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Decisions/Decisions – How to reach your Goal of Increased Profitability in Visual ERP?

I am sure you are always looking for ways to make more money for your company. Did you know that Visual has multiple reports to help you assess the profitability of your customers and parts?

The two key reports are the Gross Profit Report under the Engineering/Manufacturing menu and the other is Gross Profit from Post Manufacturing Menu.

  • Gross Profit from Eng./Mfg. – pulls from Inventory_Trans. The sales values are converted if non-system currency uses rate from Customer Order.
  • Gross Profit from Post Mfg. Journals – is based on the Postings to the General Ledger. If sales are in non-system currency the exchange rate in effect at the time of the sale is used.

Since the data is being pulled from 2 different sets of tables, the two reports may differ on a month-to-month basis. Reasons for differences:

  • Partially received work orders costs will change over time. For example, part was shipped last month and Visual’s costing valued the receipt at $1,000. As the work order is completed, the final cost of the work order is used to update the Inventory Transaction value. So, it might show as 1,044. The Eng./Mfg. report for last month will change but the Post Manufacturing report for last month stays the same. The extra $44 is picked up in the current month.
  • Costs are added to a work order after completion:
    • Labour Ticket to closed work order.
    • Material cost changes as AP invoice may differ from PO.
    • AP invoice charged directly to work order after work order closed.
    • Negative inventory is fixed, thus changing costs of issues.

In this case, the costs get reported in Post Manufacturing Journals for the current month.

Once an order is completed, then the 2 reports will agree.

Which one to use? If you want to agree to financial statements, then Post Mfg. Journals would be the one. The Eng./Mfg. is useful as all costs are reported on the 1 inventory transaction line. However, if you run the report for this month and then rerun it again a couple of months later, the costs may change. I wouldn’t expect the differences to be significant but it can cause questions from the users.

One thing in favour of the Gross Profit from Engineering/Manufacturing is that it provides some extra information: quantity shipped, packlist ID and the option to show the estimated costs. I find the last one extremely helpful for looking for potential problems. Also, this report can be run for any time period. Do you want to see a week or a day? It is your choice. On the other hand, the Gross Profit Report from Post Manufacturing Journals, provides the total profitability of the entire order. All on one line. But keep in mind, when this report is run it shows the results for the entire month.

Such decisions. Which one to use? The real answer should be based on the users of the reports and how soon after month-end are you running them.

Oh, not that I haven’t given you enough options. There is 1 other report. You could look at the Actual Throughput from the Throughput window. This is based on the concepts from the book “The Goal” by Eliyahu Goldratt. Throughput is defined as Sales less Direct Costs. The cost shown on this report, as espoused by Eli Goldratt, are material and service costs only. Labour and overhead are considered fixed costs under Throughput Accounting. This one gives the option to copy and paste to Excel. And you can also, look at the Throughput per Resource. If you know your bottleneck, this can be a game changer.

If you have never read The Goal, I would highly recommend it. Even though it was first published 35 years ago, it is still relevant and full of common sense. It’s a text book written as novel. After that, then maybe you will be inspired to have a look at the Throughput Window.