By Stephen Bullard, Marine Consultant and Sales Director at PierVantage
In this blog post, I wanted to share with you something I get very passionate about when I travel around the country meeting with Boatyard and Boat Building professionals. Those of you in the business who have met me or have heard me give a presentation know I like to talk about why technology is important and how it helps you run your complex business.
When I decided 10 years ago to leave the management a boatyard for the marine software sales business, many of my close marine friends asked me “why software, Stephen?” One owner said, “You’re a boatyard guy just like us. Software? I just don’t get it?”
I switched careers to software sales because I felt there was a better way to manage this business. I was very interested in the new technology that was being developed for our industry. I wanted to be a part of introducing it to hard working people, like you, who could benefit from it and make your lives easier.
Below are five points I wanted to share with you as I thought through the positive impact I see business management technology playing in our industry today. I hope you enjoy —
One of my favorite things to do when I visit a facility is to get a tour of their stock room. Walking through, or sometimes tripping through, a stockroom gives me immediate insight into how organized a business is. If a stockroom is disorganized without noticeable checkout processes in place, I know there are significant dollars that are not hitting the bottom line.
I believe inventory is hard enough to manage with an end-to-end solution in place, but, without one, is a complete nightmare. Boatyards and Boat Builders heavily utilize special orders for their projects. Tracking hundreds, even thousands, of special orders manually is a laborious process that leads to materials not getting posted to the proper job or not getting posted at all. Furthermore, being able to fully understand your physical inventory, knowing when to reorder at low thresholds, or removing infrequently used items from inventory altogether are all important things to consider to keep carrying costs low.
As business management technology platform will help inventory and purchasing managers by allowing them to be more efficient, concentrate on other more important tasks and drop more money to the bottom line.
As a Boatyard Manager, I spent massive amounts of time gathering information from different sources to report on operational efficiencies. The information was subsequently used by project managers, purchasing managers, controllers, and the owners to make timely and informative business decisions. There were times, however, that we were so busy that I just could not find the time to pull the information together. Management resorted to “best guess” decisions without any data to support the estimates. At times they were right, but more often than not, they were wrong. Inaccurate data led to flawed decisions, which negatively impacted the company and, ultimately, the customer.
I always tell people that if I had an end-to-end business management system when I was running a boatyard, I would be much closer to retirement by now.
New business management systems in the market let you run reports in seconds, not hours or even days. They help you and your team make real-time decisions with real-time data. They enable you to be pro-active instead of re-active in managing operations. They let you analyze real data, not estimated numbers.
3. Change Orders
When running large projects in my career, one of the many challenges was tracking change orders. Change orders can come from the project managers, the owner or from other unforeseen circumstances for which were not accounted. It is on a very rare occasion that a refit or a build goes through its life-cycle without clients requesting additional upgrades or changes to the original contract.
Having an integrated process in place to make sure that all change orders are properly documented so project managers, clients, and billing managers have a full understanding of all change orders, as well as the financial impact, is key to customer satisfaction. Plus, it ensures that you are getting paid for 100% of the work completed on the project.
Chances are you and your team are using Excel. If you are managing change orders in Excel, which is not linked to all of your daily operational activities, you run the risk of going over budget on a job. Unfortunately, this may not be realized it until the work is completed and the bill is sent to the customer. You know how that story ends — typically with a phone call, an upset customer, and a write-off. This repeated mistake can cost you tens of thousands each year. Fortunately, it can be avoided by having the right system/process in place.
Today’s business management software lets you easily track change orders in real time. These systems let you view the status of a particular job or all jobs quickly and painlessly. Most importantly, adjustments to the project can be approved by the customer and you get paid for all of your work.
4. Progress Billing
When a new company engages with me to look at their business process, one of the questions I ask is if they are currently utilizing a progress billing process for their projects. Most folks say, “No, but if it was easier, we would…”
I feel every business needs to protect their cash flow and bill at a pre-determined time frame that both you and the customer agree upon before the project begins. Actual Progress Billing is nearly impossible without an end-to-end management solution. To keep cash flow positive as they progress through a project, most companies using multiple platforms rely on “milestone deposits” – getting paid upon the completion of each phase of the project. This billing method is fine from a cash flow perspective. However, if you are not billing on a regular basis, you will not have a true understanding of where you stand on the project at any given time. Waiting until the end of a project to finally bill a customer will certainly leave behind many discrepancies with labor and material postings. It may also leave you uncertain of the overall project profit margin. Moreover, if you are not progress billing, it is virtually impossible to keep track of the true revenue earned for the months that project exists.
The absence of an integrated business management system makes the billing process a very time-consuming and tedious process. Often in my travels, when this topic comes up, the business owner will turn to his pile of manila folders on the top of an adjacent desk and nervously laugh, follow with a sigh, then throw his/her hands up in the air and indicate they need to catch up on approving invoices over the weekend. Make sure billing functionality is integrated into whatever software system you decide to purchase for your business.
5. Work in Progress (WIP)
I find that a large percentage of facilities I visit have no concept of Work In Progress (WIP). If you are utilizing multiple platforms to manage your business, chances are that you do not know what your Work In Progress (WIP) is at any given time.
By definition, WIP is billable time and expenses that have not yet been billed on a client invoice. It is work that is already completed, or expenses already incurred, but is in the progress of being billed. WIP provides an additional piece of information for project managers to evaluate the progress of their projects. To effectively manage a project’s estimate/budget, project managers must know what has been billed and what is available to bill (WIP). Project managers can utilize this information to proactively manage a project’s budget, help guide billing, and help identify any potential overruns. An end-to-end solution lets you run reports on WIP, giving your project managers insight into this very important operational metric.