Taking Control Of Your Material Costs

Supply constraints and continued inflation are causing many material costs to increase. Shops are seeing profit margins shrink as costs increase. As a shop, what are some things you can do to keep your profit margin high?

Costing best practices

Let us jump right into what our customers are saying about their materials costings. While it’s true that you can’t control everything, you can control which vendor you purchase from. To continue receiving good prices for materials, we’ve learned that putting all parts for each job into an ERP is a best practice. This way, your inventory will never run low, and you’re less likely to forget critical but small and easily overlooked parts and pieces. It’s easy to see how being organized prevents the need to rush parts and saves time from purchasing the part from a local retailer.

Another best practice is to get multiple vendor quotes. Send out that RFQ as soon as you get a job so you have ample time to get the best price. Getting accurate costing is essential not only for profitability but also for precise estimating. Pricing can vary substantially from vendor to vendor, so calling around can save you money and keep costs low. Also, to keep vendors honest, do your due diligence and look up the historical prices.

The role of ERP in material costing

If you put part information into your ERP, your ERP should provide estimated versus actuals and other reports on profitability. This will give you insight into expectations versus reality by job. By looking at the report, you should be able to account for and then fix any missing steps or extra time needed to cost and estimate more accurately.

JobBOSS² sets shops up for success. Within our quote-to-cash solution, it’s easy to enter every part detail into estimating and quickly transfer the data to the quote and order. You can transfer the part information on each job into inventory with just a few clicks.

Once details are entered into the inventory, shops can quickly look at job requirements on the order to consistently meet demand and stay lean. The Job Requirements section allows shops to plan ahead to get quality material at low prices in exchange for a longer lead time.

Also, JobBOSS² retains all historical information by vendor, giving you visibility to into how material pricing has changed over the years. As for reporting, pick from out-of-the-box estimates versus actuals, profit margins, and many other reports, giving you the details to track time and materials.

And here’s a bonus: while you plan and buy low, allowing for long lead times, you can handle the short lead times requested by your customers by accurately scheduling. This will enable you to price higher and maintain high customer satisfaction. JobBOSS² has a drag-and-drop Planning Board allowing you to see which jobs are currently being worked on and which are planned. It also quickly shows you how much of a job is completed by visiting how much each step has been completed. Manage the shop floor from your office and allocate resources in real-time as needed.

In this blog, we’ve shared some best practices we’ve learned to help you keep material costs down, stay organized, and keep profits up. We look forward to sharing more strategies with you.

If you enjoyed reading this article, check out some of our other blog posts:

• Quick Start Implementation Program
  
• Common Roadblocks When Implementing The Scheduling Module In JobBOSS²
• How To Get A Positive Return On Your Manufacturing Intelligence Platform