An aluminum fabrication shop with 34 employees won seven big custom jobs last year. The owner was happy because his spreadsheet said those jobs carried a 38 percent profit margin. When year-end came, the bank statement told a different story — actual profit was closer to 12 percent.
He had no idea where the 26 points went. That is exactly the problem ERP Consulting gets called in to solve.
Three customers left, and the fourth cut their order in half
The investigation started with the seven job folders. The ERP Consulting team sat with the production supervisor and rebuilt the cost of each job from the shop floor up. What they found was not one big mistake — it was twenty small ones that nobody had a way to see.
The biggest surprise was material. The estimator priced aluminum at the market rate from six months earlier, but the shop bought a lot of it on short notice from a local supplier at a 14 percent premium. Rework was the second surprise: 740 hours of rework were charged to “general overhead” instead of to the jobs that caused them. When 740 hours disappear into overhead, every job looks more profitable than it really is.
The fix: charge every hour to a job, and review costs before the job closes
The changes were surprisingly simple. The ERP Consulting team installed three rules that took effect on a Monday morning.
- Every employee writes a job number on their timecard at the start of each day — including the owner and the office manager, so no hour hides in overhead.
- Every material purchase gets linked to a job number the moment the purchase order goes out, so pricing gaps surface while you can still react.
- Every Thursday, the estimator, the supervisor, and the owner compare actual costs to the estimate on every open job and decide on the spot what to do.
In nine weeks, the system produced something the owner had never seen: a true profit number per job, while the job was still running, not three months after it shipped. The last two jobs of the year came in at 31 percent and 29 percent margin. Not as good as the fake 38 percent, but real.
Run this test on your own numbers
Pull your last three completed jobs and ask three questions. Did every pound of material get traced to a job? Did every hour of labor get charged somewhere specific? Did anyone compare actual costs to the estimate at the moment the job closed? If the answer to any of these is “no,” your profit number is fiction.
ERP Consulting can show you what the real number is. Start with one job folder this afternoon — pick the smallest one you have and rebuild its cost line by line. The gap between what you think you made and what you actually made is the size of your problem, and your first fix is free.