Product category:
Production costing and estimating
News Release from: Cim Solutions | Subject: QuoteCam estimating software
Edited by the Manufacturingtalk Editorial
Team on 18 April 2008
Machine shop quoting faster and more
accurate
Software allows a small business owner to see the 'true picture' of exactly what it costs to run a business and therefore include these incremental costs in his pricing structure.
Cim Solutions in Australia said that probably the most common complaint heard from small to medium sized engineering companies is that 'the shop is always busy but we just don't seem to make any money', When looking at costs, what everyone sees straight away are the machine tools But what about the tooling? Tool holders are needed for every cutting tool, collet chucks, and boring bars, drills, reamers the list goes on and on
This article was originally published on Manufacturingtalk on 17 Feb 2004 at 8.00am (UK)
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And then there are the overheads like electricity, rent, rates, petrol and diesel, and levies, etc.
Those machine tools don't run themselves so there are substantial labour costs involved in running any machine shop.
* Overhead burden - the smaller business that finds it hard to keep track of such costs and in almost every case the business owner has no real idea of the extent of the problem and so it's never properly explored.
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The result being, that for every Euro of 'profit' made from each job maybe as much as 90 cents could be spent on paying overheads.
Most machine shop owners invariably calculate profits on isolated aspects of the process, said Cim Solutions to manufacturingtalk.
For instance they will establish their own material costs then add a margin to that and add a profit margin on labour by simply marking up the hourly rate they pay a tradesman or machine operator.
This method simply gives the impression that you are making money as it does not take into account the costs associated with all aspects of the business.
Therefore Cim Solutions believe that the reason these companies are busy with work but never actually manage to turn a profit is simply that they do not take all their manufacturing costs into account when quoting for work.
Up until now that would have meant hours of record keeping and dozens of computer spreadsheets but now a new and inexpensive software program that's been written and developed in Australia called QuoteCam has been released.
The software is claimed to easily allow the business owner to see exactly what the real cost of manufacture is and therefore to know precisely how much profit will be generated.
* Work centre rates - QuoteCam works totally on a Cost Basis.
All the data entered refers to the cost of doing business such as machine rates, labour rates, materials purchases, etc.
Probably the most common mistake being made by so many companies is that they simply do not know exactly what the cost of owning and operating a machine tool is.
In most cases they make an educated guess, said Cim Solutions, but in today's highly competitive world that's simply not good enough.
QuoteCam offers a novel Work Centre Rates calculator, which takes all aspects of machine tool costs into account such as finance charges, running costs, future value and maintenance charges.
It even differentiates for machines bought cash or those financed and the results of this analysis can be surprising.
Cim Solutions said that its QuoteCam is the first engineering software of its kind to allow small business to easily see how much impact the companies' overheads have on the expected profit from any particular job.
It has a sophisticated but very easy to use Overhead Burden rate calculator which correlates the overhead costs down to a simple hourly rate which is automatically included in the cost when quoting.
* Machining times - estimating machining time is often time consuming and arduous but it's absolutely essential that it's done correctly.
This is another area that small business owners simply do not have the time to do properly.
It's so common to hear that a process for which only a few minutes was quoted for ended up taking hours and you know that no-one makes money when that happens.
QuoteCam offers a large range of machine process simulators for milling, turning, etc, which accurately predicts exactly how long the machining will take.
It does this with the help of a large library of built in material types complete with feed and speed information.
The user simply answers a few basic questions and gets realistic answers in no time.
* Sales price analyser - all types of process are catered for even sub-contract costs and purchases so when you have completed your quote in just a few minutes you can be confident that you have a clear picture of your true costs before one begins calculating profits.
At this stage once again Cim Solutions said QuoteCam has a totally novel approach.
It has a sales price analyser in the form of a simple graph.
The graph visually displays the cost of each component in a batch and displays the cost per par and per batch it also calculates your selling price based on your expected profit margin or mark-up.
But most useful of all it allows you to perform 'what if' scenarios.
For example, it will instantly recalculate the entire batch costs if you change the batch size.
If you are asked to quote for 100 pieces but are then offered an order for only 50 pieces, QuoteCam will give you a new selling price instantly that will preserve your initial margin requirements.
Every business owner should know that quoting for work is at the very core of the success or failure of your business and so it's essential that it done correctly.
Good quoting doesn't just mean that you get the work, It's no good getting work that simply keeps you busy but does not make profit or even worse ends up costing you money.
No, good quoting is about knowing exactly what your costs are and knowing precisely what's worth doing and what's not.
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