CHALLENGE: A printing manufacturer had been facing challenges with profitability for some time. While they had great production capabilities and a good reputation, they could not figure out where they were losing money.
The challenge for this company was they didn’t know the cost of their manufacturing operations or if the costing standards used in their software system were accurate or complete.
SOLUTIONS: Our efforts first went into meeting with the client to go over their existing cost data. We worked with the client and supplied a tool that LB Carlson developed to help a company compute the all-inclusive cost of doing business. We worked out a plan with the client to gather all of the appropriate information, and then trained their staff in the functionality of the worksheets, as well as in the fundamentals of maintaining a Budgeted Hourly Rate.
RESULTS: During our study, we found that the client had an ineffective costing system that did not take all of the direct and indirect costs into account, including overtime wages, employee benefits, insurance, shipping, and receiving costs. LB Carlson’s Budgeted Hourly Rate study determined the break-even point of the client’s equipment and services, taking all costs into consideration.The Budgeted Hourly Rate study helped the client determine which jobs they should be attracting and running, vs. which jobs they should be avoiding. Knowing their true costs, it has allowed them to estimate better, price smarter, increase sales, and maximize their profits.
