by Dienamic MIS Software Inc.

1-800-461-8114
www.dienamicmis.com/





Wednesday, November 28, 2018

80% OF REVENUE COMES FROM 20% OF CUSTOMERS

By Mark Porter

In most businesses the majority of sales come from a minority of customers. It is vital that businesses service these good accounts to the best of their ability and tracks these customers so they can know immediately if the customer is becoming dissatisfied with the company or its products and services.

We often use the 80/20 rule - that 80% of revenue comes from 20% of customers but I was talking to one owner recently that stated 90% of his business came from 10% of his customers.

The loss of one of these customers can be a big blow to a company so it is vital that you do everything possible to manage these accounts.

First you must identify these accounts - which most people can do through their sales records. Once you identify these customers you must make the process of working with your company so easy that it will take a major price difference or a major mistake for them to take their business elsewhere.

This can begin with convenience. Providing information such as Was my job shipped ?, What quantity did we order last time ?, Are my samples ready ? 24/7 allows the customer to work on his timetable and saves him and you a great deal of time. The internet is excellent for this.

Building customer profiles of the exact needs of each customer ensures work is done correctly every job and saves time looking for information. Problem Histories can be pulled and discussed with the customer on a monthly, quarterly basis to build relationships and ensure future jobs are run smoothly.

Provide email updates when events happen in your plant that effects these customers, Keeping customers fully informed builds relationships and reduces problems.

Monitoring customers requests for estimates and orders can ensure that you are notified of a customers growing dissatisafaction before it is too late to salavage the relationship. If you normally get 20 estimates a month from a customer and you only received 5 last month -get on the phone and find out why.

And we always want to add more good accounts so monitor Won/Loss estimate records or Jobs per month. There may be a customer whose sales volume is not sufficient to get your attention yet but maybe their won/loss record is high, their jobs are large run and we get a decent markup on their jobs. - cultivate that account and they may become part of your 80/20 group.



Thursday, May 31, 2018

IF YOU DON'T KNOW YOUR COSTS HOW DO YOU KNOW YOUR PROFITS ?

By Mark Porter

In our last issue we discussed the concept that Selling and Estimating are two different functions. We outlined the idea that it is vital that all Print Finishers/Binderies/Diemakers  know their true costs so they can make more educated selling decisions. True costs have two components - the machine speeds and makeready times and the true costs of the production assets to produce the work. Most Post Press Companies have a very good idea of the speeds and Makeready times that their production assets can obtain. Where most post press companies are weak is in determing the true cost of those assests on an hourly basis.

Direct Material and Direct Labor costs are easy to identify but how much of your monthly rent and telephone bill should be applied to each job. Because the post press industry is a job oriented manufacturing business, meaning every job is different, we must have a predetermined Budgeted Hourly Rate(BHR) with the proper allocation of factory and administrative overheads that can be applied to all jobs.

You should have all the information readily available that is required to determine your BHRs. Employees wages and benefits, which equipment they operate, what you paid for equipment, the square footage the machine occupies on the factory floor your factory overheads and administrative overheads. Once you have this data your accountant or software can apply proper accounting principles and graphic arts ratios to calculate accurate hourly cost rates.

Having accurate and current BHR's is the first step to generating higher profits. These rates reflect the all-inclusive or fully absorbed costs of doing business, and should be adjusted as events unfold which may change the costs of operating the business. Buying or selling equipment, working different productivity levels, giving raises or changing shifts are afew examples of events that can affect the true cost per hour of your production assets.

Providing your clients with prices that are guaranteed to generate profits is only possible when all of your full operational costs are reflected in your pricing.


Wednesday, January 31, 2018

ADVANTAGES OF ESTIMATING SYSTEMS - ADD UP THE NUMBERS

By Mark Porter
 
If you were questioning the speed of the quoting process in our industry, satisfying customers quoting needs and dealing with competitors that provide pricing that cannibalizes the industry.

In this blog we will deal with the time aspect of quoting.

We will save the concept that estimating and selling are 2 different functions for another issue.
 
Unless you are the guy that just gives prices off the top of his/her head we will all spend time quoting but how much time and how much benefit you provide your customers and yourself from that process can vary tremendously

Part of this problem is that 7 or 8 out of every 10 estimates we do we don't get. I am sure nobody would be complaining if every estimate turned into an order. So if we have to do this necessary evil why not minimize the time and maximize the benefit you receive while providing a solid, educated quote that maximizes your chance of getting the job and allows you to analyze your business.

The act of doing an estimate involves much more then just getting a number to the customer and should provide more benefit to your company then just getting a 20% job conversion.

You can maximize your estimating process by:

Having information at your fingertips speeds the estimating process by finding old quotes, past history etc. Software with built in logic and calculations allows you more time to find the best way to run the job rather than crunching numbers, therefore giving you a greater chance to win the job. Information from the estimate saves time when you win the job because the estimate can be turned into an order, packing slip, invoice and hours can be used for scheduling. Analyzing estimates allows you to track valuable quotes and to prioritize your estimating time by customer, job types etc.

The following our some suggestions:
 



Estimate Searching


- Finding Previous Estimates is much quicker using an Estimate History feature with many search capabilities
- You can attach the original diagram sent to you that you based the estimate on in the history and you can attach the letter sent to the customer into the estimate history so all documentation is at your finger tips
- dramatically reduces searching and telephone tag time
- Simply pick the customer it brings in contacts, address, telephone, fax information immediately no need to look up
- requoting a previous job - quickly access problem history to see if you need to adjust estimate from last time it ran or if you using job costing quickly access costs last time you ran the job



Estimate Options


- Estimating Software allows you to estimate the customers Options very quickly because you can be doing them all at once
If customer wants to compare 5,000 / 10,000 / 15,000 you can do this all at the same time or if he wants to compare 5,0000 / 10,000 on 8pt stock and 5,000 / 10,000 on 12 pt stock they call all be done in one estimate with the software doing it automatically


Eliminate Crunching Numbers Aspect


- Spend time looking at best ways to run the job to increase chances of getting the job rather than pounding on a calculator
- Build in common material so automatic calculations of things such as foil, laminate, uv, dies, mounting board and glue etc. are done as soon as you put in the specs
 


Not Just Crunching Numbers but also building in logic

- Software doesn't just crunch numbers it allows you to build your knowledge into the system. This not only saves time but also provides more consistency in your pricing which is beneficial to you and your customer
-This can allow you to download some of the simpler quotes to other people and frees time up for the serious and desirable quotes


Estimate Variations

- Finding Previous Estimates is much quicker using the Estimate History feature with many search capabilities
- Doing requotes is much quicker as the estimate is simply retrieved, changes made to existing estimate and resaved with an A,B,C variation
- Also be used for contract pricing
- Also if estimate comes from ABC Printer we know we will see it from DEF Printer and GHI Printer. Use original ABC Printer quote to quickly adjust for other printers doing the same job

Generate Additional Paperwork Automatically

- Automatically converts numbers of Estimate into a professional letter than can be printed/Faxed/Emailed directly to customer stating services and materials you are providing for the price quoted with your company terms and letterhead
- If Estimate becomes a job the software will convert the estimate into the format of the job ticket saving time there as well

Prioritize Customers

- Estimate History allows you to analyze customers as to won/loss ratios don't waste time doing a quote for a customer that uses you as a third price or at least do his quote after the good customers

Follow Up Estimates

- You spend so much time doing estimates make sure you follow up desirable estimates - Estimate History can track estimates of large quantities or high sales values so you don't lose them for a stupid reason like (customer doesn't think you provide a service in house or maybe your quote fell off his desk and your not even being considered)

Analyze Estimates with Estimate History
 

- Get benefit from the time you spend doing estimates by analyzing the data For example

- Won/Loss Ratios by Customer, Types of Work, Estimators ie track the customers and type of work you do best at or find out why your not getting certain work, identify potential new and desirable customers
- 80/20 Rule - 80% of revenue comes from 20% of customers track that their estimate level stays consistent or grows if there is a dip in their activity find out why and solve problem before it is too late

- Measure the number of estimates and type of estimates you do each day We all have a won/loss ratio if we are not doing the numbers and types of quotes that will keep business in the shop we have to adjust
- No recent estimates - that best source of new business is people you have dealt with in the past. Generate a report of any customer that has not done business with you in the last say 3 months

- Track and follow up desirable quotes as mentioned above

I hope this provides some help in saving time quoting and/or maximizing the benefit you can receive for the time you do spend quoting.
 





Thursday, October 26, 2017

DIE MGMT - LOCK UP BIG SAVINGS

By Mark Porter

A large number of companies in the Print Finishing, Trade Bindery Die Making, Packaging and Diecutting Industries use steel rule, foil and embossing dies.


Any user of dies can save a tremendous amount of money by simply managing those dies correctly.

Generally users of dies have a large inventory of dies in their plant but the ability to find these dies is often a time consuming if not time wasting exercise.

The result is remaking dies that already exist and that wastes thousands and thousands of dollars and cuts into profits.

By providing systems with extensive searching and sorting provisions we can find if you have a die that will meet the customers needs. These sorts are not just on the die specs but on the finished product specs as well.

Images of the die and the finished product will allow you to quickly identify that you have the correct die.

By using a bar coding system, a location finder and computerized take out and put back process we can ensure dies are located where we expect them.

Once we find dies we can record all specifications about the press run to ensure we can quickly get the die up to speed on the next run.

The condition of the die is monitored to ensure that we are aware of any retooling requirements. Automatic notification goes to the Die Shop foreman when a die needs attention.

We no longer have to lose valuable press time and risk late jobs because a die was not ready to be used at the beginning of a press run or a press run has to be stopped during production to retool a die.

This can save thousands of dollars in lost press time and / or overtime charges to keep jobs on schedule. Not to mention risking your relationship with the customer by delivering the job late.

A good system also tracks the disposal of dies and automatically notifies your customer and your own employees if I die is destroyed or returned to customer.

Die Management can also track the components ie type of rule, punches wood etc including costs that make up that die and track all employees that assemble or maintain the die.

This can be a very easy way for any user of dies to see substantial savings in their operations.

Thursday, September 28, 2017

JOB COSTING = VALUABLE BUSINESS INFORMATION

By Mark Porter


In any business knowing your costs is important. After all isn't Profit = Sales - Costs. If you don't know your costs how do you know your profits. Sure at the end of the year you can say I made money or I lost money but if you control your costs and use your cost data to make better business decisions you may not lose any money or be able to say I made more money.

Previous blogs discussed the importance and ways to collect your cost data. Now we can look at what we can do with that data once you have it.

Last months blog discussed the proper Job Closing routines and the type of reports you should generate when a job is complete.

The last in this series of Job Costing Blogs will deal with the value of the data you have collected. Information is a valuable asset and when you are collecting information on every minute spent by every employee and machine, every material used and every purchase made you have a great deal of information that can be analyzed to identify better, more efficient ways to run your company.

The type of reports you can generate with this type of information are:

1. Job Analysis


At the end of each job you get a complete break down of all costs labor, material, purchases and inventory that went against that job. You can compare the actual costs and hours to the estimated costs and hours to see how your plant performed. If there are costs that can be rebilled to the customer you can capture more revenue. If there are differences in the estimate and actual these difference can be analyzed as to whether they were one off differences or systematic changes that need to be addressed


2. Production Analysis


It is important that you ensure that makeready times and run speeds you achieve on the plant floor clearly reflect the data you use in your estimating process.

If you are estimating a piece of equipment at 5000 per hour but infact you are only achieving 4000 per hour on the shop floor you are losing money every time you win a job. Conversly if you are estimating at 4000 per hour and are actually achieving 5000 per hour on the shop floor you are losing jobs you could produce profitably.


3. Employee Analysis

Not all employees are equal and monitoring production results from an employee angle allow you to identify which employees may need more training.

4. Historical Information


Capturing all data about a job provides an excellent foundation for estimating and production in the event the job is re run in the future. This can provide your company with a competitive advantage as to where costs can be saved or allow you the knowledge to requote the job in a manner that will ensure you re coup all costs.

5. Time Analysis


By capturing every minute of time spent by each employee and each machine we can analyze that time to make decisions. For example examine how many hours each employee worked and what percentage of those hours were chargable time. If you have employees that work less then say 65% chargable time you may have to examine their role in the company.

A good job costing system will record the hours spent make-readying, running, cleaning up, repairing, maintaining or having no work for a machine. A machine with increasing repair and maintenance time may need to be replaced. A machine with large amounts of down time may be an asset that can be sold.

Job Costing not only allows you to analyze how a certain job ran at a specific time but also allows you to analyze all aspects of your business in a very historical way.


Tuesday, August 29, 2017

OPEN DOORS TO PROFIT WITH PROPER JOB CLOSING ROUTINES

After successfully implementing the Dienamic Estimating, MIS and Online Inquiry Software System in over 100 Finishers/Binderies/Diemakers Dienamic can bring your company results on how to

Increase Sales

Increase Quality

Increase Profitability

Increase Customer Loyalty

By Mark Porter


In any business knowing your costs is important. After all isn't Profit = Sales - Costs. If you don't know your costs how do you know your profits. Sure at the end of the year you can say I made money or I lost money but if you control your costs and use your cost data to make better business decisions you may not lose any money or be able to say I made more money.

In a previous blog we discussed the importance and ways to collect your cost data. Now we can look at what we can do with that data once you have it.

Lets start with your Job Closing routine. When you complete a job do you simply pass the job to invoicing and have them bill the customer based on your estimated amount. If so you are probably missing valuable information.

Closing a job in an automated system should generate several useful reports and functions.

1. Close the Job to Prevent Additional Charges

When you decide to make the invoice the last thing you want is to have employees still incurring costs against the job. Trying to get a customer to pay additional charges after you sent them the original invoice is at the very least embarassing.

Part of your closing procedure should prevent additional time, materials and purchases being placed against a job without a supervisor OK once the billing process starts.


2. Full Listing of all Costs Incurred


The Job Closing process should generate a report that lists all labor hours and cost, material costs and purchases that went into producing that job.  Ensure you are aware of all money that went into the job. Your closing report should offer you the option to view the data by dept, cost center, operation or transaction level.

Generally these reports are viewed at a cost center level. This means we would see a Total Hours and Total Dollars for each machine used on the job. If we see a cost center that looks unusually high or low we can drill down to an operation level to see if it was the makeready or run. If we identify the source we can drill down to a transaction level to see which employees worked on this job.

3. Actual vs Estimate Report

This report provides a comparison of the estimated hours and costs for all labor, material and purchases for the specific job to the actual costs.

This is a valuable report that can quickly identify actual costs that are not in line with your estimated costs. This could prove to be a one time exception that nothing could prevent or maybe it is a process that needs to be evaluated. If you are estimating a machine to run at 5000 / hr and it is actually running at 4000/hr you are losing money every time you win a quote. Conversely if it is running at 5000/hr and you are quoting 4000/hr you are losing jobs you should be winning.

4. Changes Report

When a job is complete you should be able to get a listing of all changes made to the job from the time you agreed to produce the job to the final product that was shipped to the customer. It is important to track these changes as you will need them to explain time and cost variances and also to help correct legitimate extra charges. Collecting extra charges can be a great source of additional revenue and by having a complete backup of information about the extra charge i.e. who, what where, why and when a change was made allows you to collect that extra charge without damaging the relationship with that customer.

5. Problem History

Provide your employees with a problem history system they can use to enter problems with jobs as they happen. When closing a job a list of its problems can be viewed. These problems may help explain some of the variations and issues on the job. This saves the time of office staff to track down employees and ask what happened 2-3 days ago.

Problem history is also very valuable when quoting or running this job in the future.

By following good closing procedures you can ensure that all costs are captured, all legitimate extra charges are recovered, all production variances are accounted for and all processes are running as efficiently as possible.

A good Job Closing Routine Opens Doors to Profits.

Thursday, July 27, 2017

BIOMETRICS - New Technology to Better Manage Your Biggest Cost - Labor

After successfully implementing the Dienamic Estimating, MIS and Online Inquiry Software System in over 100 Finishers/Binderies/Diemakers Dienamic can bring your company results on how to



Increase Sales

Increase Quality

Increase Profitability

Increase Customer Loyalty

By Mark Porter
Last months newsletter discussed achieving accountability on the shop floor to ensure you are aware of all costs you incur in the plant Shop Floor Data Collection ensures that people are accountable for every minute they are in the plant and every material that they use.
After all Profit = Sales - Costs
If you don't know your costs how do you know your profits
Technology can also allow you to better manage who is on the shop floor. To ensure a company is getting the maximum productivity out of their labor they have to ensure that employees are actually on the floor.

With simple punch card systems it is too easy for friends to clock each other in and out when in fact one person may not be on the premises.
This results not only in the wasted dollars of say paying someone for 2 hours @ $20 per hour but also results in the lost productivity on the press for 2 hours  that you are selling at $125 per hour.
Managing this type of activity gets much tougher once you start running 2nd and 3rd shifts.
Biometrics use an employee's fingerprint to activate the time card system for clocking in, starting lunch, finishing lunch and clocking out.
Requiring a person's finger to clock in ensures that you are paying employees for actually doing work for you and you are running at the efficiencies that you expect and base your cost structure on.
The Biometric Time clock can be used in conjunction with the data sharing as an employee cannot record time against a job if he has not clocked in for the day or as a standalone payroll system.
As a standalone payroll system it will stop buddy punching but it will also provide a log of everyone that punched in immediately after a shifts starts so you are immediately aware of staff shortages for the day and it can provide a direct link to payroll services such as Paychex Payroll Services to eliminate rekeying and calculating payroll.

Labor is by far the biggest cost our customers incur. By managing the employees attendance through Biometrics and demanding accountability of their time and materials while they are in the plant you can take control of your biggest cost. Even small percentage savings on labor can be substantial
5% on $2,000,000 is $100,000 savings