Why Traditional Costing Fails in Weaving
Static Excel cost sheets rarely reflect what is actually happening on the floor. Breakages, down‑time and quality issues change costs significantly. Traditional costing methods in weaving units rely on standard assumptions and static calculations that don't account for the variability inherent in production. A cost sheet might assume a certain yarn consumption per meter, a standard machine efficiency, and estimated overhead allocation. However, reality is much more complex. Yarn consumption varies based on breakage rates, which can differ significantly between styles, looms, and even operators. Machine efficiency isn't constant – it varies based on style complexity, yarn quality, machine condition, and operator skill. For accurate costing, you need digital transformation that captures real production data. Overhead allocation is often done using simple formulas that don't reflect actual resource utilization. The result is costing that looks good on paper but doesn't match reality. A style that appears profitable based on standard costing might actually be losing money due to high breakage rates or quality issues. Conversely, a style that seems expensive might be highly efficient and actually more profitable than estimated. The problem is compounded by the fact that these cost sheets are typically updated infrequently – maybe monthly or quarterly – so they're always based on outdated information. By the time management realizes that costs have changed, it's too late to adjust pricing or make operational changes. The lack of real-time costing also means that management can't make informed decisions about which orders to accept, which styles to prioritize, or which customers are truly profitable. They're essentially flying blind, making decisions based on incomplete or inaccurate information. This leads to accepting loss-making orders, prioritizing wrong styles, and maintaining relationships with unprofitable customers, all while potentially missing opportunities with profitable business.
Bolto ERP Costing Built on Live Data
Because Bolto ERP knows exactly how many meters and picks came from each beam and loom, as well as the yarn and process consumption, costing is derived from facts, not assumptions. The costing engine in Bolto ERP is fundamentally different from traditional methods because it's built on actual production data captured in real-time, not on assumptions or standards. The system tracks every aspect of production with precision – how many meters were actually produced from each beam, how many picks were completed, how much yarn was consumed, how much sizing material was used, how much time each machine ran, and how much downtime occurred. This granular data enables accurate costing that reflects reality. Yarn cost is calculated based on actual consumption per beam, not estimated consumption per meter. If a style has high breakage rates, that's reflected in higher yarn costs. If a particular beam or loom is more efficient, that's reflected in lower costs. Process costs are allocated based on actual machine running time, not estimated hours. If a style runs smoothly with minimal stops, the process cost per meter is lower. If there are frequent breakages or quality issues requiring reprocessing, those additional costs are captured. Overhead allocation is done based on actual resource utilization – machines that run more hours bear more overhead, styles that require more attention get allocated accordingly. The system calculates costs at multiple levels – per meter, per pick, per beam, per style, and per customer. This multi-dimensional costing provides insights that would be impossible with traditional methods. You can see that Style A is profitable when run on Loom 5 but unprofitable when run on Loom 12. You can see that Customer X's orders are profitable overall, but certain styles within those orders are loss-making. This granular visibility enables precise decision-making about pricing, capacity allocation, and customer relationships. The costing is always current because it's based on live data, so management has real-time visibility into profitability and can make adjustments immediately when costs change.
Better Pricing and Order Selection
Once you know real costs, you can price confidently and avoid loss‑making styles or negotiate better with buyers. Accurate costing transforms pricing from guesswork into a strategic tool. When you know the true cost of producing each style, you can price with confidence, knowing that you're covering all costs and earning a reasonable margin. This confidence enables you to compete effectively without eroding profitability. You can identify which styles are truly profitable and focus on those, while either improving or avoiding loss-making styles. The costing data also provides powerful negotiation tools. When buyers push for lower prices, you can show them actual cost data and explain why certain prices aren't feasible. Conversely, when you have data showing that a style is highly efficient and profitable, you can justify premium pricing. The system also helps with order selection – when you have multiple orders competing for limited capacity, you can prioritize based on profitability rather than just order value or customer relationship. A smaller order that's highly profitable might be better than a larger order that's barely breaking even. The costing data also helps identify improvement opportunities. If a style is unprofitable, you can analyze the cost components to see where the problem lies – is it high yarn consumption, low efficiency, or quality issues? Once you identify the root cause, you can take targeted action to improve. Perhaps the style needs to run on different looms, or with different operators, or with adjusted parameters. The system enables you to test these improvements and measure their impact on costs. Over time, this data-driven approach to pricing and order selection builds a more profitable order book and stronger customer relationships based on fair pricing and reliable delivery.
