Manufacturing accounting software is often called MRP software (manufacturing resource planning), or ERP software (enterprise resource planning). This software does much more than just producing financial information, and is much more complicated than normal accounting software.
MRP/ERP software can be a
complete enterprise wide software
that collects, stores and reports information for the following
departments:
The materials and
engineering departments will maintain the
bill of materials for every part that is manufactured. The system
tracks and
moves materials at every stage of the manufacturing process, along with
labor
and burden costs.
The bill of material
(BOM) will include each physical part used in the
final
product, labor used, overhead used, packing materials,
etc. The MRP system
captures each step in the manufacturing process occurs, as
more materials,
labor, etc are added to the product, until the product is complete and
then
sold.
Inventory transactions occur in the system when raw materials are
received,
production occurs, product is transferred to finished goods, and the
product is
sold. The MRP system will report inventory quantities and valuations as
raw
material inventory, WIP (work in process) inventory, and finished goods
inventory. The system is also capable of making adjustments to the
inventory
for cycle counts, scrap product, etc.
Purchasing and sales will maintain vendor and customer information in
the
system, along with cost and price information. Purchase orders can be
written
and maintained here as well.
The finance department will use the system for invoicing and payables,
as well
as producing many cost and financial reports from the database of
information
available.
The finance department will also maintain and report product revenue
and
costing. A standard cost will be used to compare to the current cost of
parts
to aid in continuous improvement activities, inflation reporting, and
profit
reports.
The MRP/ERP system
is very complex and requires a large amount of
capital to
purchase and implement. Often, the purchase of the software is the
smaller
amount, as implementation should take as long as needed to be certain
that when
the system goes live it does so with few or no issues. Implementation
usually
includes consultants, programmers and software specialists.
The more common manufacturing accounting software is SAP, Mfg Pro or
QAD, etc.
A
successful launch of the software will allow the company to control and
improve
its processes.
A successful
launch should be the main objective when thinking about adding
manufacturing accounting software to your business. Be sure that every
possible
scenario is worked through in testing before the launch. Champions from
every
discipline must be given time away from their normal work duties to be
part of
the launch team.