The Attivo Group will get your system implemented - on time and within budget. Realize increased efficiencies, lower costs and improve profits. As trusted advisors for distributors, manufacturers and service providers, we will help you improve and automate your business processes.
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05-09-2013 / The Who, What, Why and When of Standard Costing
05-06-2013 / Effects of Barcoding Felt Well Beyond the Warehouse
04-29-2013 / Macola in the Cloud: A Match Made in Heaven
04-15-2013 / Understanding the Hidden Savings of Cloud ERP is Key
04-09-2013 / Behind the Numbers: Why Smart Money is on ERP
03-28-2013 / EDI - Taking Your ERP to the Next Level
03-11-2013 / Moving to the Cloud in 4 Easy Steps
03-06-2013 / Looking Past the Shop Floor to Improve Lead Times
02-26-2013 / In the World of Cloud Computing, Speed Can Kill
02-13-2013 / What Exactly is a "Dedicated Cloud"
02-07-2013 / 3 Revenue Pitfalls To Avoid When Moving to the Cloud
01-30-2013 / Where is ERP Heading for 2013?
01-24-2013 / Why Cloud Hosted ERP is Set to Take Off in 2013
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Landed Costs, or the "all in" costs of materials and inventory on the shelf, are very important for understanding true cost of product and margins. Essentially, a landed cost is a product cost that is inclusive of not just the cost of the material that is paid to the vendor, but all of the costs incurred in getting it to your shelf. Typical landed costs include inbound ocean freight, duties and fees paid, dreyage or other hauling charges, a harvesting charge for a crop, etc.
Some buyers even include their own internal material handling or receiving inspection charges to get inventory onto the shelf, or into a state where the inventory is ready for sale or use in a manufacturing process. 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.
Contact us today to find out more about managing your landed costs and improving profits.
photo credit: ecstaticist via photopin cc
QuickBooks doesn't do manufacturing, does it? Well, kind of. It does have a basic bill of materials, which will consume components and create a parent item. But that's where it stops. Intuit QuickBooks Pro, QuickBooks Premier or QuickBooks Enterprise Suite have never been known as robust manufacturing solutions. Manufacturing Systems Designed to Work with QuickBooks First, I should tell you that our company, The Attivo Group, is an Intuit Solution Provider, and that we sell and support QuickBooks Enterprise Suite. We also sell and support several tier 2 ERP (Enterprise Resource Planning) systems such as Microsoft Dynamics GP and Exact Macola. These are wonderfully capable systems, but may be more expensive or overly complex for the smaller, $1-10 million manufacturer. The reason I wanted to point this out is to help small manufacturers understand that they should implement good planning and control systems, but they shouldn't overspend to achieve the goal. Fortunately, there are several great software applications that are designed to work with QuickBooks to support manufacturing needs. Here's the great part - you don't have to disturb your accounting department to implement them! There might be some small process changes to deal with, but no major overhaul of your entire business. This is like remodeling the house without ripping out the kitchen or either of the bathrooms. The key is understanding those requirements, and choosing the right solution. Although it might seem like there are a lot of software choices, the choices are narrowed when specific requirements are considered. First, narrow the field with basic choices, by identifying the type of manufacturing support that you need, such as: - Make to order - Configure to order - Make to stock - Process Manufacturing, etc. Then, consider unique requirements such as compliance needs, serial or lot traceability, project management needs, labor tracking, outside processing or other needs. Each application provides a different set of functions, and in some cases are designed to support particular types of industries. So get some help on determining your needs before you start looking - or you will be looking for a while, since there are over 100 options out there. Some of the more widely used applications are (click on them for more information): Intuit Marketplace, and see for yourself. There is a lot of good software out there to manage your operations. Our experience is that most of the $1-10 million manufacturers are using QuickBooks for accounting, and Excel for everything else, as tedious as that is. Even though Microsoft Excel is a great application, it's time to put in an easy to use system that can really save your company time and money. And you don't have to throw QuickBooks out to do it!
What the economic melt down has meant to business consulting and software salesThe majority of our clients have been predominantly smaller mid-market sized companies, typically privately owned, with revenues in the $5-100 million range. They have been absolutely frozen in place since about October of 2008. Unable to make any decision whatsoever, they have stopped all spending on marketing, certifications, automation or any kind of improvement initiatives of any kind for their business. Six months have now passed. Still no signs of life. You can probably guess what happened to the business software projects that we were supposed to work on with them. Forget new system implementations. The few projects on the street have had so many vultures flying around them that they are hardly worth chasing. Not a very healthy situation at all. We've made a few very important shifts in our business model that have really helped a lot. Here's a few:
1) Became an Intuit Solution Provider, offering the higher-end version of the popular QuickBooks software, QuickBooks Enterprise Suite. This expanded our market dramatically.
2) Became a QuickBooks ProAdvisor, opening up access to 4,000,000 users of QuickBooks to help them with their software and provide unique software solutions to solve their business needs and integrate with their QuickBooks system.
3) Became a Microsoft Dynamics GP (Great Plains) and Microsoft CRM reseller. Microsoft is very quickly becoming the 600 pound gorilla in the business software applications market. Prospects have indicated that they perceive Microsoft as a very high-quality provider of business systems. Marketing works. Remember IBM in the 1980's?? 4) Exanded our product offerings - we now work with over 60 different business management software applications. Check out our home page - after 16 years in business, we've accumulated a lot of partners! 5) Began focusing on service industries, rather that just manufacturing and wholesale distribution. 6) Began providing mid-market ERP solutions that integrate with QuickBooks. In this way, a company can get the controls and functionality that they need where it counts, but maintain the simplicity and low cost of their QuickBooks Accouning system.But here's the key - smaller, bite-sized projects. Instead of $50-150,000 projects, we're working on $5-25,000 projects. And they are coming from the $1-10 million revenue sized companies. Not the mid market. (Still no signs of life there - they still have their hands in their pockets holding onto their wallets). Service industries have less complex system requirements than manufacturers, but they have needs nonetheless. We are working on some very interesting projects with service companies, and have gained instant entry into the market with the addition of Will Breiholz as our new Vice President of Business Development. Will is a 12 year veteran of the Intuit Marketplace, and brought along plenty of knowledge and contacts with him. Will most recently served as General Manager for BQE Software, the developer of the popular BillQuick Software. BillQuick is a professional services time and billing system, that is used by architects, engineers, attorneys and others that need to track their time and bill customers against projects or contracts. We're implementing tier-two sized ERP offerings such as Exact MAX, Exact JobBOSS, MYSis and Fishbowl that are designed to integrate with QuickBooks for the accounting needs. This saves clients a significant amount of money, since most can get away with basic accounting, but still need the functionality of bigger systems for their operations management. This makes a lot of business sense to me. Not only that, Eunice, the 40-year veteran bookkeeper, does not have to give up her QuickBooks system and learn a new system (which would have killed the deal, by the way). I don't want to go too far out on a limb with this, but I see this as a real growth market for us. I welcome any and all comments on how you have changed your business in these tumultuous times - we could all use some good hints on how to stay alive!