|
Can
computer-aided estimating software help your shop make money? Estimating affects the economic condition of your business. It's the basis of your profit or loss. Estimates that are too high produce no work, because you are underbid and don't gain those potential orders or sales. You may win underbid jobs, but they don't produce the profit from which you can successfully grow a business. Whether you estimate using your trusty calculator, writing the numbers down, plug them into your shop management system for reference, or use a spreadsheet, estimating must be done. Estimating software must be able to highlight the best method, and indicate the cost differences between the methods. Opportunities to select standard operating procedures should exist. This capability will allow you to standardize your methods, and give you the capability to train potential estimators quickly and build consistency into your operations. Whether you prepare quotes manually, use a spreadsheet, or use your shop management system, you must give customers something for their consideration. Estimating software should be able to generate your quote letter with the click of one button. Customization of the quote letter, internal to your estimating program, should be available, as learning another software program to make custom forms is counterproductive. You
already have the information in the system; it's just a matter of pulling
that data. Sending the letter should be just as easy, whether you choose
to print and mail, print and fax, fax directly from the computer, or
e-mail--it should all be at your fingertips. Unreliable estimates are costly. When looking at the costs of unreliable estimates everyone can readily identify the first one, under quoted. Either something was missed--possibly a tolerance was overlooked--or the estimator anticipated better performance on a given machine on a given material than was achieved. In any case, you missed the quote and now you have two options: attempt to resolve the price difference with the customer, or maintain your credibility, honor your commitment, and find a way to make the part for the quoted price. Pass this information on to your shop manager and you'll likely get one of two responses: "There's no way we can make it for that price," or "We could attempt to eliminate a certain operation and try to salvage the job." Either way you are playing with fire, because pushing a job that's already known as a loser through your facility does nothing to help the estimating department's credibility on the floor. Likewise, attempting to shortcut operations can lead to higher-than-normal opportunities for scrap, which further reduces the profit for that job. Establishing credibility through consistency--one of shop estimating software's key benefits--will assist the facility as a whole. The estimating department will prepare estimates by referring to what the shop floor can produce, and confidence in the numbers that the estimating department sends to the shop floor will allow less room for second-guessing, enhancing throughput. Small shops and manufacturers often don't take advantage of software technology, even compared to their peers in other industries. More often than not, it isn't the financial investment that's responsible for this situation, but the perceived investment in time. Time is money--no doubt about that--as most shop owners and facility managers will agree. Helping them see this in their terms, however, can be more difficult. Here's an example. The medical community doesn't expect $500/hr surgeons to fill out patient admission forms, prepare the operating room, or supervise billing procedures. Personnel who do those jobs are paid $15 - 45/hr. Yet many shops neglect to change the administrative side of their business at the same pace as they change their shop procedures. Many purchase the latest drills, the newest machines, the best tools--everything related to shop work or making chips. But they don't seem to keep the same pace on the other side of the wall. There are exceptions, such as CAD/CAM or shop control software, which are viewed as being on the shop-side of the wall, or an administrative necessity like accounting software. But many still feel software, or more specifically the computer, is a gamble, and represents a loss of control or even delegation. If software can bring operations such benefits as time savings, speed, and increased productivity, all of which directly impact the time portion of the equation, why can't we see the value of the time gained by employing such a tool? Is it because the folks using the software don't make anything? Most companies know they must have some computer tools, but don't feel that developing an estimate with a computer is a necessity. Yet developing estimates and process plans, and providing customers with accurate and dependable prices, is a shop's business. If the shop can't do that quickly and accurately, it can't compete. And if a shop can't compete, what good is that new high-speed machine on the floor? One question I often ask customers is, "If you can't respond to the RFQ by its deadline, what confidence have you instilled in your customer that you can make the part-delivery deadline?" Identifying and implementing cost reduction methods for existing parts are always a major responsibility for facilities that make production runs. Getting the cost out of the design as early as possible is where the biggest value-engineering benefit resides. As we all know, it's very difficult to get cost out of a design after production begins. You can be locked into your design because in the field everything has to be backwards and forwards compatible. Once manufacturing has gone down a path any distance, engineering is extremely reluctant to back out and rework a design. For existing product lines whose design won't be changing, engineers may find they are paying premium prices. Re-estimating those products with software can give the company's procurement buyers a better-cost target, and highlight opportunities for savings. Many facilities are developing "should-costing." That is, what this part should cost. Software offers another avenue by which facilities can validate whether they are getting the right prices and costs. Many times, when customers go out for competitive bids, the pre-estimated costs can set the tone for what the market will bear. When doing development work, and even prototype work, the final print may not be available. Using
estimating software can allow you to say to your suppliers, "here's
what we think it should cost, and here's the reason why." With
the right information for your suppliers, such as routings and layout
sheets, possibly even cost-breakdown worksheets, you can assure them
your numbers are accurate and justifiable. One additional function of
the estimating package is the chance to research and highlight opportunities
for more business. By using the built-in reporting and sorting tools
inside the program, research can be done to find missed opportunities
and areas of weakness. Many software providers will tell you that, in job shops and small to mid-sized manufacturing firms, software sales have been pushed aside in favor of new equipment. Before the current slowdown in economic activity, we saw a good deal of money spent on making piece parts: buying machine tools, buying tooling. An uneasy mistrust of software seems to exist. Recently, a systems integrator and software distributor told me he'd lost an expected software sale. The customer told him he needed more capability and would buy a new machine. "If I were to prove to you this software will help you run the plant better," my friend asked the customer, "so that you wouldn't need to spend 15 times the software cost, would you buy the software instead?" The answer was no. We all know that some software, properly applied, can eliminate the need for additional hardware. Some software can contribute as much to a shop's return on investment (ROI) as any machine--often at a far lower acquisition cost. What will it take for shop owners to consider manufacturing software to be essential? Cost
estimating software speeds up the process of preparing a quote for customers
by automating a procedure that's very often done manually in small and
mid-sized shops. For more information on using Cyrious software to increase sales, we recommend that you contact Cyrious Software at 800-552-1418 (U.S.) or 001-225-752-2867 for international callers, or by email at info@cyrious.com.
- This Months Humor Mill entry comes to us via the Internet from Anonymous. This was in the "Bob Levey's Washington" column in the Washington Post. Every year he compiles and prints the "Best T-shirts of the Summer" 1.
(around a picture of dandelions) I Fought the Lawn and 2. So Few Men, So Few Who Can Afford Me 3. I Suffer Occasional Delusions of Adequacy 4. God Made Us Sisters, Prozac Made Us Friends 5. If They Don't Have Chocolate In Heaven, I Ain't Going 6.
At My Age, I've Seen It All, Done It All, Heard It All... 7. My Mother Is A Travel Agent For Guilt Trips 8. I Just Do What The Voices Inside My Head Tell Me To Do 9. (Worn by a pregnant woman) A Man Did This To Me, Oprah 10. If It's Called Tourist Season, Why Can't We Hunt Them? 11. Senior Citizen: Give Me My Damn Discount 12.
Princess, Having Had Sufficient Experience With Princes, 13. No, It Doesn't Hurt (on a "well-tattooed gentleman") 14.
(on the back of a passing motorcyclist) If You Can Read 15. I Used To Be Schizophrenic, But We're OK Now 16.
(Over the outline of the state of Minnesota) My Governor 17. What If The Hokey Pokey Is Really What It's All About 18.
I Didn't Climb to the Top of the Food Chain to Be a 19.
(on the Front) Yale Is Just One Big Party (on the back) 20.
Coffee, Chocolate, Men...Some Things Are Just Better 21. Liberal Arts Major...Will Think For Money 22. Growing Old is Inevitable; Growing Up is Optional 23. IRS-Be Audit You Can Be 24. Gravity...It's Not Just a Good Idea. It's the Law. 25. If You Want Breakfast In Bed, Sleep In the Kitchen 26. Wanted: Meaningful Overnight Relationship 27. The Old Pro...Often Wrong...Never In Doubt 28. If At First You Don't Succeed, Skydiving Isn't For You 29. Old Age Comes at a Bad Time 31.
In America, Anyone Can Be President. Think you have the next "Joke of the Month"? If your joke is selected, you win $50 off your next purchase. All you have to do is click the link and e-mail us your name, e-mail address, and name of your business to enter. Submit your jokes here.
The National Association for Business Economics panel of 31 professional forecasters said rising energy and commodity prices would feed into 2.3 percent inflation this year -- up sharply from the forecast for a 1.6 percent rise in the consumer price index just three months ago. Inflation for 2005 was also pegged at 2.3 percent -- up from 1.9 percent projected in the February outlook. The economists raised their outlook for this year's growth to 4.7 percent from 4.6 percent in their February survey, the fourth time the 2004 outlook has been upgraded. The forecast for 2005 was unchanged at a more moderate 3.8 percent rise. Signs of a strong pickup in employment in recent months have cemented market expectations for the Fed to begin raising short-term interest rates, possibly as early as June. Interest rates were dropped to a 1958 low of 1 percent last year in a bid to strengthen the slow recovery from the 2001 recession. The economists said the biggest risk for their growth forecast remained a terrorist attack, but recent energy price hikes and a sharp increase in market interest rates were also high on the list of risks. They said the impact of rising energy prices -- and resulting higher transportation and production costs -- was the most important factor in the recent upturn in core inflation. Rising steel and lumber prices, buoyant demand outpacing supply and the weaker dollar also contributed. Surviving The Sign Business, A Perspective from a Seasoned Veteran You could probably say that in my over 43 years in the sign business that I've seen it all. I've made more than my share of mistakes, but this is all part of the learning process. I'm not implying that I have all of the answers, but the fact that I've lasted this long in the business suggests I'm doing something right. Click here for full story
10 Essential Health Tips - The Basics to Practice Every Day 1.
Move More 2.
Cut Fat 3.
Quit Smoking 4.
Reduce Stress 5.
Protect Yourself from Pollution 6.
Wear Your Seat Belt 7.
Floss Your Teeth 8.
Avoid Excessive Drinking 9.
Keep a Positive Mental Outlook 10.
Choose Your Parents Well
Serious Problems / Cyrious Solutions Each month, we will raise one common problem in the sign and graphics industry, and demonstrate how Cyrious Software directly solves this problem:
Q: Do you have inconsistent or unprofitable estimates? As the owner or manager, are you the bottleneck for estimating?
A: Cyrious Software is so easy to use for estimating that you can teach other people to estimate almost any job. It's fast enough to save you hours of work each week. The software is also extremely profitable because all estimates are consistent & estimators are reminded to sell add-ons and to make follow-up calls.
"Shoot for the moon. Even if you miss, you'll land among the stars"
-Les Brown
Cyrious Software is now holding FREE Live Online Learning Webinars. These Live Webinars will provide attendees with a professional demonstration on various important topics aimed to help business's increase profits and manage more effectively. Below are specific dates and topics: (all times noted are Central Standard Time)
1. "Pricing for Increased Profits"
June 24th, 2004 @ 4:00pm (EST)June 30th, 2004 @ 11:00am (EST)
2."How to Avoid Wasted Time in Your Orders"
June 9th, 2004 @ 11:00am(EST)3."Effective Management Tools"
4. "Growing Your Business" June 17th, 2004 @ 11:00am(EST)
|