In the face of ever tightening margins, South Island engineering company I-Trans New Zealand is using business software from specialist small-to-medium enterprise provider Accredo, to better monitor production costs and maximise profit.
From its Christchurch manufacturing plant I-Trans makes and distributes industrial transmission components. The 20-strong company machines gears, sprockets and other precision parts, which it supplies to racing car engineers and to other specialised industries. I-Trans also imports transmission components, which it sells onto retailers from its two wholesale branches - in Auckland and Christchurch.
When the current owners took over the company in 2000 they went shopping for a new financial software system that better matched the job-orientated nature of I-Trans' business.
“We inherited disparate systems and we knew there were advantages to be made in having all our information on one database,” says I-Trans office manager Theo van Vuuren. “But even more importantly, we were keen to find a system in which job costing was an integral component. Back then MYOB did not provide this functionality, but luckily we found a local company that did.”
I-Trans search brought them to the door of independent software vendor, Neal Irwin of AFI Systems. As a financial information specialist with experience of accounting in job costing, Irwin was quick to recommend Accredo.
“We specialise in job costing implementations and have a strong focus on customers in the manufacturing space,” says Irwin. “For small-to-medium businesses, Accredo’s job costing is the best value for money on the market. It gives customers the power to quickly and easily create quotes and monitor material costs for each job - two key features for a manufacturer such as I-Trans.
“It is also a flexible platform which allows experienced resellers to customise functionality to better suit the individual needs of its customers.”
Irwin installed Profax7 (an earlier version of Accredo) and that initial two user system has now grown in steps to become a multi-faceted Accredo Saturn suite running on a server with eight users, two of whom are remote, based at I-Trans Otahuhu branch.
Van Vuuren says I-Trans' work typically consists of a mix of both short and long run batched jobs, which requires costs to be updated in very short time-frames as most work leaves with a priced invoice.
“To create an accurate quote you need to know who is available to do the work and, based on timesheets of similar jobs done in the past, estimate the time it would take the workshop to finish the job.
“You also need to have an up-to-date record of the materials you have to hand and know the capacity of your equipment. Prior to using Accredo all this information lived in a variety of places and pulling it all together was an intensive manual task.”
Now thanks to Accredo’s Job Costing module this information is available in one place and can be accessed quickly by a range of users.
“All the information on previous jobs is stored on the system and relevant information such as timesheets can be transferred directly into the Job Costing module,” van Vuuren says. “We are now more efficient at administering the work-flow thanks to the availability of timely information.
“We use Accredo to look up historic jobs in order to gain a better like-for-like analysis of how long an order will take to complete. This results in more accurate quoting and allows us to gain insights into the profitability of certain jobs.”
Using information stored in the Job Costing module, I-Trans keeps close tabs on material costs and calculates the percentage of gross profit provided by each job.
At month end I-Trans runs a standard suite of reports updating management on progress do date. This information is filed and easily accessible for future reference. It can also be easily downloaded into spreadsheets and manipulated to produce one-off reports.
“Previously this type of information lived in people’s heads, but now we have captured that institutional knowledge and can serve it up in different ways to suit the needs of our GM, engineering and sales managers. The key thing is that the information is now in one place and there is one true set of data from which each is working from.”
Using Accredo’s report designer, Irwin has also designed a suite of custom reports that allows I-Trans to breakdown the efficiency rate of individual workshop operations.
Van Vuuren says this type of analysis of the data held within the Job Costing module is allowing I-Trans to identify the type of work that is most financially viable for the company.
“It has already shown us that we have been concentrating on low profitability work and that we need to refocus on higher value jobs. In a competitive market you continually need to reassess the cost effectiveness of each type of job and look for work with higher margins.”
Van Vuuren says the Accredo channel model, which matches an Accredo-approved reseller to every Accredo customer, provides an extra layer of support, which as a small business provides welcome back-up.
“Knowing that help from Neal and his team is only a phone call away provides us with a good level of comfort. We are not IT specialists and cannot afford a full-time IT person. Neal knows the Accredo system backwards and when customisations need to be done he takes care of it.”
It is a relationship that van Vuuren says has allowed the company to make continuous improvements. “We believe we have improved the accuracy of our job costing and have done so in a cost effective manner. In a competitive market this type of efficiency drive will become more crucial to the ongoing success of the business.”