The job cost is a reliable indicator

The job cost is a powerful performance indicator which can be used to match product with their associated costs. It allows the identification of the strengths and weaknesses of a manufacturing process. It helps to identify bottlenecks. It shows the required investments and help in the analysis of the return on investment (ROI) of past investments. The job cost can also help in setting the selling price. Any business and especially the manufacturer should know its job cost to the penny.

 

 

Recently, different types of solutions have been implemented to calculate the job cost. But how many companies use incorrect or partial data that provide only a portion of the information. Many management decisions made are based on incomplete data that threaten the survival of the company. The job cost should be calculated in real time to provide the manager with the information to make decisions to continually improve the profitability and productivity of the organization.

 

 

 

The job cost as a decision tool

The job cost includes the cost of raw materials, direct labor and overhead. This model can be calculated on a spreadsheet when the number of product is rather limited.  But this method holds a number of weaknesses including transcription errors, information that is hard to get and the time required to maintain the spreadsheet.

However, when the production includes several products, made from various raw materials with different routing time and processes, the task becomes increasingly complex. How to allocate the costs of raw materials? How to ensure that staff time is properly assigned to the right finished product? To get the correct job cost, which includes all data, a real time capture of raw materials and employee hours by product or project is essential.

 

The job cost is the main factor that affects profitability

Between 2001 and 2009 gross domestic product (GDP) of Canadian manufacturers decreased by $30,1 billion. The job cost is the main factor affecting the profitability of manufacturers. An integrated ERP that consolidates all data, transactions and updates will provide you the information required to support you in achieving your business goals.

 

 

Caroline Cholette, M.B.A
Director of Business Development
JBM Logic

 

References :

Michel Beaudry, Service d’intervention sur mesure (SIM) :
www.simexperts.com

JBM Logic, INTEGRA e-business :
http://www.jbmlogic.com/emanufacturing_fr.html

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