Guest blog from the Head Beancounter
Bugs (CEO, cofounder, and head beancounter), me and most of the HK staff, have spent the past few weeks tracking down every “thingy and whats-it” that we sell, or use to put build our espresso machines.
We've built a system that takes Bugs' “bill of materials” and deducts (in real time) every time we build a machine. For every machine we build https://decentespresso.com/batches we know what part we used and what it cost. Every model, every revision, gets a slightly different BOM. At the end of our year (April 1) we have to figure out why some part is “+300 overstock” or some other is “-1000 over-taken”. After the annual Audit, we're not allowed to adjust anything, so this is our chance to figure things out, before it's too late.
Bugs is quite proud of her system, and wanted to share what it takes to run a “tight ship” of a manufacturing company.
This is her “guest blog” :
Countdown
31st March is stock take day for Decent. Once a year a Hong Kong auditor arrives “armed” with a clipboard early in the morning and picks random SKUs (Stock Keeping Unit) from our shelves and has us count them in front of them. The quantity has to match the quantity that we claim to have on the books in the accounting system.
For a manufacturing company there are normally a lot of different SKUs to keep track of, for us it's actually pretty modest at 378, but that's because screws, clips, o-rings and small cables are classified as non-inventory and don't need to be counted in an accounting system. We have 465 different types of those little tiny things.
Maintaining all previous versions of machines means we can't write off any old stock either, we have to store it and track it and most importantly know where to find it when a V1.0 machine comes back in the shop for repair so a lot of factory space is dedicated to keeping parts so that previous machines can be kept up and running as well.
We started off really badly at keeping track of things, our first year we failed the stock take, no one really knew where all the boxes were, nothing was labelled correctly with a SKU, and we didn't have a good way of getting the right inventory into the accounting system (the BOM). Year by year we slowly got better, boxes were labelled and organised, floor maps created to show locations, the BOM was built and we corrected and corrected it and little by little we started getting better at working out how many things and which things it takes to build the 73 different versions past and present of Decent Espresso machines.
This year everyone worked so hard to prepare for the stock take, rummaging under desks, labelling everything with the correct SKU, writing off the bad defective stock and yes again making small corrections to the BOM. The auditor arrived and randomly picked 81 different SKUs from the shelves a total of 83,030 individual pieces had to be counted. And we were out by……..1 piece.
This week the staff will get some time off and eat a lot of cake as thanks for their efforts but after that it's time to work out just how we can make it even easier and more accurate to get the numbers right and maybe next year we might get to that elusive 0.
- Bugs Harpley, CEO Decent Espresso
Updated 2023/04/06