Category: Machine Building, Case Studies, Shop Management, Inventory
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Machine Building Manufacturer Sees $400K Reduction in Inventory Levels Thanks to ERP Software
Headquartered in Vermillion, SD, Masaba, Inc. manufactures a wide range of industrial material handling and conveying equipment for companies in the mining, aggregate, agricultural, industrial, power plant, pulp and paper, wood chips, and other industries.
The company’s unique skillsets include specialty machine design, engineering services, and in-field support, allowing them to create make-to-stock, make-to-order, and custom-design projects to suit each customer’s specific needs.
When Purchasing Manager Justin Sievers first joined Masaba, Global Shop Solutions ERP software was already in place. However, it was being woefully underused due to resistance from employees and a lack of support from senior management.
We’re now using Global Shop Solutions for everything from sourcing and inventory management through production and shipping/receiving. Everyone is on board with using the software, and we’re starting to see the results management expected when they purchased it.Justin Sievers, Purchasing Manager at Masaba, Inc.
$400K Reduction In Inventory Levels
One of the first areas Sievers tackled was inventory management, starting with switching from purchasing raw materials to the job to purchasing directly to inventory.
When materials were purchased to the job, they didn’t get accounted for in inventory. As a result, managers often didn’t know the part number or what they had in stock at the moment, which often inflated project costs. Now, Sievers operates with a first-in, first-out inventory system, completely managed within Global Shop Solutions ERP software, that has greatly reduced Masaba’s purchasing requirements, inventory stock levels and carrying costs.
The result: a $400,000 reduction in inventory levels and the ability to more accurately forecast on-hand requirements and hold inventory based on predicted usages.
Better Inventory = Better Job Costing
Tightening inventory management has led to more accurate job costing for Masaba. Previously, material costs were calculated using an Excel spreadsheet with many different people manually entering data. Now that purchased items are automatically received into stock at the current price and then issued to the project, managers know the real costs of components and consumables for each job.
Tracking direct labor costs has also improved by leaps and bounds. Instead of hand-written time cards, operators now log into the system by scanning their badges into the Shop Floor Data Collection screens of the shop floor.
Building Huge BOMs in Less Time
Masaba projects often require a bill of materials (BOM) containing upwards of 12,000 individual components. To simplify this previously manual process, Masaba uses a custom interface to build their BOMs and import them into Global Shop Solutions ERP software, saving hours of manual data entry.
The ability to create custom Crystal reports in Global Shop Solutions helps provide a check-and-balance process when building these huge BOMs. The report runs a list of the components that need to be purchased for large projects, based on the BOM requirements indicated in the custom interface. Managers then compare the report to the BOM and the work order in Global Shop Solutions to ensure the accuracy of the information.
Download Masaba’s case study to learn all the other ways ERP software has improved their business and the ROI they received from it.