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This article is the second in a series of articles dealing with the broad subject of information management. The first was "Computer Integrated Manufacturing," and the next will be an article written by Jim Phillips. Jim is the information manager for Southeastern Die. His article will be written from the perspective of a larger company. I feel strongly that this is an important topic for our industry, and my discussions with individual operations throughout North America have confirmed that managing information is essential for growth. As a matter of fact, as I was preparing for this interview I received a call from a company asking for input regarding their decision to install a job costing and estimating system. I believe this account of the experiences of ABC Die Company will be helpful for anyone considering such a move.

Mike and Kim Moravec are the owners of ABC Die Company in Denver Colorado. They recently decided to design and install a shop floor data collection and information management system linked to their existing accounting system. They looked at possible "canned" or "off the shelf" software packages, but after careful consideration, decided to contract with a professional software programming company to have a custom program written. The estimates they received for the custom programming ranged from about $3000.00 to about $10,000.00. The system includes the following functions:

Inputs:

Reports:

Future plans include quoting, (currently done manually) numerous additional reports and forms, and perhaps a bar code system to make data collection even easier.
This is not a system they are selling to other companies, it was developed for ABC’s use. The interview is with Kim Moravec. Kim has a background in accounting software and worked with the programming company to develop the system.

Cutting Edge: "Why did you decide to install a shop floor data collection and information management system?"

Kim: "First, we didn’t have any way to keep track of what our jobs were actually costing us. We could cost an individual job here and there, but we wanted to be able to see what each "type" of job cost. We do a variety of different types of tooling, including two point, three point, and rotary. We serve a variety of industries, including Folding Carton converters, Corrugated converters, and Printing trade converters. We wanted to check our quoting system against all these different job types to determine if we were quoting accurately."

Cutting Edge: "Do you think a lot of diemaking companies really don’t know how much the individual jobs are costing them?"

Kim: "I know we didn’t. It’s impossible to sit down and cost the jobs on an individual basis, it just takes too much time. You can look at one job, or another, and it’s always nice to know if you made or lost money on that job, but that can’t help you to analyze different types of jobs to see if you need to adjust, say, two point pricing. In order to evaluate properly, you need the information in a format that allows you to see the big picture. Unless they have a system to collect the information and generate reports, I would say that most companies probably do not know how much the jobs are costing."

Cutting Edge: "Would you say this feedback to your estimating system was the most important reason ABC decided to install this system?"

Kim: "It was certainly one of the main ones. Another very important area was employee productivity. This information allows us to check estimated times against actual times. It also allows us to show new employees how they are improving. Our compensation system rewards employees that constantly improve. We use the data from the system to base raises for our employees."

Cutting Edge: "You decided to contract with a programming company to write a custom system. Why did you take this approach?"

Kim: "Well, we really only saw four options. Buy an existing "canned system" for job costing and estimating, write it myself, bring someone "in house" as an employee to write a custom system and manage our information, or to contract with a programming firm. We didn’t see anything "canned" that we felt met our needs perfectly. I started using a database program (Microsoft Access) and started to customize it for our needs, but realized it would take more time to finish than I was willing to spend. We didn’t feel we could justify a dedicated employee just to manage this area of the business. After all this we decided that it was probably best to contract with a company to write the system.  I knew what we wanted, but just didn’t have time to do it myself."

Cutting Edge: "You knew what you wanted in this system before you called the programming company. Was that important?"

Kim: "It was critical. I had documented what we wanted from the software, and even with this written information, it was still difficult to get the programmer to understand fully what we wanted. They had a tendency to assume we wanted things we really didn’t want and tried to make the software more complicated that it needed to be. Because we knew what we wanted, we were able to get the program written for a lot less than it would have cost if we had not done so much preparation ahead of time."

Cutting Edge: "So the procedure you followed was to write a set of requirement specifications for the software, and submit them to the programmer."

Kim: "Yes. This is important. You need to know what data you want to track, and what is not important to you. Early on we thought we knew what kind of data we needed to track, but when we thought about what kind of reports we needed, we realized that we had to track data we didn’t consider at first. It helps to consider all these things in the beginning, and go back and forth between the data collected and the reports needed. As you do, you realize, OOPS, we don’t have the data necessary to generate that report."

Kim: "Yes. We wanted something easy to use, windows based, with very simple data entry screens. We didn’t want our employees to have to spend a lot of time entering information that was not important to us, or moving between multiple screens in order to enter the information."

Cutting Edge: "How did you find the company that wrote the software for you?

Kim: "The yellow pages, and we checked their references. If you want to link to accounting functions, it’s important to find a company that understands accounting principles. They wrote the software for us as an extension to a programmable database program."

Cutting Edge: "How long did it take for the programming company to write this system for you?"

Kim: "That depends on whether you include the time we spent deciding what we wanted. We have been thinking about what we needed for years. But from the first meeting with the software engineer to the system as it is today took about three months. The programmer estimated a month."

Cutting Edge: "And how much time have you personally invested in developing the system?"

Kim: "About 30 hours. This included meeting with the programmers after the initial program was written, modifying the reports and input screens, and debugging the system.  If I had it to do over again I would have insisted on more frequent meetings early on in the process. Many of the functions needed to be changed, some of the reports were not what we wanted, and the input screens were too complex."

Cutting Edge: "And this didn’t include time you spent planning and writing requirement specs."

Kim: "No. I spent probably 70 hours preparing for the first meeting with the programmers."

Cutting Edge: "So, the big question; You spent a substantial amount of money as well as over 100 hours of personal time planning and executing this plan, and endured numerous meetings with the software programmers debugging and discussing the program. Was it worth it?"

Kim: "Oh yes! One thing we realized during the first set of reports was that we needed to raise prices on small dies with punches. That information alone would have been worth the effort, but the system has done much more than that. The Job costing information has helped us to check our estimating accuracy on all types of jobs. The employee productivity information helps us to encourage the new employees by showing them their progress in black and white. Our production scheduling used to be done by hand, and the program saves us considerable time on this every day. The inventory control has helped to prevent us running out of materials and automatically generates a purchase order for special parts such as punches."

Cutting Edge: "What advice would you give someone who wants to repeat what ABC did?"

Kim: "The most important points are:

1. Plan what you want in a system ahead of time. It’s a good idea to plan the system in stages in order to check the progress, and to make sure the company you have chosen is working out.
2. Write it down. Provide the company who is doing the programming with good requirement specifications, as well as sample reports of each type you need.
3. Get a written proposal from the company outlining what is included in the contract. Make sure that everything you want is included, and that any additional costs for changes to the specifications are spelled out. Make sure that source code, documentation, and any training provided are included in the contract.
4. Make sure the company you choose understands accounting principles and is qualified to write the kind of system you want. Check references.
5. Insist on meeting with the company early on in the process for progress reports to insure that the direction the programmer is taking is correct. Don’t wait until the program is finished and then start making changes or corrections.
6. Insist that everything included in the contract is finished to your satisfaction at the price quoted.
7. You may decide to make changes during the process or when the program is finished. This can cause substantial cost increases. Try to limit changes during the project.
8. Don’t get discouraged. Our programmers brought over the first (alpha) version of the software and it was full of bugs. In order for them to debug and get the system where it is today it took maybe 30 additional trips to our facility while we were using the software."

In Conclusion:

I have often been asked "Why doesn’t someone come up with a canned or "off the shelf" software package to address this need in our industry. A single software package or system that would meet the information management needs of anyone in our industry would be impossible. I have had the privilege of being invited into hundreds of diemaking and diecutting operations around the world. Each one is different. So most operations choose to write a custom program. This kind of project requires a commitment from everyone involved, and is not a decision that should be entered into lightly. ABC made a hard decision to ignore the urgent (but less important) things that tried to steal their time in order to do something that was important for their business.

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