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"Encompix, a Consona Industry Solution (www.encompix.com), is the leader
in enterprise resource planning (ERP)solutions that enable
engineer-to-order (ETO) and project-based manufacturers to improve profits
and on-time delivery. "
Source : Consona
Monitoring your Business Vital Signs: A Guide for Engineer-to-Order and Project-Based Manufacturers
Project Based Manufacturers is also known as :
Project Based Manufacturing,
Define Project Based,
Online Project Based,
Performance Based Projects,
Project Based,
Project Based Assessment,
Project Based Assignments,
Project Based Business,
Project Based Company,
Project Based Industries,
Project Based Learning,
Project Based Planning,
Project Based Production,
Project Based Programs,
Project Based Research,
Project Based Services,
Project Based Software,
Project Based Software Engineering,
Project Based Solutions,
Project Based Technology,
Project Based Training,
Project Based Outsourcing,
Engineer to Order.
The ability to keep track of your key business indicators is
the difference between a business that is thriving and a
business that is on life support.
Yet according to PricewaterhouseCoopers’ Trendsetter
Barometer, one-third of CEOs at fast-growth companies
feel that they are not spending enough time reviewing
financial and operating numbers.1
On the other hand, nine percent of fast-growth CEOs think
they are spending too much time personally reviewing
their key indicators. Tellingly, theirs are also the businesses
that have grown twice as fast over the past five years as
the average “trendsetter” company. But is the answer
simply to spend more time pouring over the numbers?
“It’s essential to identify the three or four key indicators that
are most important for monitoring your own business, and
to review them often—if possible, every day,” says Paul
Weaver, PricewaterhouseCoopers’ global technology
industry leader.
Over 70 percent of “trendsetter” CEOs focus on three
types of financial and operating information, at least once
a week:
| Cash flow |
73% at least weekly |
38% daily |
| Total company sales |
71% weekly |
36% daily |
| Accounts receivable |
73% weekly |
26% daily |
How much time do you spend on monitoring vital
business indicators? If you are like many senior executives,
it is either not as much as you think you
should, or so much that you run a real risk of burnout.
You try your hardest but you still fall short. You just
don’t have enough time to spend on the numbers.
One reason that you may be struggling to keep up
with your vital business indicators may be the sheer
difficulty of obtaining the information you require. A
recent survey by TR Cutler, Inc., a marketing firm
focusing on manufacturing,2 showed a large percentage
of executives of engineer-to-order (ETO) companies
are not getting the information they need, when
they need it. For example:
“Putting in more time and crunching more data are
not the answer,” says Weaver. “Keeping pace with
today’s increasingly complex business environment
requires identification of the indicators most important
for your particular business, benchmarks for comparison,
better communication, and proper delegation.”
The answer is not in spending more time, but in what
you spend that time on.
What Happened?
When your company was young, it was easy for an
executive to figure out what was going on in all aspects
of the business. As a senior executive in the company,
you would have been directly involved with sales, estimating
and engineering, and you could find out the status of
a project by simply taking a walk around the shop.
But as your company grew and became more automated,
it was no longer so easy to keep in touch with all the
details. Software systems were added to collect the data.
For example, maybe an accounting system was added to
track financials, and a spreadsheet application was developed
for estimating. But lack of integration between these
systems made it difficult to analyze information in a way
that facilitated management decision making.
As a result, today you find it more and more difficult to
keep up with what’s going on in your company and even
more difficult to obtain the information you need to run
your business.
Can ERP help?
When disparate software systems need to be integrated,
the next step for most companies is to implement an
integrated ERP business system.
The average ERP system has no problem monitoring
the business indicators suggested by the
PricewaterhouseCoopers survey, such as cash flow,
receivables, and expenses. A traditional ERP system
can also monitor sales by rep/geography/product line,
and keep track of inventory levels and finished goods
inventory. This functionality is necessary for a company
that manufactures many, relatively low cost items. But
these functions are useless to an ETO company, which
produces low volume, high-value products with material
purchased specifically for each project. ETO companies
need to monitor a different set of business indicators, in
a different way.
At a macro level all companies have the same financial
objective—to make a profit. But the ETO industry has
some unique business practices that dictate different
criteria for measuring business performance.
From the perspective of ETO companies, all ERP systems
are not created equal. In fact, most ERP systems were
designed for companies that produce standard products,
and are not equipped to track the kind of information
needed in the ETO environment.
ERP for ETO
Designing and building complex products to exact
customer specifications frequently involves long lead times
and heavy engineering content. Unlike manufacturers that
build standard parts, capital equipment manufacturers
need to do progress billing and collect actual costs to
their projects. To win business, you must provide accurate
estimates and quotations to a demanding customer base.
Often, you will not receive payment for a project until it is
installed and operating on a customer’s site. And after the
sale, you need to track warranty information and provide
aftermarket services, including the sale of spare parts
that may constitute a significant share of the company’s
business.
Does your ERP system let you examine cash flow with
regard to progress payments? How about profit or loss
by project? Or actual costs versus original estimate?
All of this is data that may be collected inadequately by
a traditional ERP system, if it is collected at all.
And what about measurements that are unique to
your business? Ideally, your system should allow you
to generate customized queries to get at the exact
information you need.
Going Beyond Raw Data
Do you know where your information comes from?
Perhaps it appears on your desk in a spreadsheet summary. It may look pretty, but how did the data
get there?
In many companies, management information is prepared
by consolidating data from different systems, both computerized
and manual. The data is typically summarized in a
spreadsheet application. This process is time-consuming,
wasteful and prone to transcription errors.
Even if your ERP system is collecting the right information,
if you have to wade through reams of data to get what
you need to know—or wait for an assistant to summarize
it for you—then you probably will be among those executives
spending more time at the office. And no matter how
much time you spend, it will never seem like enough.
But if the right information is available quickly and easily,
and in a useful format, then you will be able to focus on
the indicators that are vital to your business, as
appropriate.
More than plain data, you need business intelligence, so
you can identify business opportunities as well as potential
bottlenecks. Business intelligence provides real benefits,
fast. Better and faster business decision-making will lead
to improved customer satisfaction and increased revenue.
Characteristics of a business intelligence system
should include:
- Ability to provide customized information
Senior executives analyze information in different
ways for different purposes. Look for a system that
meets information needs across your organization.
- Flexible, scalable architecture
As your business grows and changes, you need a
business intelligence application that can adapt and
grow with your business needs.
- Ease of deployment and administration
Rapid deployment enables you to start getting results
quickly. Ease of administration reduces both the initial
installation effort and ongoing maintenance.
- Graphical analysis capabilities
Graphical query capabilities provide easy ad hoc
access to data. You should be able to drill down
dynamically through your data to explore and
analyze information. Such ad hoc analysis enables
you to uncover and analyze trends that may be
hidden in the data.
- Executive alerts
Often referred to as a “dashboard,” these enable you
to quickly and graphically monitor key performance
indicators.
- Strategic reports
These should enable the analysis of large volumes of
data to deliver sophisticated reports for managers and
senior executives.
But business intelligence tools and techniques are just one
facet of an overall enterprise performance management
solution. You need to carefully evaluate your company’s
overall strategic goals, and identify the risks associated
with each. Then, you can identify and categorize key performance
indicators for measuring your financial, customer
service and operational goals.
One way of measuring business performance on an
ongoing basis is through the Balanced Scorecard methodology.
3 The Balanced Scorecard provides a management
tool that tells not only how an enterprise has performed in
the past, but also gives an indication of how it will perform
in the future. Within this framework for improvement,
you can measure what has happened, analyze why it
happened, plan new initiatives through “what if” scenarios,
and manage change by communicating and sharing
insights into performance results.
Using a balanced scorecard approach to filter your
business transactional data, it is easier to review your
company’s progress towards your goals. Look for a system
that enables you to define your own unique key performance
indicators, and that allows you to drill down easily
from a large volume of data, to pinpoint potential
problem areas and what is causing them.
To get an idea of the potential benefit of these capabilities,
imagine you are looking at the cash flow summary
for a project and want to question an individual purchase
or invoice. Then think about what it takes for you to get
that information now.
Paul Weaver of PricewaterhouseCoopers summarizes the
issue this way: “With time so precious, it’s more important
than ever to have the most critical data readily available,
and delivered in a mode that’s most user-friendly.”
Get Off Life Support
Can you afford to waste time looking for answers in the
wrong places, or pouring over reams of data to get the
vital business information you need?
As the PricewaterhouseCoopers survey shows, senior
executives of the fastest growing companies are spending
more time than average looking at their key business
indicators. But you need to make sure you are spending
that time on the right indicators.
ERP systems can provide easy-to-use reporting techniques
and the ability to dig deep into data if necessary. But if
your ERP system is not collecting the right data from the
start, you will never get the information you really need.
With the right ERP system for your type of business,
and tools such as the Balanced Scorecard and Executive
Dashboard, you’ll be better able to keep pace with
today’s increasingly complex business environment,
identifying business opportunities as well as potential
bottlenecks before they become critical. It’s the difference
between a business on life support and a business
that thrives.
A b o u t E n c o m p i x
Encompix has filled the manufacturing software
requirements of Engineer-to-Order companies since 1992.
Our name reflects our commitment to developing business
application solutions that encompass the complex areas of
project-based and job-based manufacturing. Our goal is
to provide our customers with a competitive advantage in
their own markets by improving bottom line results.
Encompix was designed by, and for, project-based
companies. Our customers have played a big part
in our development process. Unlike many traditional
manufacturing systems, Encompix grew out of the
requirements of a consortium of project-based companies
who felt that traditional MRP-based systems did not
adequately address their needs. Much of our development
over the years has its roots in enhancements built
to address specific business problems faced by
our customers.
Today, we continue to work closely with our customers
as we grow and prosper, based on our commitment
to design, develop, market, install, and support the
best possible solution for designers and builders of
capital equipment.
4010 Executive Park Drive, Suite 430, Cincinnati, OH 45241
Tele 513.733.0066 Fax 513.733.9816 info@encompix.com
www.encompix.com