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Process Mfg for high tech company

I'm considering helping a start up that has a combination of process manufacturing at the front end(think of ingredients, batch tracking, changing the recipe as you go, etc.), which results in a large roll of "stuff", and then moves into discrete (think taking this large roll, and cutting it into tiny parts and then put these parts into modules). I have worked some with a semiconductor company where they did process from wafer to finished chip, but in this case, we're talking more like an analogy to a factory that would actually build the wafer first. They're at ground zero from an ERP standpoint, and FP&A modeling is probably challenged - i.e., how far do you go to get accurate loaded costs in a factory that is only running R&D lots and building prototype modules. Any ideas on 1 - ERP solutions tailored to process-->discrete evolution of mfg steps, some folks have talked up SAGE MAS products and 2 - challenges and solutions to FP&A modeling of the business -how far to take it, etc. and any other comments welcome.

Answers

Mark Stokes
Title: CFO
Company: Private
(CFO, Private) |

Jeff:

1)Take a look at Microsoft Dynamics. They purchased Great Plains and Navision, both mid-market acct'g packages (GP lower mid-market, Navision higher mid-market) and have made a real usability push over the past couple of years. I have not used them for mfg this decade but have been pitched on both products and they look fairly compelling http://www.microsoft.com/dynamics/en/us/industries/manufacturing.aspx. That said, no first hand experience with the post-MS packages. I have extensive experience with Oracle Mfg but would not recommend until you have the budget for a full-time crew of developers and project analysts to adapt it and keep it humming.

I have also seen demos of Netsuite and came very close last year to getting it. It was not for a mfg business, but the rest of the package was quite intriguing http://www.netsuite.com/portal/industries/manufacturing.shtml. There is always Quickbooks, but there was a QB Mfg thread on PF a while back and not much was known about it. I am a big fan of QB for young companies but in this case, with a BOM and all of the moving parts associated with manufacturing I just don't know if they've got what it takes. But what the heck, have them pitch you and you'll learn something regardless.

2) You know how it goes with modeling; no matter what you do, it will be wrong :). However, just to get a feel for the fundamentals of your economics i would think you want to do a full set of financials all the way through to cash. Then hook up scenarios (using Excel data tables) to your primary revenue and cost inputs to get a sensitivity/scenario analysis. I have some models I could send your way if you need (although they probably need a few hours of cleanup/redacting). I find that if you don't go right down to the BOM line item and through to your B/S and C/F you will miss critical items. Inventory at every stage (including E&O) will be critical for this company as well as receivables from the mega-companies you will most likely sell to. Be conservative on both fronts and you won't be sorry.

That said, keep it in Excel. I have yet to find software that comes close to it for power and flexibility. When your company is big, knows its operations and things have settled down a bit you can look at all of the budgeting/forecasting and BI tools you like. But prior to that quiescence I would not bother.

Topic Expert
Jeff Chase
Title: Advisory CFO
Company: Hazelcast, Juicebox Energy, and Social I..
(Advisory CFO, Hazelcast, Juicebox Energy, and Social Inertia ) |

Thanks Mark. I'm a fan of GP Dynamics, I've implemented it, and gone reasonably deep into NAV. Both are discrete pmfg based products. Dynamics plays with Vicinity add in which is a batch/formula mfg add in module. The other player that comes up is SAGE MAS 500 with Escape Velocity Systems module. Netsuite i've looked at has little to no mfg capability. Agree on your FP&A pointers, thanks much. If you know any CFOs that deal in formula type mfg let me know, thanks. This will be an interesting worksheet due to the UOM conversions from the batch of stuff to modules, etc.../jeff

Irv Williamson
Title: Owner
Company: Growth Guidance Solutions
LinkedIn Profile
(Owner, Growth Guidance Solutions) |

Startups usually don't have the financial or technical resources for GP or NetSuit. Look for a QuickBooks solution using a third party addIn app. I think you'll find process manufacturing apps that can get the job done and still be affordable for a startup.

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