Small manufacturers are hurting, says David Bilbrey, "Their inventory is not under control. They don't have what they need on time.They have too much that they don't need and they can't find anything." And although the technology world is abuzz with the latest developments in manufacturing, RFID tags that help keep that track bar-coded inventory. It's the basics that are still critical.
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In many cases, companies still use a variety of disparate systems including databases such as Microsoft Access, Excel spreadsheets for the Bills of Material, "and guys walking around with yellow pads," says Bilbrey, who runs both a reselling and a third-party software operation that deals with manufacturing software.
Bilbrey operates Everest Software Solutions, a St. Clair Shores, Mich.-based company whose manufacturing software works with AccountMate and Accpac Advantage accounting software.
Inventory, Bilbrey continues, "is the No. 1 reason I'm getting in the door. They don't have faith in their costs. They don't have the right inventory. You have to enter data in four different systems."
By its nature, manufacturing creates a lot of accounting work. On the inventory side, there is raw material, work in progress, and finished goods. Basically, small manufacturers need systems that help them follow good business practices, says Bilbrey. Those serving manufacturing are benefiting from trends affecting others supplying business technology products.
Manufacturing: A Place for CPAs?|
The words Intuit, QuickBooks ProAdvisor, and manufacturing software haven't been associated with each other. But this year, Intuit exhibited at the National Manufacturer's conference.
The low-end packages, including both QuickBooks and Peachtree, have manufacturing versions, and the manufacturers of both systems have released software development kits that enable third parties to develop companion manufacturing products.
That can be a turnoff for some accountants, says Bruce Anderson, owner of Woodland Hills, Calif.-based BTA Consulting.
"There are some ProAdvisors that just love to do bank recs, but when you are talking about a mid-market package you have design issues, business process flow issues," Andersen says.
But Andersen, a QuickBooks ProAdvisor who has 15 years' experience as a controller at manufacturing companies, says that Intuit advisors can learn to provide more sophisticated consulting services needed to serve manufacturing clients.
Andersen, who is working with Intuit, says the vendor needs to make changes to the advisor program in order to succeed. "Their challenge is how to adapt the ProAdvisor program so the client has the proper technical support," he says. Andersen is handling one or two deals a month, providing consulting services for companies upgrading from QuickBooks. That can include the sale of an additional vertical market package.
"We take on responsibility for the initial conversion, set up of the profit center, and the user definition of who is getting into what," says Andersen. The accounting skills are also necessary because, "You have to have an idea of what the company is doing and how it is doing."
While there is room for CPAs with manufacturing experience in the Intuit advisor world, "I think they need to look at a more sophisticated advisor group to manage Enterprise [QuickBooks Enterprise Solutions]," says Andersen.
Not the Usual Suspects
The fact that both Peachtree and Intuit exhibited at the conference of the National Association of Manufacturers this year may be surprising. But it is a signal that the players in the manufacturing market have changed as lower-cost software packages have added vertical market versions, including both Best's Peachtree and Intuit's QuickBooks, while Intuit has gone further into the field with its QuickBooks Enterprise Suite.
Still Bilbrey's assessment about the needs of smaller manufacturers resonates with Bill Lucchini, General Manager for QuickBooks Enterprise Solutions. "They are looking for relatively simple stuff: Let me keep track on what I have in inventory, help me purchase, help me with my workflow, help my sales guys close my sales orders, get into the warehouse, pick off the shelf, and ship them," says Lucchini.
Peachtree similarly found that many of the requests of the smaller operations were surprisingly basic. For example, some requested the ability to use both the manufacturer part numbers and part numbers that users have created in order to track the parts.
Also in small companies, "they may have a lot of people doing data entry. Two people might create the same reference number for the same part or material," says Daneen Heislitz, director of product marketing for Peachtree. The company will add the ability to report duplicate reference numbers in Peachtree Manufacturing 2006.
Customers also wanted better views, including the ability to dig into the components of subassemblies so that they can determine not just the parts used, but also the cost.
Higher-level functions aren't necessarily out of the range of those with smaller budgets. "What I'm seeing is that these small manufacturing companies are becoming more sophisticated," says Gary Claggett, owner of Professional Accounting Service, a Louisville, Ky.-based reseller of Open Systems' Traverse software. "It's a matter of competitive pressure. They have to understand what their costs are."
Many small operations have multiple systems, one in accounting, doing some inventory control "and a little bit of order entry," Claggett continues. Meanwhile, the engineers are tracking information on spreadsheets.
So in many ways, the need in the manufacturing market is not about the latest technology. It's about the need to make sure that companies are using the processes they think they are using, and that they are able to perform the basic functions needed to keep a business operating.
"It is a tale of two cities," says Scott McMaster, national sales manager for Syspro, the Costa Mesa, Calif.-based manufacturing software specialist. "You have the think tank organizations that are speaking of the future. You have the common business that is wrestling with the business of today."
Most businesses, McMaster continues, are looking at an out-of-the-box solution. They need activity monitoring and they need to be able to manage daily processes.
Syspro is pushing its .Net-based applications, which McMaster says provide an integrated system so that when a sales order is entered, the application writes an activity record to the back-office software. The company is also moving towards providing inventory optimization capabilities-it has just published a book on the subject and plans to have inventory optimization included in a product release this year.
Shakopee, Minn.-based Open Systems serves a more select group with its Traverse Manufacturing modules.
"Our product focuses on some specific niches," says Paul Lundquist, the company's vice president of sales. "We have put together a characteristics grid that shows where we fit."
Traverse is designed for tier-three manufacturers, which is defined by APICS, the Association for Operations Management, as including companies with $5 million to $50 million in annual sales, according to Claggett.
Companies that size need some basic data manipulation abilities in their software. "They want to be able to have their accounting data moved out to an Excel spreadsheet so they can slice and dice it," he notes. To assist them in accomplishing that, Traverse has built-in pivot tables.
Another important feature for small companies, says Claggett, is ease of use, a point supported by Chris Lenzo, director of product operations for Andover, Mass.-based Exact Software North America.
A major part of Exact's market is companies with $25 million to $60 million in revenue, whether as single entities or as divisions of larger organizations. Many are looking for software that can be tailored to their operations and that can also grow with them.
One of the strengths of Macola ES is "a really deep bill of materials," says Lenzo. "Because we serve a broad spectrum of companies, we can turn off and on as much complexity as they need."
The Power of Four
Microsoft Business Solutions fields manufacturing capabilities in all four of its accounting software lines-Axapta, Great Plains, Navision, and Solomon, and they each fit different parts of the market.
"Axapta is aimed at any manufacturer that needs multi-national, multi-site, multi-language capabilities," says Mike Frichol, director of manufacturing industry solutions for Fargo, N.D.-based MBS.
Great Plains Manufacturing is primarily for single-site companies that need out-of-the-box systems. "While they need some personalization of screens and reports, they just want to implement a system with good built-in business practices and a low cost of ownership," says Frichol.
Navision's strong point is distribution, but it is also suited for single-site companies and supports the most languages of any of the four packages. Solomon, targeted at project-oriented companies, also serves manufacturers with that orientation.
Frichol has no doubt about the capability desired by many users of all four applications.
"The No. 1 priority of half of the customers is to get better information out of the system for better business decisions," he says. Frichol also believes that there isn't that much difference in features between most systems, and what counts is which vendors and their reselling partners are most knowledgeable in helping customers use the software to meet their needs.