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Jul 25
2009
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Last week, I received a call from Don*, one of my clients. Don was animated! "Mike, I'm sitting here at my desk, looking at my numbers...this is unbelievable! So far this month my sales are $196,237.26 and cost for those sales are $142,654.80. This is SO Cool! I can tell you how many units we made last hour even. This is SO COOL!!"
Don had good reason to be excited. In 60 days his company had built all the data necessary to run completely new operating software at his manufacturing company. They had to load all parts, vendor data, vendor pricing, customers, customer pricing, bill of materials (BOM), purchase orders, customer orders...everything, including his general ledger AND completing a physical inventory. Pretty amazing!
I remember being shocked the first time I sat down at one of his terminals and realized I was staring at a blue DOS -like screen, reminiscent of the 1980's. There was no BOM, on hand quantities in an inventory module, no open purchase orders. The company calculated cost of goods by calculating beginning inventory plus purchases minus ending inventory. There was no way to determine which sales accounts were profitable and which were draining the resources of the company. Developing cost information for existing products was difficult at best. All BOM information resided on a massive Lotus worksheet. There was no way to automatically update costs to roll up accurate costing data. Everything was laborious. Even Accounts Payable and Accounts Receivable were difficult to maintain.
Now, however the story is different. Later in the week, Don presented me with a current report of sales for July by customer along with the calculated gross margin for each account. Now this was information! We also were able to dissect the various components of the business so that we were comfortable that we understood how the company was responding to the new information. Don was particularly relaxed. Despite the tough economy, his company is on the upswing. In fact, he shared a little secret with me..."Mike, I slept all night last night. That's my first full night of sleep since last September. Now, I can know exactly what is going on in my company with this system. The fear of the unknown was keeping me up at night."
By the way, Don slept through the night again the next day. Don is confident that he has the systems necessary to provide him with the information his people will need to be successful and they are up to the task of meeting those challenges. That's knowledge that can really help any owner relax.
*Names and dollar amounts have been changed.
