If you are a manufacturer who works on engineer to order projects, undoubtedly, you are always under time constraint which is shorter than that required for manufacturing. On top of that, the situation worsens when unpredictable supply situation created by the vendors also occurs. The final blow comes as EMD liquidation risk in the event of failure to deliver on time.
ERP for Price Estimation- Is It Helpful?
I was talking to a world-class machine manufacturing company when I realized that the severity of the situation becomes much more acute when it is coupled with price pressure raised due to wrong price estimation. In fact, incorrect price estimation occurs if the project is quoted in response to the request for proposal (RFP) floated by the client.
Say if you are an overhead travelling crane manufacturing company who gets requirement from various prospects on technical and design brief on various functional requirement of the end use of the machine. Based on the requirement brief, a design is conceptualized and various bill of material (BOM) is defined accordingly. Once the BOM is designed by the engineering and design team, it becomes important to know the cost of new shape of, say, gearbox or pulley which is being designed to do a correct costing of project.
I found this to be quite interesting to know how that company estimates the cost of that newly designed gearbox! When I questioned the promoter of that company about this he says, “I am very lucky in that way as I have a seasoned gentleman Mr Nandanwar working with us since last 15 years who is an expert in this.” His answer increased my inquisitiveness and I was desperate to know the algorithm for doing that. Finally when I spoke to Mr Nandanwar, his answer left me speechless. He said “This is where experience works, as I have to do a guess estimate which a young star can’t do.” With this answer I became more curious to know how they are able to meet the projected vs. actual costing while talking to the promoter he said “We make decent profit doing the project.”
How MS Dynamics ERP makes a difference
This is a typical scenario of typical engineer to order project based company in our country. Then I invited the promoter and Mr Nandanwar to one of my clients who uses Microsoft Dynamics ERP for doing the cost estimation before doing the RFP response. With Dynamics ERP, when the design team hands over the customer-approved final design sheet to commercial engineering team for quoting, they import that design BOM to ERP and it breaks BOM to the SUB-BOM level till the time reaches to its constituent component level. From there, ERP takes the purchase price of that component used in any project historically and if it is not used then it triggers fresh quotes request to the registered vendors and compares the quote to estimate the component cost, adds the overhead cost on it and starts building the final BOM cost. It gives a clear visibility through its inbuilt Business Intelligence (BI) tool about the component cost thereby the final BOM cost. In this way, actual production cost can be estimated and can be compared with actual landed cost of production also when the production happens. If you change the brand or vendor of components, ERP also can help you to estimate the net impact of its costing and thereby the profitability of the project.
A thorough assessment is the first step that ERP generally takes while tackling a problem like this. By taking the time to look at the entire picture and make objective assessment of each component, you set yourself up for success in the long run.
MS Dynamics ERP helps you to gain edge over competitors
Work smarter and faster than before with the help of advanced tools and if this is also your mantra, Microsoft Dynamics ERP is your obvious choice. Be it price estimation or for any other relevant business needs, this cutting edge ERP software allows you to get hold of tools you require to connect as well as manage the overall business, starting from financial to supply chain and from product manufacturing to business operations with insight you require to come up with smart decisions and fuel up business growth. Begin with what exactly you require and then quickly adapt whenever your needs differ, either in cloud or on-premise- choice is absolutely yours.
Nimbus System: A Class Apart in MS Dynamics ERP implementation
Nimbus System goes a step forward. Technical expertise combines with years of experience; Nimbus can help you get unique ERP solutions. Being a Microsoft certified business solutions partner for MS Dynamics AX, NAV implementation, Nimbus has effectively served multiple verticals like education, jewellery, manufacturing, and healthcare and so on. Its unique implementation methodology is effectively molded to deal with even complex deployment issues. Indeed, at Nimbus, there is perfect blending of operational excellence and proper technology implementation in a way that may help the clients get most from its business solutions and stay ahead of the competitors.