Case studies / Light manufacturing
Case studyProduction and stock control for a small manufacturer
A small manufacturer producing to order and to stock moved bills of materials, production orders and costing into Business Central, reducing shortages and making product costs accurate.
Overview
An owner-managed manufacturer of metal shelving, workbenches and storage systems for workshops, schools and warehouses, based on a single site in the English Midlands with around sixty employees. It makes standard ranges to stock and configured units to order.
Scale. About 600 components and raw materials, five product families and a mix of make-to-stock and make-to-order work running through the same shop floor.
The challenge
The production manager kept the real bills of materials in their head. The written versions, spread across spreadsheets and the old accounting package, were partly right, partly out of date and in a few cases described products the business no longer made.
Materials were short on some jobs and excessive on others. Buyers ordered from experience and from the stores team's sense of what was running low, so a job could reach the shop floor with everything except one bracket, while racks of another component sat untouched for months.
Costing was a rough estimate. Prices had been set years earlier and adjusted by a percentage each year, without anyone knowing what each product actually cost in steel, fixings, powder coating and labour. Steel price rises were absorbed rather than passed on.
Delivery dates for made-to-order work were optimistic. Sales quoted standard lead times without seeing what was already on the shop floor or whether materials were in stock, and customers were too often told their order would be late.
The owners wanted to grow online sales to schools and small businesses, but that needed accurate stock, reliable dates and prices they could stand behind.
The solution
Every product now has a bill of materials and routing in Business Central. Sales orders for configured units create production orders from the right components, and make-to-stock items are replenished by reorder rules.
Material requirements are calculated from open sales and production orders against stock and incoming purchases. Buyers work from a list of what is needed and when, instead of a walk round the stores.
Stores issues and finished goods are scanned, so stock levels stay accurate between counts. Shortages show up when the order is planned, days or weeks before the job reaches the shop floor.
Costing rolls up material, labour and overhead for each product, and variances between standard and actual cost appear on each production order. Supplier price files update purchase prices, so rising steel costs show up in product costs quickly.
Online orders from schools and businesses come straight into sales, with stock and lead times drawn from the same data. Finance, bank reconciliation and reporting run in the same system.
The engagement
- Four months
- Three specialists
- Product and routine mapping, bill of materials review, Business Central production, inventory, purchasing, costing, sales and finance, barcode scanning and online ordering, and a supervised first production cycle.
Integrations
- Barcode scanning
- Online ordering
- Supplier files
- Bank
- Reporting
How we delivered it
- 01
Map and agree bills of materials
Five weeks
We mapped each product family and its production routines with the production manager and team leaders, then reviewed every active bill of materials line by line. Where the written version and the shop floor disagreed, the shop floor won and the record was corrected.
- 02
Configure and connect scanning
Five weeks
We configured production orders, inventory, purchasing and standard costing in Business Central and connected barcode scanning for stores issues and finished goods.
- 03
Load and test with production
Three weeks
Bills of materials and stock were loaded, and the production team tested real orders end to end, from sales order to purchase, issue, completion and despatch.
- 04
Supervised first cycle
Three weeks
Go-live began with a supervised first production cycle. We stayed on the shop floor as orders moved through, fixing bills of materials and routings as issues appeared.
Results
- Fewer material shortages on the shop floor
- Accurate cost for every product
- More reliable delivery dates
- Prices reviewed and corrected across the range
Material shortages have reduced. Jobs reach the shop floor with their components, and the stores team spends less time chasing missing parts and more time keeping the shop floor supplied.
Costs per product are now accurate. The owners reviewed prices across the range in the first quarter, raised several that were selling below cost and dropped two products that could not be made profitably.
Delivery dates are more reliable. Sales can see shop floor load and material availability when quoting, and customers receive dates the business can keep.
The online channel has grown on this footing. Stock shown online is real, lead times are honest and prices reflect what products cost to make.
We found out we had been selling our best-known workbench at a loss for two years. The software did not fix that; the bills of materials did.
What made the difference
Bills of materials had to be right before costing could be trusted.
