Work orders are tools that we are trying to utilize for equipment costing. The whole purpose of the work order is to accumulate ACCURATE history so when further work is done we can evaluate the equipment and determine whether to repair or to replace.   One of the areas we are having some confusion on is deciding which way to allocate the cost of parts.  The big question is: Do we charge parts directly to a shop or directly to the equipment?

Why is this area so important?  The short answer is that the way the cost of a part is allocated tells a specific story.  Consider the following examples:

1. Sometime in the first part of April, someone comes into the parts room and picks up filters and oil indicating that they are going to be working on a piece of equipment out on a job. A Work Order is then created to bill the equipment for the parts.  They obtain enough parts so they won’t have to return to the parts room when the preventive maintenance is required (which is fine if it is billed to the shop and not the equipment). Time passes and the miles or hours come due at the end of June for that piece of equipment.  The filters and oil were billed to the equipment at the time they were received from parts on a work order.  On the work order history it looks like the maintenance was done in April, when really it was completed in June. 

To put a different spin on the same scenario, lets say that the part is brakes and the DOT stops the equipment.  They inspect the equipment and the work has NOT been done.  Someone will be paying a fine and someone else will want to know why the work order history is wrong. Someone else will want to know why the time to perform this work has already been accounted for with respect to workload. 

2. After the person received the parts and had them charged to their shop, the parts are in the shop until needed.  When the work is done, a work order is created with the amount of labor that it took to do the maintenance.  The shop is then given a credit for the parts and their inventory value is reduced by that amount.  The cost of the labor gets charged to the equipment.  The amount of labor also matches the person’s time card coding.  We then know that the person was working on equipment and not on a job.  This is an important checks and balances system for costs that shows exactly how our labor is being spent. Work order history is more accurate and the work orders can be closed at the time of repair.  The only time something should be billed directly to the equipment is if the repair is going to be done at that time. 

We also want to bring to everyone’s attention that there are locations in outlying areas that are now doing their work order electronically.  These offices are doing an excellent job and have put a lot of hard work in learning and understanding the whole process.  We would like to thank Brooklyn shop, Waterloo, Independence, Johnston Tires, Quality Control, and the Tire Shop for all their hard work. 

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The advantage of Manatt’s being consistent on this process is that equipment is moved all through the company and anyone that has access to the Viewpoint software can see all work orders with correct dates and repairs that have been done for the life of the equipment.  This can only be a win-win for everyone to help find information easily and efficiently company wide, which will allow us to trust the information and make good quality decisions.  

On another note, all paper work orders sent to the Brooklyn office now get scanned in and show as an attachment in Work Order Edit in Viewpoint.  This is a great addition to our information arsenal since we can view an electronic copy of the paper version complete with any and all hand written notations.  If you need help finding these scans, please don’t hesitate to call me, or any of the following people in Brooklyn: Serena Shaull, Jane Cline, or Will Hochstetler.