Manufacturing Software Explained: manufacturing software benefits & costs
Manufacturing software benefits
Manufacturing software delivers several significant benefits. Some of the big obvious benefits of manufacturing software include the following:
• Reduction in inventory levels because only inventory needed for manufacturing is ordered—and it’s ordered no earlier than needed. Reducing inventory, of course, immediately improves cash flow by an amount equal to the reduction in inventory. Reducing inventory levels also typically reduces inventory shrinkage, spoilage, obsolescence and theft.
• Improvement in production scheduling because items needed for manufacturing are ordered in time and in appropriate quantities and because work centers are neither under-scheduled nor overscheduled.
• Increased accuracy of cost accounting information because complete and accurate bills of material show all components and their costs. Knowing what manufactured items cost of course means that a firm makes better business decisions about pricing products and services and, about choosing to make or buy components.
More information about manufacturing software benefits:
Manufacturing software costs
In addition to the up-front cost of installing manufacturing software, firms often find themselves incurring additional expense. The list that follows is not complete, but it gives you some idea of the follow-on costs that come with installing and setting up new manufacturing software:
Upgrade costs for manufacturing software
The manufacturing software vendor will regularly charge you for upgrading the manufacturing software to the newest version of the software.
Technical support and maintenance for manufacturing software
Manufacturing software companies typically charge for technical support. You can spend anywhere from a few hundred dollars a year for this service to thousands of dollars a year for this support and maintenance.
Payroll tax table updates for manufacturing software
If you're using your manufacturing software for payroll processing (such as for payroll of factory floor employees), you may be required to subscribe to a payroll tax table service.
Manufacturing software training for employees
Almost invariably, firms need to provide training for the employees who provide inputs to the manufacturing software or who work with outputs from the manufacturing software. Because manufacturing software affects almost every person involved in the manufacturing process, such training often needs to be supplied to many employees within the firm.
Reorganization of process to conform with manufacturing software
Perhaps its not so common these days, but in the earliest days of manufacturing software, firms commonly found themselves reorganizing the factory or shop floor to better mesh with the concepts and objects of material resource planning, capacity resource planning, and other manufacturing software philosophies. In the long run, this sort of reorganization probably pays for itself many times over… but the upfront costs of such reorganization can be an important factor to consider.
More information on manufacturing software costs