Mike on Manufacturing

Manufacturing vs. Accounting

By Mike Hart

The following is a typical scenario in the evolution of a small manufacturing business. 

Every company needs accounting software to invoice customers, pay the bills, collect money, and run financial statements.  When a company starts up and is small in size, it uses a low end software package such as QuickBooks or Peachtree because it performs these basic functions well and is low cost.  . 

The manufacturing side of the business gets by using the basic inventory, sales order, and purchasing modules offered by the accounting system and augments them with spreadsheets to handle manufacturing requirements.   

"Light Manufacturing" Is a Lot of Work!

By Mike Hart

Many small manufacturing companies choose to operate with a light manufacturing software package, believing that it is easier to use than full-featured manufacturing software. 

A "light manufacturing" system offers a basic bill of material that enables you to calculate an assembly's cost and deduct component parts from and add finished items to inventory in a single or two-step process. 

Should QuickBooks Compatibility Be a Requirement for Your Manufacturing Software?

By Mike Hart

If your company uses QuickBooks and you are shopping for manufacturing software, should you make QuickBooks compatibility a requirement?  This only makes sense if you accept three premises: 

• First, QuickBooks has unique accounting capabilities that would be lost were you to change accounting systems.
• Second, manufacturing and accounting are separate functions where one can use "best of breed" software for each.
• Third, an accounting system conversion should be avoided because of its disruptive effect on operations.

If these three premises are true, then QuickBooks compatibility should indeed be a requirement of your manufacturing software.  But are these premises true?  Let's examine them one by one. 

Are You Too Small for a Manufacturing Software Package?

By Mike Hart

Can a manufacturing company be too small for a manufacturing software package?  Is a typical manufacturing software package "too much system" for a company with 5, 10, or 15 employees? 

The answer is -- yes and no.  It depends on which category of manufacturing software you are referring to.  A "mid-market" ERP system designed for companies with roughly 75-500 employees is without a doubt "too much system" for a micro-sized company.  On the other hand, a "small business" manufacturing system is a practical solution that is far more efficient than using general accounting software and spreadsheets. 

Is a Hybrid Manufacturing-Accounting System a Good Solution?

 

By Mike Hart

 

For most small manufacturing businesses, meaning companies that broadly speaking have fewer than 75 employees, an ERP system is not practical because of cost and complexity considerations.  For most, the only feasible alternative is a small business manufacturing software package.

 

Small business manufacturing software packages fall into two categories: small business manufacturing systems that include accounting, or “hybrid” systems that link to an outside accounting system.  In this article, we examine whether a hybrid system is a good solution.

 

Don’t Limit Your Potential with a Light Manufacturing System

 

By Mike Hart

 

Many general accounting systems, including QuickBooks and Peachtree, offer the ability to allocate and deduct a set of kit components or a bill of material.   I refer to this type of software solution as a “light manufacturing” system. 

 

Is a light manufacturing system a good solution for an ultra-small manufacturing company, meaning one with well under 100 employees that only needs 5, 10, or 15 computer users?  Is a QuickBooks or Peachtree type system a good solution for a startup company?