MISys Manufacturing Cost Roll-up

Whenever I speak with people about the MISys Manufacturing System, I’m often asked what my “favorite” part of the system is. Ha! There are so many terrific parts of MISys Manufacturing that I am really hard-pressed to single out my one favorite.

But certainly the Cost Roll-up function of MISys has to rank high in a hypothetical “Top 10” of great things I know about MISys. Here’s why.

I think about the things people do with MISys: keeping track of stock, dispensing, receiving. Creating purchase orders and production orders, and generating all the debits and credits the accounting people want to see at the end of the month. These are all terrific things that could be done manually, if you really needed to. For sure, it wouldn’t be fun or easy, but it could be done.

On the other hand, cost roll-up is something that you just can’t do yourself. And if you don’t do it, you’re likely to go out of business.

I’ve met a lot of manufacturers who make a widget consisting of $10 worth of parts and who sell it for $8? “Why would anyone in their right mind do that,” you ask? The fact is that, when the hypothetical widget was invented, it consisted of $6 worth of parts, so selling it for $8 made sense. Over the years, raw material prices have ratcheted up. First to $6.50, then to $7.20, then to $8.40, then to 9.10 and beyond. Without any means for tracking these incremental changes, a manufacturing company is helpless when trying to re-evaluate production variance (the difference between the value of an assembled item and its component parts) and to adjust the selling price accordingly. When a manufacturer’s bill of material has multiple levels (as most do) then a difficult job becomes virtually impossible.

The MISys Manufacturing System has the ability to roll raw materials up from the lowest BOM level, up through the entire product structure, so that the cost of every top-level assembled item is always known. Performing a cost roll-up for one raw material item might, in theory, require the re-evaluation of every other item in stock. If any raw material item is used in multiple assemblies (as savvy manufacturers always strive to do) then this computation must be done not once, but multiple times.

This is a task you would never want to tackle with a calculator, pad of paper, and a pencil. The good news is that MISys Manufacturing can completely re-cost the inventory with just the click of a mouse. In a big manufacturing database with a complex BOM structure, this could take a while to run, but remember -- MISys doesn’t complain and it doesn’t make mistakes.

So that’s my vote for the “best thing that MISys Manufacturing can do.”

Wait…I just thought of another, even better one. I’d better save that for another blog post.