The Importance of Tracking Indirect Labor Costs in Manufacturing
In the fast-paced world of manufacturing, understanding and tracking indirect labor costs can significantly impact your bottom line. Let’s delve into why it’s crucial and how it can benefit your organization.
Definition of Indirect Labor
Indirect labor refers to any labor that supports the production process but isn’t directly involved in converting materials into finished products.
Ramifications of Not Tracking Indirect Labor
Inaccurate Labor Reporting: Without accurate tracking, labor reporting to the manufacturing process becomes unreliable.
Inaccurate Part Costing: This leads to inaccuracies in part costing, with actual setup and production times overstated.
Disrupted Part Scheduling and Shop Loading: Inaccurate tracking affects part scheduling and shop loading, leading to inefficiencies.
Inability to Reduce Indirect Labor: Without proper tracking, it’s challenging to identify areas for improvement and reduce indirect labor costs.
Understated Shop “Burden Rates”: Failure to track indirect labor results in understated shop burden rates, impacting overall cost calculations.
A Real-Life Example: The Impact of Tracking Indirect Labor
Let’s explore a real-life example of a manufacturing shop in Minnesota that experienced significant improvements after implementing a system to track indirect labor.
Case Study: Transforming Shop Operations
This shop, prior to implementing a computerized Shop Control (ERP) system, faced challenges in understanding the true cost of indirect labor. Employees would routinely shut down machines and engage in cleanup activities, but the management lacked visibility into the actual time and cost associated with these tasks.
Implementation and Results
After implementing the Shop Control system and encouraging employees to report their labor efforts accurately, management gained insights into the inefficiencies of having highly skilled production workers engage in cleanup activities. By analyzing the indirect labor reports provided by the system, management realized the significant waste of time and money involved in this practice.
Optimization and Savings
With this newfound understanding, the company optimized its operations by reallocating cleanup tasks to a dedicated employee, freeing up skilled production workers to focus on core tasks until the end of their shifts. This simple change resulted in substantial cost savings, increased productivity, and improved adherence to delivery schedules.
Partnering with EstesGroup for Manufacturing Efficiency
At EstesGroup, we specialize in optimizing and streamlining manufacturing operations to maximize efficiency and cost savings. By leveraging tools available in Epicor to produce detailed indirect labor reports, we help businesses identify areas for improvement and implement actionable strategies for success.
Our Approach
Comprehensive Analysis: We conduct a thorough analysis of your indirect labor reporting to identify inefficiencies and opportunities for improvement.
Tailored Solutions: Based on our findings, we develop customized solutions to streamline operations and reduce overhead costs.
Implementation Support: Our team provides hands-on support to implement new processes and technologies, ensuring smooth transitions and tangible results.
Let Us Help You Unlock Efficiency and Savings
If you’re ready to optimize your manufacturing operation and unlock potential cost savings, partner with EstesGroup. Contact us today to learn how we can leverage technology and strategic insights to drive efficiency and improve your bottom line.
The 10 Principles of Success & How to Apply them to: Enterprise Resource Planning (ERP) Systems
With everything in life there are foundational principles one needs to know and practice to achieve success.
These foundational ERP success factors can also be applied to when a company is trying to choose the:
Right Enterprise Resource Planning (ERP) System
Right Enterprise Resource Planning (ERP) Implementation Partner
Right Benefits from using an Enterprise Resource Planning (ERP) System
In this Blog Series the EstesGroup ERP staff thought it would be interesting to share with you:
The 10 Principles of Success & How to Apply them to: Enterprise Resource Planning (ERP) Systems
As with most things these days the concepts included in this paper aren’t all that revolutionary or original, but their foundation comes from a newspaper that has been in circulation for many years, Investor’s Business Daily (IBD). This is a daily newspaper aimed at helping stock market investors understand what good growth stocks to invest in, based on what the current overall market conditions are. You might find it odd, as I did, that an investment newspaper would take the time and effort each day to devote an entire page of their paper to discussing these 10 Secrets to Success. Investor’s Business Daily does this because they firmly believe that if an individual applies the 10 Principles/Secrets to Success to not only how they approach investing in the stock market, but everything in life, they’ll achieve success.
It’s EstesGroup’s hope for those that read this, that’ll they will be able to use these “10 Foundational Principles” to achieve ERP success at the start of your journey when choosing an ERP system that’s right for your business, implementing your ERP system and the on-going use of the ERP system to continually improve your company’s execution.
Take Responsibility – Otherwise 1 through 9 above won’t matter.
How does the 1st Principle of Success, “How You Think is Everything” apply to Choosing the Right ERP System for Your Business?
If your organization has chosen, implemented and is using its current ERP system wrongly (which is frequently what we hear) there undoubtedly will be negative thoughts/feelings/frustrations from the people in your organization involved with the ERP system. These negative thoughts/feelings/frustrations will carry over to how you approach a reimplementation of your current system (if the ERP system selection was done properly) or the selection of a new system. It’s important for your organization to understand specifically what these negative system feelings are, who in the organization they’re coming from, how it adversely impacts people’s job and what you as an organization need to do to get back on the right track.
Once all of the negative thoughts/feelings/frustrations are known, written down, circulated to the stakeholders for them to review/discuss you can develop an action plan for resolution. If your organization does not know where to start or it doesn’t have an individual to lead this process, ask for help. A good consulting firm with experienced consultants that possess years of business experience in your industry will be able to shed some light on your situation.
Cost justifying the consulting dollars to ferrite out those negative ERP system thoughts/feelings/frustrations can easily be done; so a new positive environment for how your company approaches the selection of your next ERP system or the reimplementation of your current ERP system can be achieved.
A hint in how EstesGroup accomplishes creating a positive business environment for an ERP system selection, implementation and use revolves around how we conduct our Business Process Reviews. For more information on this, please leave your name and email address below and we’ll have one of our industry experienced sales people share that with you.
Now that you’re in a “Positive” frame of mind, in our next ERP blog in this series, we will shed some light on our second principle of success, deciding on your goals.
The 3 Things EstesGroup Consultants want for Christmas:
Tis the season and along with everyone else out there your Epicor Consultant has a wishlist for Christmas as well. We hope everyone enjoys their holidays with friends and family and has a safe and Happy New Year. Thank you all for a fantastic 2014.
1. A good carry-on
Find me one that I can’t demolish in a year’s travel and can organize a week’s worth in a carry on.
2. Bigger Battery
Flights and airport time take up a lot of time and don’t have a lot of access to power outlets. How are they supposed to watch that movie?
3. Testimonials:
Who doesn’t like it when someone speaks highly about you? This is the biggest satisfaction point to any good consultant and they thrive on receiving high praise. This is their number one goal and the best thing is that means they have to do a bang up job for you to get there. Help them help you!
Now you know what your consultants want for Christmas. Sometimes it’s the little things that make a world of difference when you travel weekly. /epicor-consulting/epicor-ecommerce
Epicor custom tech for Epicor 9 and Epicor 10 are on sale!
For the holidays EstesGroup is deeply discounting our tech team so you can get your Epicor dashboards and reports in time for the new year. We are dropping our tech rates over 30% for the remainder of 2014. So if you need some help with:
Dashboards
BAQs
Reports
Service Connect
Customizations
Get in touch today and get on the schedule. Times are filling up fast so make sure you get on the calendar before the year is up. On January 1st the rates go back to normal.
No Hurt Feelings: Getting Over Getting Actively Refused in the Epicor System
“When you were called, did you answer or did you not? Perhaps softly and in a whisper?”
― Søren Kierkegaard, Fear and Trembling
Kierkegaard, the nineteenth century existential thinker, wrote at length of the internal struggle between the individual agent and his or her sense of existence. His philosophical work Fear and Trembling outlines the moral anxiety produced by choosing to live according to an absolute faith, in a world that provides no validation or verification. This has been commonly referred to as a leap of faith.
The Epicor System Doesn’t Hate You
With its logical foundations in propositional calculus and its physical manifestation in Silicon, one might not expect such angst to enter the realm of information technology. Nevertheless, anxieties flare more often than one might expect when implementing software such as ERP. For example, when I worked for an Epicor customer, users encountered the following login error with trepidation:
I never expected logging into the Epicor system to require a leap of faith, yet users found the message especially troublesome, and came to me in desperation, pleading that I restore their confidence in the application. The mere thought of being “actively refused” by the application server struck many new users as a surprising, almost personal, affront. “What did I do wrong?” they would anxiously ask me, “Did I make it mad?”
The error is really quite easy to explain and resolve without things getting personal. The system normally raises this error when the application server gets stopped, hung up or is otherwise unresponsive. It’s an error due to inactivity rather than activity. There is no angry ghost in the target machine, more of a sleepy doorman. System administrators normally resolve such a circumstance by simply restarting the AppServer. Once restarted, the AppServer can nowactively respond to login requests.
Moving On From Lost Connections
Have you ever felt actively refused? Do you fear the temporary loss of connection to the information you need? Has your AppServer ever made you tremble? Well, fear no more—the next time you receive this error when logging into the system, remind your system administrator of your existence with an email that includes the error message. And keep the faith.
Learn more Epicor consulting strategies that can improve your business:
