Maintaining a healthy profit margin is vital for long-term success in the competitive manufacturing landscape. To thrive and stay ahead, manufacturers must continually evaluate their operations and identify opportunities for profit margin improvement. Manufacturers can enhance profitability and gain a competitive edge by implementing effective strategies.

The manufacturing and profitability issues I’ve shared in this article and exchange is common. Typically, organizations are held hostage by short-term targets and expectations that put profit first.

If budgets are set and determined to ensure a certain profit level is achieved, without ensuring the organization has the systems, processes, and people to facilitate it, a downward cycle is perpetuated.

When the systems and processes are lacking, the burden is then put on the people. People will only then take so much abuse and pressure for so long before they head elsewhere, further perpetuating the issues.

Sellers often face significant price pressure when their products are easily comparable to those of their competitors. This is particularly true for companies involved in discrete manufacturing, where products can be clearly defined and distinguished from one another.

Buyers in this market have access to a wide range of cost analysis methods and systems, allowing them to thoroughly evaluate and scrutinize the costs associated with their suppliers' products.

Given the complexity and cost of fully integrating and customizing multiple systems, many businesses are turning to unified software solutions that can handle all their financial, inventory, and quality management needs. These solutions can be easier to implement, require less customization, and may be more cost-effective in the long run.

In general, using modern software like Jedox or Vena can be more cost-effective and require less time than creating a database or data model from scratch. However, it is important to carefully evaluate the specific needs of your business and consider factors such as data complexity, level of automation required, and customization needs before making a decision.

Manufacturing has traditionally been a cornerstone of the US and EU economies. Still, in recent years many companies have chosen to outsource production to China due to lower costs and increased efficiency.

Now, however, there is a growing movement of those same companies bringing operations back home. The decision by several companies to move manufacturing back to the US and EU from China has been met with approval and applause.

Intelligent Costing informs about opportunities and risks by providing information about the costs and performance of the company's current business situation. Not only data of the own company is processed, but additionally data from the competitive environment and the overall economic situation. These measures enable the company to gauge its competitiveness to create timely measures to increase it.

By harnessing the power of data and analytics, businesses of all sizes can better understand their customers' needs, develop innovative products and services that meet these needs, drive process improvements, and maximize profits. Managers and leaders can finally understand the cost and profitability of their entire organization and make better decisions.

 Want to learn more? Let’s chat! I can share more about what FP&A software does and help you find the right tool for your organization.

As controllers and finance professionals begin the journey to a new controllership, it is crucial to understand that the process will likely require significant investments of resources and time.

Organizations must consider technological, processes, people, and organizational design changes. For example, they may need to invest in automation and analytics capabilities and look at ways to optimize costs and increase performance visibility.

Manufacturers can quickly become overwhelmed when trying to sort through the numerous software solutions available for Financial Planning & Analysis. With opportunities in all price ranges and with varying levels of complexity, it is understandable why the FP&A software landscape has become confusing.

When analyzing a potential purchase of a manufacturing firm, it is critical to go beyond reviewing the opportunity off on strictly financial and freely available information.

Instead, buyers must get past spreadsheets to see if the business can be translated into increased value or higher risks within their portfolio. Making these explorations early in the review process allows buyers to come up with a more accurate evaluation of a manufacturing firm before making long-term investments.

The 1st of the New Year is approaching quickly, which means only one thing for many cost accountants and manufacturers- time to switch or “roll over” standards to the latest version.

Goodbye, 2022- Hello, 2023!

While the rest of the world celebrates and relaxes, this is a nerve-racking part of the year; ensuring that the standard costs are calculated correctly, approved, and implemented across all systems and reporting tools is strenuous.

Making the challenge even more difficult is the fact that standard costs can typically only be changed once per month- this means you have exactly one shot at getting everything right. And typically doing this in the late hours of 1/1/2023.

Throughout my corporate career, I've spent 10+ years working for 7 organizations, all in manufacturing. As I rose from humble cost accountant to manager to director, I have had a rare view of each organization's costing and product profitability. For most of these organizations, there was typically a problem to solve, and unknown "profit sinks" no one could quite explain or resolve.

Too many businesses only prioritize top-line expansion. Smart business owners know that concentrating on margins is frequently the simplest way to increase profits.

However, your business must be profitable for you to serve your customers, pay your employees, and reward your investors (whether they are you or outside investors). Your margins determine profitability.

Many individuals believe that production and manufacturing are interchangeable terms. As a result, while discussing business creation procedures, both phrases are frequently used interchangeably. Production and manufacturing share certain basics, yet they are two different processes. So what precisely separates production from manufacturing?