manufacturing as
a GOvernment
Contractor
Orchestrating Complex
Contracts, Specialized
Products and Dynamic
Supply Networks
TABLE OF CONTENTS
Introduction
3
Project Manufacturing Lifecycle
4
Business Development: Win It
5
Project Initiation: Design It
7
Performance and Delivery: Build It 11
Post Performance and Support: Close It 14
Performance Management: Analyze It
16
Conclusion 18
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Introduction
»» Win It
Navigating Built-to-Order Manufacturing
as a Government Contractor
»» Design It
Built-to-order or demand-driven
manufacturing comes with the territory of
government contracting. Success in this
environment means managing:
•Timely allocation of all job costs
•Accurate prediction of material requirements
These are just few of the questions that
regularly challenge engineers, program
managers, production managers and
accountants. In addition, the high frequency of
change in product, demand and supply requires
constant flexibility in processes, people and
systems.
•Risk of non-compliance and quality assurance
»» Build It
•Real-time production performance metrics
•Tight integration of engineering, production,
program and finance processes
»» Close It
»» Analyze It
3
How much does a business bleed in costs due
to errors and lack of timely project allocation?
What is the risk of not adhering to Materials
Management Accounting Systems (MMAS)
standards? How much off-line number
crunching does it take to uncover true job
costs? What does it take to effectively
integrate engineering changes into the
production environment?
Deltek Costpoint Materials enables materials
estimation, procurement control, materials
handling, production and delivery to the
customer. Whether your business is working
on the prototype or full-scale manufacturing,
being able to handle complex procedures and
unique exceptions from project to project
can ensure higher profitability and stronger
cash flow. Explore this eBook from the lens
of a Manufacturing Lifecycle – winning a bid;
designing project set-ups; building the product;
closing out invoices; and shipping the end product
– and learn how Deltek software uniquely adds
value with each step in the process.
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Introduction
Win It
Design It
Build It
Close It
Analyze It
Conclusion
Business Development:
Win It
»» Ease-of-Access to Past
Performance
»» Collaboration Across Design,
Planning, Production and Finance
»» 360-degree View for Opportunity
Development
»» Facilitating Go-NoGo Proposal
Evaluations
5
< >
Business Development:
Win It
While federal procurement budgets have
tripled in the last two decades, government’s
policy initiatives indicate an increase in
contracting competition. Consequently, this
has meant a noticeable shrinking in contract
size and an increase in competition. To bid and
win aggressively in this environment, Deltek
helps clients employ several key competitive
advantages.
Ease-of-Access to Past Performance:
To win contracts, bidding based on accurate
materials and labor cost predictions become
critical to success. For a fluid and collaborative
representation of all costs for proposal,
Deltek Costpoint creates the Bill of Materials
(BoM) from historical information for similar
Manufacturing Orders (MOs). The parts in the
BoM’s also have all timely direct and indirect
costs allocated from each operation step.
Deltek helps leverage the most current pricing
structure for bids.
Since flexibility is critical, customers define
their own timeframe for pricing and parts
data and can also add any new items to the
proposal BoM as needed.
Collaboration Across Design, Planning,
Production and Finance: To generate the most
accurate proposals, engineers, production
managers and purchasing departments need
one system that coordinates all changes to
design and latest procurement information
into the BoM. Deltek Costpoint imports directly
from CAD design programs to ensure the
latest changes have been incorporated. Vendor
quotes and historical purchasing information
are available to estimate material costs. The
costs used are the standardized “meet or beat”
prices at the time of procurement.
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Win More
Government Contracts:
What You Should Know
Hear from government contracting
experts and get insight into what
you can do to maximize your revenue
by focusing on the opportunities
you’re best positioned to win. Find
out how to increase your win rate
with a concerted, well defined capture
management process and ensure you
respond to the right bids.
View the webcast.
6
< >
Introduction
Win It
Design It
Build It
Close It
Analyze It
Conclusion
360-degree View for Opportunity
Development: With multiple access points
for lead information, Deltek Costpoint
CRM consolidates sources such as INPUT,
FedSources and Centurion to provide contract
teams with the latest opportunities to pursue.
Once opportunities are identified, Deltek also
tracks and analyzes every contact to provide a
360-degree view of customer interactions and
process status.
Facilitating Go-NoGo Proposal Evaluations:
Go-NoGo decisions require bringing together
multiple levels of the organization with access
to in-depth information at your fingertips to
make consistent decisions.
Deltek Costpoint CRM enables collaboration –
including activity and schedule management
– while capturing decision strategy for every
step of the planning process. On a logistical
level, Deltek integrates Microsoft PowerPoint®,
Excel® and Word® in one place to simplify
document management.
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Introduction
Win It
Design It
Build It
Close It
Analyze It
Conclusion
< >
Project Initiation:
Design It
Proper configuration of projects and materials
rules greatly impacts MMAS compliance,
inventory traceability and accurate
information flow across engineering, program
management and production management.
Project Initiation:
Design It
»» “Single Source of Truth” for
Compliance
»» Application of Contract Rules
For Parts and Accounting
Treatments
»» Engineering and Manufacturing
Change Control
»» Material Requirements Planning
Accuracy
»» Scheduling Production Resources
»» Coordinating Sourcing Process
7
“Single Source of Truth” for Compliance: With
a unique Project, Account and Organization
(PAO) structure throughout the system, Deltek
ensures that customers can efficiently comply
with stringent contract requirements.
With the use of a simple inventory
abbreviation, a company can establish the
associated project, department and cost
roll-up for each inventory part. In the case of
borrow/payback transaction, MMAS requires
precise traceability of materials borrowed and
paid back from other projects.
Instead of maintaining physically segregated
inventory, a company can commingle
parts and still maintain compliance with
segregated records of contract identification
(PAO) in Deltek Costpoint. This helps
companies drastically reduce floor space, the
time they spend reporting and their efforts
to maintain compliance.
Deltek Costpoint’s flexible structure
complements the business requirements
for a government contractor’s complex
built-to-order needs. More importantly,
Deltek provides the kind of project,
General Ledger (GL) and job visibility that
closes the loop between accounting and
operations from the moment a project is
awarded through customer delivery.
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Introduction
Win It
Design It
Build It
Close It
Analyze It
Conclusion
Application of Contract Rules for Parts and Accounting Treatments:
An essential part of setting up projects for government contractors
means applying rules upfront. For instance, can they share material or
be in the same netting group? What type of GL activity is expected?
With Deltek Costpoint’s flexibility in governance, customers can
designate inventory based on the following attributes – asset
inventory, project-owned and WIP; project-owned and expensed;
and government or customer furnished (GFM). In the same context,
Deltek’s part master allows flexible configuration of minimum
and maximum quantities based on service level agreement and
customer contracts.
Engineering and Manufacturing Change Control: Tight control
over design changes and traceable approval processes are critical
business requirements, especially for engineer-to-order contractors
that design unique, complex systems. Deltek Costpoint generates
the baseline, creates controls and implements engineering changes
to parts, documents, BoMs and routings through a user-defined
auditable approval process that interfaces with a workflow. This
replaces cumbersome paper-based manual work, and connects
engineers to production managers and program management.
ATK Mission Systems’ Business Transformation Best Practices
Changing from a site-based to a “project-first” approach
required significant shift in thinking and process:
Collaboration Sites: Allowing common access and visibility to
knowledge repository for each project
Employees: Ensuring the right people were involved at the right
place and time in a standard organizational structure, allowing
for easier interaction across sites
Virtual Engineering Community: Iterating multiple design and
manufacturing scenarios quickly in order to achieve the best results
Process Documentation: Integrating all viewpoints into a
single process and capturing best practices to guide all parties
regardless of role
8
Common Tools: Standardizing tools across most sites in areas such
as project management, costing, earned value management, design,
manufacturing simulation, and team collaboration
ATK Mission Systems Executes Projects To Make
Affordable Innovation A Reality – AMR Research
Read about ATK Innovations.
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Introduction
Win It
Design It
Build It
Close It
Analyze It
Conclusion
Material Requirements Planning Accuracy: Executing materials
requirement planning grows in complication with an increase in
production volume and complex products, such as laser systems,
military aircrafts, rescue equipment and unmanned aerial vehicles.
Deltek’s Costpoint MRP module acts as a robust workbench for planners
by generating and tracking planned Manufacturing Orders (MO) and
Purchase Orders (PO) based on independent demands, inventory
status, order quantities and Bill of Material (BoM) information. Planners
further benefit from action messages for new orders and changes to
existing orders based on changes in supply and demand.
Materials Managment Planning
MRP inputs
MRP Processing
MRP Outputs
Charges
Master
Schedules
Order Releases
Pr
Re ima
po ry
rts
Orders
Forecast
Design
Changes
Receipts
Withdrawals
List of
Materials
Inventory
Records
Planned Order
Schedules
MRP
Computer
Secondary
Programs Reports
Exception
Reports
Planning
Reports
Performance
Control
Reports
Inventory
Transactions
source: mcu.edu.tw
9
MRP grows in usefulness while making decisions and tracking
progress of additional jobs, rush jobs, bottlenecks on the shop floor
and overtime requirements.
Scheduling Production Resources: Forecasting production scheduling
helps monitor deviation from plan, in regards to resources. Planners
can lay out anticipated orders and estimate “what-if” scenarios to
make informed decisions on capital investments, rough cut capacity
and material requirements. This reduces overall lead times while
increasing throughput.
Make Informed Decisions on Capital Investments, Labor Requirements and
Resource Allocation with an MRP system
• Actively monitor deviations from the existing materials
and resource plans
• Make informed decisions about impact of additional
jobs, rush jobs, bottlenecks on the floor and overtime
• Reduce lead time while increasing throughput
• Estimate “what-if” scenarios to reschedule
and prioritize orders
• Track planned manufacturing orders and
purchase requisitions
• Provide action messages for planners for
changes in supply and demand
• Generate finite capacity schedules based on the actual
loaded capacity of any given facility
• Make informed decisions capital investments, labor
requirements and resource allocation
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Introduction
Win It
Design It
Build It
Close It
Analyze It
Conclusion
Coordinating Sourcing Process: Project
level data becomes much more critical in
a demand-driven environment with strict
regulations on leveraging materials. Deltek
not only provides project level detail, but also
streamlines the accounting and operations
side throughout the lifecycle. Deltek Costpoint
supports standard purchase orders, blanket
orders/releases and subcontract purchase
orders. Electronic requisition approval
workflow with built-in dollar limits and project
assignment expedites change orders, while
still maintaining audit trails. Flexible two-way
and three-way match accounting options are
also available for accounting treatment of
materials received.
“There aren’t a lot of companies that
we would want to rely on as we do
Deltek. But when you partner with
Deltek to run your business systems,
you get a very good feeling that they
will ‘make it happen’ regardless of your
business requirements, or the stretches
necessary to complete them.”
Barry Fratello, VP Finance
Telephonics
Read the full case study.
10
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Introduction
Win It
Design It
Build It
Close It
Analyze It
Conclusion
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Performance and Delivery:
Build It
All the effort put into planning materials,
labor and resources bear fruit when the
building phase begins.
Performance and
Delivery: Build it
»» Flexible, User-defined
Manufacturing Orders
»» Agile Production Performance
Tracking
»» Managing Quality
»» Cost Accounting and Adaptable
Overhead Treatment
»» Compliance with MMAS
11
Flexible, User-defined MOs: Manufacturing
Orders (MOs) are at the genesis of this
phase, and threads itself throughout the
process, maintaining high data integrity for
cost accounting, vendor management and
customer order changes.
Not surprisingly, MOs form the core of Deltek
Costpoint’s manufacturing platform. Starting
with the different types of MOs available
(Standard, Customer Repair, Rework),
Deltek creates flexibility in MOs to capture
dynamic changes in operations such BoMs
and routings. Each MO can be synchronized
to specific BoM and routing steps required to
manufacture a given part. Routing operations
can be associated with internal work centers,
labor operations and outside subcontractor
operations, depending on the business model.
When the process is complete and all costs
are allocated, shop floor relieves the MO, or if
necessary sends the part to subcontractors.
Two Sides of a Coin
Manufacturing Execution:
•Creating and executing against Manufacturing Orders (MO)
•Tracking production performance
•Accounting for project based materials, labor, subcontractor
and overheard costs
• Juggling compliance controls
Ongoing Change Management:
•Tracking customer delivery performance
•Managing design changes and routings
• Planning against requirements
•Updating resource schedules
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Introduction
Win It
Design It
Build It
Close It
Analyze It
Conclusion
Agile Production Performance Tracking:
A large part of shop floor control is the
ongoing collection and rigorous tracking of
production metrics, such as shop rate. How
long does it take to complete the routing
step? Deltek Costpoint supports the capture of
actual labor hours against each operation step,
allowing comparisons to the estimated time
predicted on the standard routing traveler.
Managing Quality: Deltek’s partnership with
TipQA enables stringent quality control
processes that require detailed records
with audit trail, including time stamps and
electronic signatures, in accordance with Mil
Spec and ISO/AS/QS requirements. Deltek
supports ISO 9000 certification requirements,
which mandate having a fully documented
and controlled quality control system.
This includes all data collected throughout
incoming quality inspection, shop floor quality
inspection, material disposition and material
review board processes.
12
Cost Accounting and Adaptable Overhead
Treatment: The principles of manufacturing,
especially for government contractors,
dictate multiple variables in cost allocations.
Accordingly, Deltek Costpoint supports
overhead application, labor costs and
subcontractor costs down to specific
manufacturing order detail. Deltek enables
building multiple cost pools, rate tables and
burden rates.
These burden rates – applied as costs –
are incurred during manufacturing. Finally,
customers can conveniently track targeted
vs. actual rates and “true up” at the end of
the month when all the overhead costs are
posted. Such detailed cost accounting and
overhead applications increase a company’s
ability to estimate and bid more effectively
on the right project.
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Introduction
Win It
Design It
Build It
Close It
Analyze It
Conclusion
Compliance with MMAS: Quality is a subset of MMAS policies with
which government contractors must comply. Over the last two decades,
Deltek Costpoint has carefully woven MMAS standards into the fabric of
the system. The detailed list of MMAS requirements consist of systems
compliance, cost allocations, systems control mechanisms, audit trails,
record adequacy, part transfers, materials costing, inventory controls,
contract cost allocations and internal audits.
Elements of Material Management Accounting System for a Government Contractor
Deltek’s Costpoint system enables planning, controlling,
and accounting of materials according to MMAS
(5)Adequate levels of record accuracy on recorded and
physical inventory
(iii) transfer parts and associated costs within the same
billing period
(1)FAR compliant policies, procedures, and operating
instructions
(6) Detailed descriptions of transfers of parts
(8)Records for allocations from common inventory accounts,
have controls to ensure that re-allocations and credit due
(2)Material costs allocated to a contract based on valid
time-phased requirements
(3)Mechanism to identify, report, and resolve system control
weaknesses
(4)Audit trails and records on system logic
13
(7)Consistent, unbiased logic for costing of material
transactions, such as pay-back and same billing
period transfers:
(i)Transfer methodology and loan/pay-back technique
(ii)Consistency across all contract and customer types,
and from accounting period to accounting period for
initial charging and transfer charging
(9)Controls for physically commingled inventories
(10) Periodic internal reviews to ensure compliance
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Introduction
Win It
Design It
Build It
Close It
Analyze It
Conclusion
Post Performance and
Support: Close It
»» Project-focused Sales Structure
and Language
»» Government-friendly Invoicing
and Shipping
< >
Post Performance and Support:
Close It
From order to payment receipt, manufacturers
need a single source of truth that reflects
customer sales orders, order shipment,
invoicing and payment receipt. Deltek
Costpoint supports tracking the paper
processes, approval work flows, shipments
issued and invoice creation.
Project-focused Sales Structure and Language:
Doing business with the government means
being able to communicate in their language.
Deltek Costpoint supports CLIN pricing complete
with price breaks and expiration dates.
In addition, all customer deliverables (product
or services) can be captured on one sales
order, expediting other related processes, such
as creating inventory demands and purchase
requisitions.
Sales orders offer another way to bill customers
because it includes multiple revenue recognition
methods (annual, monthly, etc.), products built
and services rendered.
Demand Driven Manufacturing = Operational Excellence
With Jane Barrett, Vice President, Industry Value Chain
Strategies at Gartner-AMR Research
Manufacturers today are subject to massive pressures due to
the need for driving down costs and increasing efficiency. More
product variants, complex projects, shorter product life cycles,
regulatory compliance issues and cost reductions all add to the level
of complexity. Project manufacturing companies need to exploit
technologies and transform manufacturing in alignment with
business drivers and goals.
14
View the webcast.
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Introduction
Win It
Design It
Build It
Close It
Analyze It
Conclusion
Government-friendly Invoicing and Shipping:
With Deltek, customers can generate
commercial, as well DD250 invoices, with
EDI and WAWF capabilities. With Wide Area
Workflow, invoicing becomes streamlined,
speeding up the collection process and
eliminating errors.
As a corollary to customized invoicing,
Deltek also supports RFID shipments, serial
number tracking and UID information to
ensure accurate delivery of product, as well as
tracking serial number and UID information.
Getting accurate and timely bills and
shipments out the door translates to shorter
Day Sales Outstanding (DSO), healthy cash
flow and on-time customer delivery.
It’s All About the Cash Flow
Cash flow management is vital to survival. And government
contracting firms face unique cash flow challenges such as managing
interest and unallowable expenses, executing compliant invoicing and
ensuring that the cash curve stays ahead of the cost curve. Find out
why Deltek users are more successful at managing, measuring and
improving cash flow.
Improve Your Business Today –
Experience the Deltek Difference.
15
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»
introduction
Win it
Design it
Build it
close it
analyze it
conclusion
Performance
management: analyze it
» Pricing analysis
» materials management reporting
» Procurement and accounts
Payable reporting
16
< >
Performance management:
analyze it
the true value of visibility into project status
becomes most apparent when various
departments – engineering, production,
program management and finance – begin to
ask questions about procurement, inventory,
planning or production performance status.
all the information captured and generated
throughout the process becomes critical in
analyzing the health of the business.
Pricing analysis: sales order history can be a
treasure-trove of information when reviewing
pricing and overall profitability of customer
orders. it provides costing information that
helps compare prices to unit costs including
material labor and overhead, to show the
true pofit for each sales order item. While
pricing without costs details might not
reveal much, drilling into cost of goods sold
will demonstrate true profit/loss per project
or customer order, and how the business
development group should accordingly modify
its pricing strategy.
materials management reporting:
Deltek provides visibility into production
performance with trends looking forward to
help decision-making and to avoid surprises.
from a materials perspective, Deltek enables
reviewing and comparing of indented Bills of
materials; planning and executing material
demand and supply by Project; and, reporting
material shortages and stock availability.
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Introduction
Win It
Design It
Build It
Close It
Analyze It
Conclusion
Deltek Addresses
These Cross-functional
Challenges and More:
Finance
Why am I learning about cost overruns after MOs
are closed out?
Procurement
What are the procurement costs associated with
specific projects?
Business Development
What does my sales history show about my pricing
vs. cost of goods sold?
Procurement and Accounts Payable Reporting:
With the Project Account Organization
structure in place at the time of requisition,
Deltek enables reporting of procurement
status and how much is spent per project, per
task and per vendor. With such information,
manufacturers can manage sourcing while
adhering to MMAS. Accounts payable benefits
from two-way and three-way matching
options with procurement, as well as
discrepancy reporting, for price, receipt and
acceptance. In addition, revenue and costs to
date, as well as purchase commitments are
included to ensure overall project visibility.
“We not only increased profits by
reducing IT and finance expenditures,
we have been able to think more
strategically in our use of the data
supplied by Costpoint. We wanted to
give our users more hands-on control
of targeted data for decision-making.”
Barry Fratello, VP Finance
Telephonics
Engineering
How do I track all design change approvals to
documents, routings and BoMs?
17
Read the full case study.
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Introduction
Win It
Design It
Build It
Close It
Analyze It
Conclusion
< >
Conclusion
Let Deltek Be Your Trusted Advisor in Government Contracting
Where Should I Start?
For more information or to
get started, contact your
Deltek representative or
visit us online.
Whether producing laser systems, electronic
devices or unmanned aerial vehicles, builtto-order manufacturing in the government
contracting industry means managing change
in one hand, while eliminating risk in the other.
To achieve that, executives have to keep a
keen eye on precise cost allocations, materials
planning, compliance and quality assurance.
However, a company cannot achieve these
success objectives without tightly integrating
engineering, production, programs and finance
processes to arrive as close to a single source
of truth as possible.
If you have questions or would like to be contacted,
please feel free to send us a message.
>
18
For over two decades Deltek has successfully
provided manufacturers in the government
contracting business with a holistic solution
that incorporates competitive business
development capabilities, a comprehensive
accounting backbone and an industry-specific
materials management suite.
Contact US
Contact
Deltek
www.deltek.com
[email protected]
Deltek (NASDAQ: PROJ) is the leading provider of enterprise applications software designed specifically for
project-focused businesses. For more than two decades, our software applications have enabled organisations to
automate mission-critical business processes around the engagement, execution and delivery of projects. More
than 12,000 customers worldwide rely on Deltek to measure business results, optimise performance, streamline
operations and win new business.
World Headquarters:
United States & Canada
13880 Dulles Corner Lane
Herndon, VA 20171
800.456.2009
International Sales Headquarters:
Australia
United Kingdom
6th floor • 182 Victoria Square
1 Warwick Row
Adelaide, South Australia 5000
London, SW1E 5ER
+61 8 8112 1200
+44 (0) 20 7518-5010
© 2010 Deltek, Inc. All rights reserved. All referenced trademarks are the property of their respective owners.