We’ve done enough Business Process Assessments and Value Stream Mapping using Lean techniques with Kaizen Events and Kanban methods to optimize and re-engineer business processes and Throughput Time Efficiency (TTE) to know that NO ONE KNOWS WHAT THE HECK I’M TALKING ABOUT!  I get a better response to all of that when I sing to my dog…at least he tilts his head and looks at me.

Think about the things that people do in your company day in and day out.  Those are called business processes.  Some people make a product, or perhaps provide a service to customers.  Other support the main activity of the business with necessary back room things like sending out invoices, receiving cash, paying bills, etc.  All of these activities incur costs for the business, which in turn is passed on to the customer in the price that they pay for the goods or services that you sell.

Let’s pretend that you invite your biggest customer to spend two weeks at your company to really get to know how you do things.  At the end of the two weeks, you give him the opportunity to assess your operation, and tell you what he thinks of the value that you really deliver.  He might say “Your engineers are outstanding, and your quality people really have it dialed in.  But your customer service department…they’re doing everything manually, can’t find anything, redo things multiple times…take them off my bill, please!”

Think your operation could stand that kind of scrutiny?  No?  Then why are YOU putting up with it?  After all, your customer writes small checks compared to the big ones that you stroke every day to fund all that waste.

Like a leaky faucet, there are inefficiencies throughout your operation that are being ignored, and are costing you thousands of dollars that you could otherwise keep.  Some leaks are bigger than others, but together, it adds up in a hurry.  That’s what a Business Process Assessment uncovers – where the waste is, and where the opportunity for gains in efficiency exist.  It’s about doing more with less.  Like getting the job done with one person instead of two.  Welcome to the new economy. 

You don’t need to use all of the big words that I was throwing around at the beginning to get this right.  It’s a lot more common sense than you think, and a lot less painful than an annual physical exam.  Contact us to find out how we lead you through a process assessment…there’s a huge benefit waiting for you.  It takes outside leadership to pull this off…or you would have already done it.

While a support line can’t be effective at major implementation efforts, if managed well, it sure can improve your productivity.  At Attivo, we’ve developed a plan called “Full Value Support“.  It not only covers error correction, but all of the “how to” questions, user refresher training, assistance with custom report writing, and other small budget tasks that every company needs.  A quarterly budget is mutually agreed upon for the quarter, and if the entire budget isn’t used, the unused portion becomes “rollover minutes”.

The Customer Portal Makes it Work
To keep it as affordable as possible, each customer receives access to a comprehensive online support portal, where all of their system information and documentation is stored.  The portal also provides access to helpful how-to documents, training guides, release notes, etc. to allow as much self-service as possible.  You can also log support requests using the portal, which comes in handy for late-night or non-critical requests, which provides a confirmation email to you, and immediately notifies our entire technical staff as well. 

Response Time and Feedback are Critical
Response time is critical, since a “system down” condition can’t wait.  Regardless, no one should have to waste their time trying to log a support incident or request help.   Call Attivo during business hours, and you get a live person 99% of the time.  I’ve always said that if you’re going to provide support, you should answer the phone!   When an issue takes a little while to resolve (some could take hours, days or even weeks), periodic feedback is provided to update status on the issue.  This lets you know that we haven’t forgotten about your issue.  Not every issue gets resolved on the spot, and status is often equally important as resolution.

Not getting this kind of support from your provider?  Show them this blog post.  Let them know that you have alternatives!

It is critical to perform these procedures in a timely manner, or the year to year comparisons, accumulators, etc. will not be updated or reset for the coming year.

Order Entry Year End Checklist

Order Entry is usually the critical package for most companies as sales staff will begin getting an “Out of Period” message on the first day of the next accounting period. Orders can be entered, printed, selected for billing, and invoices printed in O/E without closing the period. Period-End processing must be completed before any posting occurs for the new accounting period.  Timing of Year End Process:  Must be run before any transactions are posted for the next month. This includes O/E Orders posted to A/R.

Step 1 Change the history period date to the current period that you are closing. This is the year-end option.  (System, Period-End/Year-End, Order Entry, Year-end procedure)
Step 2 Close the period for the Order Entry journals specified in Source Journal setup. Open the next period.  (System, Company, Package settings, Source Journal setup, G/L, Maintain, Period-date calendar)

Accounts Receivable Year End Checklist

Timing of Year End Process:  Must be run before any transactions are posted for the next month. This includes O/E Orders posted to A/R.  You need to run the clear accumulators processes in Inventory Management as soon as possible after the end of a fiscal period. If you do not complete this process before you complete any of the above transactions for the new month, the values captured will be distorted. You must print any reports you need that reflect these numbers before clearing accumulators. Note: Finish the A/P Year End Checklist before clearing tax accumulators.

Step 1 Clear tax accumulators for the period. G/L, Taxes, Clear PTD/YTD tax accumulators
Step 2 Close the period for the Accounts Receivable journals specified in Source Journal setup. Open the next period.  (System, Company, Package settings, Source Journal setup, G/L, Maintain, Period-date calendar)
Step 3 Clear tax accumulators for the period.

Inventory Management Year End Checklist

Timing of End of Year Process:  Must be run before any transactions are posted for the next year. This includes inventory transactions, O/E orders posted to A/R, P/O receivings, POP production reported, and SFC production reported.  You need to run the clear accumulators processes in Inventory Management as soon as possible after the end of a fiscal period. If you do not complete this process before you complete any of the above transactions for the new month, the values captured will be distorted.  Warning: Clear Inventory accumulators only once, Macola ES will advance the period each time you clear the accumulators.  Clearing inventory accumulators is date sensitive. The Clear Inventory Accumulators process uses the system date as the date from which to clear accumulators. If you are clearing accumulators after the actual end date of the period, contact the Attivo support department for assistance. 

Step 1 Make sure all Inventory Management reports have been printed.  (System, Period-End/Year-End, Inventory Management)
Step 2 Clear Inventory Management accumulators for the year.  (System, Period-End/Year-End, Inventory Management, Clear inventory accumulators)
Step 3 Set the beginning balances with the first day of the new period.  (System, Utilities, Distribution, Inventory Management, Beginning balance records)
Step 4 Close the period for the Inventory Management journals specified in Source Journal setup. Open the next period.  (System, Company, Package settings, Source Journal setup, System, Financial, General ledger, Codes, Period-date calendar)

Payroll Year End Checklist

Step 1 Print W-2s (PR & HRM, Payroll, W-2 Printing)
The W-2 Printing process provides all necessary income and withholding information on standard W-2 forms. The instructions for printing W-2s are part of the supplemental year-end documentation provided by Exact Software each year.  W-2 processing can create a paper copy for the Social Security Administration (SSA) and the SSA “A” information required on magnetic media for those employers that have obtained approval to table in this manner.  Note: DO NOT process any new year payrolls before printing W-2s and/or clearing YTD accumulators.  If necessary, the “live” data can be moved to a test/temp directory and the YTD accumulators cleared in the “live” data directory to be able to process new year payrolls. 
Step 2 Clear Year-To-Date Accumulators  (System, Period-End/Year-End, Payroll, Clear accumulators)
Step 3 Close the period for the Payroll journals specified in Source Journal setup. Open the next period. (Setup, Company, Package settings, Source Journal setup, G/L, Maintain, Period-date calendar)

Purchase Order and Receiving Year End Checklist

Timing of Year End Process: Must be run before any transactions are posted for the next month. This includes PO Receiving.  Delaying the closing of Purchase Order and Receiving and Accounts Payable will skew vendor performance accumulators and is not recommended.

Step 1 Complete A/P and I/M year-end checklists. 
Step 2 Close the period for the Purchase Order and Receiving journals specified on the Source Journal Setup screen.  Open the next period.  (System, Company, Package settings, Source Journal setup, G/L, Maintain, Period-date calendar)

Accounts Payable Year End Checklist

Timing of Year End Process:  Must be run before any transactions are posted for the next month. This includes P/O receivings, A/P voucher processing, check runs, etc.

Step 1 Print and Create 1099 Forms at Calendar Year End
Step 2 Print all reports used to analyze your annual data. 
Step 3 Close the period for the Accounts Payable journals specified in Source Journal setup. Open the next period.  (System, Company, Package settings, Source Journal setup, G/L, Maintain, Period-date calendar

Note: You can continue processing A/P transactions before printing 1099s. The Print 1099 and Create Disk functions allow you to select the set of data to be used. If you have not closed the year, print and create 1099s using current data. If you have already closed the year, print and create using last year’s data.

Assets and Depreciation Year End Checklist

Step 1 Use the Evaluation report to analyze and repair any discrepancies (Assets, Entries, Evaluation)
Step 2 Print the Asset Year End Totals report Assets, Reports, Asset year end totals

Manufacturing Cost Accounting, Shop Floor and Labor Performance Year End Checklist

Step 1 Close the period the Cost Activity Trx Journal specified on the Source Journal Setup screen.  Open the next period. (System, Company, Package settings, Source Journal setup, G/L, Maintain, Period-date calendar)

General Ledger Year End Checklist

Step 1 Print a Trial Balance Report and verify balances (G/L, Reports, Balance/PL)
Step 2 Select and print the financial reports for the period (G/L, Balance/PL)
Step 3 Run previous year financials.  Note: If you run the Financial Statements after running Profit/Loss, they will still accurately reflect the prior year.  (G/L, Reports)
Step 4 Generate the Final Trial Balance for the year that is being closed. (G/L, Reports, Balance/PL)
Step 5 Complete the final year-end procedure. (System, Period-End/Year-End, Process profit/loss)
Step 6 Close the period for the General Ledger journals. Open the next period.  (G/L, Maintain, Period-date calendar)
Step 7 Close any remaining open journals for the period being closed. (G/L, Maintain, Period-date calendar)

The Process Profit/Loss process creates the retained earnings entry for the year. This application does not close out the accounts or clear the current year transactions from the general ledger. You can print any previous year financial statement for comparative information by choosing the number of years you want to print on the report. The retained earnings entry is created and posted with the last day of the financial year, but does not show on the financial statements for that year allowing the financial statements to remain exactly the same as they were before processing profit/loss. The retained earnings account beginning balance for the next year will include the entry allowing the financial statements for the next year to be correct. (See the Process Profit/Loss topic in the Macola ES online help for more information.)

You can process profit/loss multiple times for the same year.  Important: Process all posting for all packages and process all journal entries before processing profit/loss. If you do not process all entries for the year before processing profit/loss, your retained earnings entry will not be correct.

 
Remaining Packages

The following packages have no period-end or year-end processes:
• Bar Code
• Bill of Material
• Capacity Requirements Planning
• Human Resource Management
• Material Requirements Planning
• Master Scheduling
• Quoting and Estimating
• Standard Product Routing
• System Manager

It is critical to perform these procedures in a timely manner, or the year to year comparisons, accumulators, etc. will not be updated or reset for the coming year.

Accounts Receivable

 -          Run all A/R reports before clearing Y-T-D accumulators (AR accumulators are cleared in the Order Entry module).

Purchase Order

 -          Clear Vendor Y-T-D Statistics (PO – Processes – Clear YTD Statistics).  Advance the System Period calendar to the next year.

Accounts Payable

 -          Clear Y-T-D accumulators (AP – Processes – Clear YTD Accumulators)
-          Advance the System Period calendar to the next year.

Inventory Management

 -          Run all IM reports before clearing Y-T-D accumulators (IM accumulators are cleared in the Order Entry module).

Order Entry

Note:  When you perform the “Post Sales History” procedure, and then perform the “Period-End Procedure” for period 12, a message will pop up which says “You must run the year end procedure”

 -          Perform the Sales History “Year-End Procedure” (OE – Processes – Sales History – Year End Procedure).

o   This procedure will advance the Sales History Periods to the next year, and set the Current Period to 1.  Verify that this has occurred by checking under OE – Maintain – Sales History Periods.

 -          Clear both the month end and the year-end accumulators for A/R and I/M.  This is the final closing step for these modules, and all desired reports should have been run prior to this step (many reports depend on accumulator balances).

 -          CAUTION – You can only perform the “Clear Year to Date Accumulators” ONCE.  Clearing AR or IM accumulators more than one time will destroy prior year data.  If you do perform more than once please contact us for assistance - we can fix the data for you.

 -          Clearing the AR Accumulators:

o   Since you are in Period 12, when you perform the “Clear AR Accumulators” process, it prompts you as follows:

Do you wish to advance the AR Accounting Period?
Do you wish to roll Period Dates (for AR) to next year?
Do you wish to advance the OE Accounting Period?
Do you wish to roll Period Dates (for OE) to next year?

o   You may, based on your answer to the above questions, allow the system to update the AR and OE System Periods for you.

 -          Clearing the IM Accumulators

o   This process does not advance the IM System Period or year for you.  This must be changed manually.

 Assets & Depreciation

 -        Run Year-End processing (AD – Processes – Year End Closing).
-         Advance the System Period calendar to the next year.

 General Ledger

 Perform the Temporary Year-End Closing
-          Once the month end is complete and preliminary statements for December have been completed, perform the “Temporary Year-End” Closing procedure.  This will advance the system accounting period calendar for General Ledger to the next year for all periods, and set the current accounting period for the General Ledger module to 1.  Do not advance these periods manually.

 -          Note: If you are on a user-defined accounting year, you will need to manually correct the system accounting periods for all modules.

 Once Financial Statements are finalized (this might be several weeks or months later):

-          Complete all year-end adjusting journal entries.
-          Print/Save Trial Balance as a final copy.
-          Print the final year end statements.
-          Run Final Year-End Procedure.  This must be done with no one in the system!
-          Review Retained Earnings/Loss transaction by printing edit list.
-          In G/L setup change “Allow out-of-balance posting?” to yes.
-          Post retained earnings/loss journal transaction.
-          In G/L setup change “Allow out-of-balance posting?” back to no.
-          Run Trial Balance and compare to final Trial Balance.

It is a slow day in a small town and streets are deserted. Times are tough, everybody is in debt, and everybody is living on credit. A rich tourist drives through town, stops at the motel, and lays a $100 bill on the desk saying he wants to inspect the rooms upstairs to pick one for the night.

As soon as he walks upstairs, the motel owner grabs the bill and runs next door to pay his debt to the butcher. The butcher takes the $100 and runs down the street to retire his debt to the pig farmer. The pig farmer takes the $100 and heads off to pay his bill to his supplier, .the Farmer’s Co-op. The guy at the Farmer’s Co-op takes the $100 and runs to pay his debt to the local prostitute, who has also been facing hard times and has had to offer her “services” on credit. The hooker rushes to the hotel and pays off her room bill with the hotel owner.

The hotel proprietor then places the $100 back on the counter so the rich traveler will not suspect anything. At that moment the traveler comes down the stairs, states that the rooms are not satisfactory, picks up the $100 bill and leaves town. The whole town is now out of debt and now looks to the future with a lot more optimism.

Now, I didn’t pay much attention in economics class, but it worked for them…

Such costs can be considerable, especially if there are significant freight costs due to weight or ocean freight.  Imported items may have duties that should be associated with them.  The alternative to associating these costs with the specific inventory items that generated them is to charge the costs as a period expense, which then applies to all items sold.  Not only does this distort margins, it expenses the costs more quickly, which increases cost in the short term.  Since this lowers inventory valuation, it lowers profits, and with it income taxes.  The IRS has an opinion about this, which may not be the same as yours!

Assigning and managing landed costs can get tricky.  Ocean freight cost for a container of mixed items is a good example.  You’ll need to make some decisions regarding how to allocate the total freight cost…perhaps by weight, cube, value, etc. 

There are several affordable small business and mid-market systems that help to achieve the goal of receiving inventory in at it fully-loaded expected cost, and accruing for both the actual cost of the inventory, along with all of the other cost elements.  Macola Enterprise Suite, Globe Enterprise and Microsoft Dynamics GP are great choices for managing landed costs.  They offer the setup flexibility needed to get this right, which is really important to managing this function properly, and keeping the administrative overhead needed as low as possible.

Here are some of the key reasons why MiSYS might make sense for you:

Flexible and easy to use MRP. Using MiSYS MRP, you can consider the sales orders and inventory quantity on hand in QB during it’s recommendations without having to rekey that data into MiSYS. MiSYS MRP also lets you use inventory forecasts during Material Planning before generating MRP so it can consider actual and planned demand. When MRP makes ‘buy’ or ‘make’ recommendations you can control what quantity MRP will recommend based on:
- ‘Never‘ means never automatically recommend to build this item meaning you control the planning for this item
- ‘Zero‘ means build enough to meet current demand.
- ‘Minimum‘ means build enough to maintain the minimum quantity on hand defined for this item.
- ‘Reorder‘ means build enough to reach the reorder qty defined for this item

Link Sales Orders to Mfg. Orders: If you are a make to order environment you can link Manufacturing orders to a QB sales order during the MRP run for manufacturing. The quantity produced will then be transferred to QB and automatically fulfill this sales order.

Raw Material Consumption: MiSYS gives you the choice when it comes to raw material consumption on a BOM. Raw materials can either be consumed per planned quantity of the parent or by actual quantity of parent produced.

Costing Choices: MiSYS supports Average, Standard, LIFO and FIFO costs, while QBES only supports Average Cost.

Add/Change Components: Manufacturing orders give you the flexibility to make one-time changes to what is being manufactured whether it is raw material quantities or adding additional raw materials.

Scrap Transactions: You can also record scrap transactions against manufacturing orders to more accurately reflect what materials and quantities were actually consumed during the manufacturing process.

Download a FREE trial Version and try it for yourself.  You can either use the demo data included with the trial version, or you may create your own company with up to 100 inventory items.  MiSYS offers free online demonstrations, and excellent training sessions to get you started.  And as experts with MiSYS Manufacturing software, Attivo can help you complete your implementation and provide the local consulting and support that you need.

A lot of businesses can get away with throwing people at a problem.  Adding personnel is very costly – on the way up, and on the way down.  Good systems are much less expensive.

More compliance requirements?

There’s nothing like a well designed system that is the ONLY way a job can be done to enforce compliance.  Compliance requirements come apart when they depend on a person to remember to write something down.  Systems define the process, become the only way they can be done (thus assuring it will be done that way), and are self-documenting (for audit).  It is the cheapest insurance you can buy.

Stop talking about it and implement bar code data collection already.

In my many years of technology implementation, the one thing that I have heard people talk about the most but do the least, is bar coding data collection systems.  It is probably the highest return on investment project available, but one that requires a little more investment because of the cost of scanners.  As a result, most businesses get cold feet before writing the check.  What a shame…it’s like found money!  And talk about improvements in customer service…don’t get me started!

Let technology projects help you get process improvement changes made.

“We’ve got to do it for our new system” will usually trump “this is the way we’ve always done it.”   Don’t underestimate the human aspect of change – the people aspect of process improvement and additional automation is far greater than the actual technology challenges.  Use your systems project as the watershed event that is requiring the behavioral changes – changes that are designed to improve everyone’s work life.

Learn to manage by exception.

Once things are fairly automated, utilize system tools like event management software that alert you of conditions that need management attention in a timely manner.  What goes “bump” in the night for you?  Find that condition when it first happens, and notify the right people to deal with it immediately, before it becomes a costly affair.  These same tools can also be used to automate some very routine tasks, such as emailing order acknowledgements, saving labor cost. 

Integrate your systems. 

Don’t let your company slip into “Excel Hell”.  Excel is not designed to be a business system…it is an analysis tool.  Find where the disconnects are in your business systems, evidenced by duplicate data in different systems, and extensive use of Excel to operate the business.  Everywhere there is duplicate data indicates waste, and a cost that can be eliminated.  If you need multiple systems to run your business, there is very affordable software available that allows integration of disparate systems to keep each of them updated with data changes made in whichever system “owns” the information (such as customers).

Here’s my top 5 recommendations:

1)  Assess and improve your processes

Look around.  See that crack in the ceiling?  Of course you don’t – you’ve ignored it for the last 6 years, why would you see it now?   A good business process review is in order – a “full 360” examination of how well each process is working will reveal lots of opportunities to streamline your business and cut costs – while positioning for growth.  You want to be able to handle a lot more business without a significant increase in personnel.  Contact me for a free worksheet tool to help you get this done.

2 )  Improve your customer service!

Price is interesting, but today customer service is king.  If you can’t deliver on time with high quality products and services, somebody else will.  Invest in customer service improvements.  Delight your customers, not just satisfy them.  Survey them (with tools like Survey Monkey) to make sure they’re delighted.

3)  Shorten your lead times

Like customer service, someone else will deliver sooner if you can’t.  Look at all elements of lead times – they’re not all on the shop floor, by the way.  A tremendous amount of lead time improvement can be achieve in the front office, in areas such as quoting, planning, etc.  Lead time reduction is a critical part of becoming a lean organization…so get lean already!

4)  Tighten your controls.  If you have inventory, what is your inventory accuracy level?  No, really, what is it?

If you’re going to rely on systems (as you should), one of the key metrics in your operations is inventory accuracy.  It’s at the core of all the assumptions that systems use in their logic.  I’ve heard many a business owner tell me that “we have an inventory problem”, to which I always answer “your inventory system is probably just fine, it’s you’re everything else’ that isn’t working”.  Inventory accuracy is very telling about how well your processes are defined and controlled within the system, and is the best report card for operations to measure their controls.  So, how are you measuring inventory accuracy?  Gut feel?  I wouldn’t buy your company.

5)  Invest in Ecommerce 

Still depending on that tired looking electronic brochure of a website that your nephew did for you back in ’99?  Well, welcome to the 21^stcentury.  Your customers and suppliers expect more (see #2 above).  Figure out how to collaborate via the web with your customers and suppliers – it will keep your costs low and your customer service high.  Don’t underestimate the importance of ecommerce, regardless of whether you pride yourself on the “personal touch”.  Consider that generation Y or Z customers communicate differently, and perhaps don’t think they need to speak with you.  What about your South Korean manufacturer?  Staying up until 2:00 AM is not exactly what anyone would call a productive way to spend your time.

In the IT world, there are literally hundreds of categories of processes you may wish to document. Passwords, Network Architecture, Installed Software and their Update Histories, Backup Schedules; the list goes on and on.  Here at Attivo we considered doing what so many have done – to create a shared database containing all of this information in one place.  From that database, we have one document for each of the above categories, then refer to that document easily when we needed to. We track our own information this way, but more importantly, we keep track of this data for our clients as well. Exact Synergy ,our CRM system,  has the capability to simplify the approach by allowing us to attach this data and documents to the customers. So why did we choose to go with a “workflow” approach instead of documents? Answer: the intangibles.

Before I get started, let me explain what a workflow is.  Also called a “process flow” or “request”, a workflow is a pre-defined business process that carries information from one employee or resource to another, for the benefit of the required process, until the information is no longer needed. This is best exemplified by a customer comment or complaint. The comment first gets “created” by the satisfied (or angry) customer, then travels with the remarks themselves to the customer’s account manager, then on to the general manager – notifying everyone along the way.  As it gets passed along, various people log their own information into the workflow, such as the date of the comment, what product or service the comment concerns, what type of comment it was, to the final resolution of the problem. 

A document, on the other hand, is alot like this blog: alot of information on a white sheet of digital paper. I can sort it by category, date, and author…but that’s about it.  And that’s where the intangibles comes in.

Suppose you’re a technical support operation and you’d like to see a list of all your customers’ installed software sorted by install date. But you’d also like to filter it by Operating System and sort it by the softwares’ last updated date. Finally, you’d like to export that data including the updater’s comments into an excel spreadsheet.  If this were an online document, you could handle the first and last parts, but all the additional fields and filters in the middle would have required customizations to the document management system that may never be completed. But with Synergy’s workflow solution we have at our disposal an almost unlimited number of free fields that are searchable straight out of the box, and the requests themselves carry just as much textual data as a document.