMP, OSHA, FDA, SEC etc.). Other non-value-added activities, despite not being regulation driven, are tenacious in their seemingly innate ability to survive because people believe that if they weren’t incurred, dire consequences would follow.
From a micro-economic perspective, manufacturing overhead is a large component of the break-even point of the enterprise and therefore part of squeezing out value lies in minimizing it. It is the fixed period cost base that the enterprise must cover with incremental gross margin. Accounting gives us numerous expense classification and departmental views of overhead in the detail needed to analyze and reduce/contain this strategically important manufacturing cost component.
Manufacturing overhead has a time and variability dimension…