Why a small or mid-size factory needs factory management software
Most small factories price by estimate: the last raw-material price plus a margin. But materials are bought at different prices, waste is forgotten and overheads never enter the calculation — so a best-selling product can quietly lose money. Factory management software turns cost into a calculated number and connects production with inventory, sales and accounting.
The manufacturing cycle, step by step
- Define the product and its components with quantities and waste rates.
- Create a production order — the system calculates required materials.
- Issue materials from the raw-materials warehouse against the order.
- Receive finished goods into stock at their true cost.
- Record waste to see where losses happen.
- Sell and analyse — profit reports compare price with real cost.
Calculating unit cost correctly (illustration)
| Item | Value |
|---|---|
| Materials issued (average purchase cost) | 18,000 EGP |
| Material waste 3% | 540 EGP |
| Direct labour | 6,000 EGP |
| Allocated overheads | 3,460 EGP |
| Total cost for 1,000 units | 28,000 EGP |
| Unit cost | 28 EGP |
Counting materials alone gives 18 EGP per unit — so any price between 18 and 28 EGP loses money while looking profitable. (Figures are illustrative.)
Features to look for in factory management software
- A bill of materials per product with quantities and waste rates — not a separate spreadsheet.
- Production orders that reserve materials and deduct them when actually issued.
- Average purchase cost for materials instead of the last price, so cost does not swing with every shipment.
- Separate warehouses for raw materials, work in progress and finished goods.
- Waste recorded by value, not only by quantity.
- Links to sales, suppliers and accounting so profit reports reflect reality.
- Permissions for storekeepers, production supervisors and accountants.
Common pricing mistakes in small factories
- Pricing on the last material price — a cheaper last shipment means pricing below true cost.
- Ignoring waste — 3% waste on an expensive material can erase the whole margin.
- Forgetting overheads — electricity, rent and machine maintenance belong in every unit.
- Never reviewing cost — material prices change, so cost must be recalculated per production order.
Who it is for
- Food, bakery and confectionery producers.
- Plastics, packaging and printing plants.
- Furniture, garment and leather workshops.
- Detergent and cosmetics manufacturers.
Production sits in the same system as ERP accounting and inventory. See pricing or book a demo.