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Aug 19, 2011 12:00 AM
The automation, dashboards, historical data and process integration of the modern management information system (MIS) provides printers with the tools and the means to reduce business costs in a significant way. The modern MIS, properly implemented and used, will reduce labor, decrease key performance cycle times, increase cash flow and increase customer service effectiveness. By simply providing a view into key performance indicators such as quote conversion rates, on-time delivery, planned versus actual costs, and accounts receivable aging, the management team of a printing company will have a real-time view of the health of their business.
Many management information systems include customer relationship management (CRM) modules to analyze the performance of salespeople and drill down into profitable or non-profitable jobs. Using dashboards or even printed or PDF reports, most MIS solutions provide the ability to monitor, in real time, the effectiveness of their sales team. In figure 1, the sales pipeline for Brady Lee shows projected revenue for this month to be above budget and forecast. The forecast represents the revised budget that is generally submitted by the salesperson on a period basis. Brady is doing well this month. And looking ahead at Work In Process (WIP) jobs that are scheduled to ship next month, Brady is going to have a tremendous month!
The dashboard shown in figure 2, focused on Brady Lee again, is a wealth of information. Looking at the jobs booked in for the month of November, we see things really picked up around the week of the 17th, but then leveled off at over $80k. Brady’s quote conversion rate (the percentage of quotes converted into jobs) from last month was 0%. This indicates that his sales are coming from existing customers that are either re-ordering without new quotes, or ordering new products without quotes. This may be an indication that Brady is not doing a good job getting new business. Other data such as Job profitability and sales vs. budget can be used to monitor performance. Brady had no sales budget (or a very small budget) in June, July, Aug and November. Perhaps he was working on other projects or had job responsibilities rather than sales — yet continued to bring in revenue from existing customers. His September and October numbers are ahead of budget.
MIS and cycle time
Management information systems typically are comprised of an integrated set of modules including estimating, job planning, scheduling, invoicing and generally full accounts. Most systems time-stamp any and all transactions — for example, the date and time an estimate was created and/or modified, the date the estimate was converted into an order, and the date an invoice was created, among a myriad of other dated transactions. These time stamps can provide a wealth of information to measure business process cycle times for cycle time improvement efforts.
Time is the universal measure and can be equated to dollars, waste, inventory and other key business indicators. Time is also the perfect measure for employee-based process improvement teams. Using tools such as value mapping and A-Delta-T, the time stamps available in an MIS can provide data necessary to measure business process cycle time. (A-Delta-T is a cycle time reduction process improvement technique developed by Digital Equipment Corporation in the 1980s where A=actual cycle time and T=theoretical best cycle time. The delta represents non-value added time.) For example, a team looking at decreasing the time it takes to send an invoice to a customer — certainly an important factor in cash flow — could use MIS time stamps to measure actual results, institute new processes, and measure progress.
All of the milestones of the invoicing process are available in the MIS. The invoicing process begins with a shipped order (time stamp). It continues with receipt and entry of outsourced work invoices (time stamp). The pre-invoice is issued for review by the account manager (time stamp) for issue and (time stamp) for review. The invoice is sent to the customer (time stamp). The elapsed time between each of these steps can be tracked and the effectiveness of process improvements can be measured by the increase or decrease of these times.
Other key performance indicators that can be tracked with the MIS include the conversion rate of estimates to jobs, on time delivery percentage, and month-end close time, to name a few. The conversion rate can be tracked by salesperson, estimator, customer, product line, etc. All of this data is available in the MIS. On-time delivery will generally be tracked through the scheduling module of an MIS, and month-end close time can be tracked with time stamps in a similar fashion to the invoicing process.
The ability of the MIS to provide analysis of job costs is a key feature that virtually all MIS solutions provide. This functionality allows a business to grow from the small owner-operator business, where all estimating and job profitability is managed by the innate and unique capabilities of the owner-operator, to the mid-sized to large printer where profitability analysis and assurance must be controlled throughout the shared systems of the company.
The job entry screen shown in figure 3 shows the ongoing cost for Job 10229. It is critical to monitor the job cost as it moves from estimate, to plan, to production. In this case, the upper right hand corner of the job entry screen tracks, in real time, the cost of the job. Planned is the expected cost after the production operations department has reviewed the quote and has made production changes. In this case, the plan is costing close to $400 above the estimate. Estimates, in most cases, are costed based on the best method of production – best usually being most competitive. However, when the estimate is converted to a job and planned for production, other equipment and or materials may be chosen. A quick drill down into the planned cost will uncover the discrepancy. It could be prepress or press time, or even a higher cost for paper stock.
Collecting job cost data on the shop floor represents a big cultural change for many companies, but is an important factor in the accurate collection of costs. In the example shown in figure 3, this information will drive the Actual cost field. There are three levels of shop floor data collection.
1. Manual, paper-based data collection where shop floor employees complete time sheets and the data is entered into the MIS by a clerk at a later point in time. It is the least accurate method, and not real-time.
2. Entry of shop floor transactions by employees directly into a terminal. This method still relies on the accuracy of the employee, but can provide the necessary data for analyzing job cost real time.
3. Automatic machine connections that gather shop floor data directly from the machine without operator intervention. This is the most accurate method and real time.
Most companies move through these methods sequentially. Only a limited number of MIS solutions offer an automatic machine connection either through JDF integration or dedicated machine connection modules.
Final costs can be compared at job completion to analyze job performance as show in figure 4. It looks like this job cost (and was billed) a few hundred dollars above estimate.
When the accounting modules of the print management information system are used to manage cash flow, the MIS brings together all of the advantages and benefits of the entire suite of modules. Production information drives accurate accounting, and accurate accounting encourages good cash flow management.
Good accounts receivable (AR) management is essential to good cash flow. All MIS with accounting modules can provide a good view of AR, such as the view in figure 5 which shows customer Fab Digital Services’ payment history. Key indicators include the average payment days, 64, and a total debt of over $80k with a breakdown by period.
Also affecting cash flow is accounts payable. Analysis and management of payables by vendor, in views similar to AR views will aid in good cash flow month after month.
Today’s management information systems represent consolidated business intelligence of an organization. Most companies have the intelligence, but the leading organizations are those that use it. What differentiates one MIS from another is the ease and accuracy in which the data is collected, and the effectiveness of when and how the data is presented for decisions.