Designing Costpoint Manufacturing for Today’s Needs and Tomorrow’s Growth

Costpoint Materials and Manufacturing is highly configurable, but that flexibility requires intentional design. Government contractors who implement without planning for growth often face costly reconfigurations as operations scale. Aligning manufacturing with accounting from the outset builds a system that supports the business today and adapts as complexity increases.

Highlights

• Intentional Design. Costpoint manufacturing implementations require tailored configuration decisions based on current operations and future growth expectations.
• System Flexibility. The platform supports a wide range of business models, making configuration choices critical to avoiding inefficiencies and rework.
• Accounting Integration. Manufacturing modules are tightly integrated with financial systems, requiring coordinated design between operations and accounting.
• Operational Alignment. Business processes must be evaluated and aligned with system functionality to avoid workarounds and reporting challenges.
• Scalability Focus. Early decisions around structure, naming conventions, and reporting directly impact the system’s ability to scale with the business.

You’ve decided to implement Costpoint’s Materials & Manufacturing capability. Now where do you start? The capabilities are incredibly vast and can be overwhelming. This is not a bad thing; it is actually quite the opposite. The same capabilities, when implemented correctly, can support both a small non-complex company and a massively complex defense prime contractor. Costpoint will grow with you and, if set up correctly at the beginning, you will not run into the common pitfall of outgrowing a one-size-fits-all setup. This is why Costpoint Materials & Manufacturing implementations require a much more intentional design tailored not just to who you are today, but to who you want to be in the future. A little forethought goes a long way. I promise you that taking a thought-out approach rather than a one-size-fits-all approach will pay off in the long run. Reconfiguring later, as you grow, is far costlier than spending a bit more time and effort initially on considering and designing for the long term.

I always tell my clients to plan for who they want to be, not just who they are today. I don’t know very many companies that don’t have a desire/plan for growth, so why would we build in barriers that unintentionally stifle growth? While we can’t predict the future, we certainly can consider it in our design!

Manufacturing in Costpoint Is Highly Flexible by Design

While you will quite frequently hear me say “your business is not that different than other businesses [in certain subject areas…],” the reality is that in manufacturing, while the core of the engineering design and manufacturing flow is generally extremely similar, even across vastly different industries, the business processes that underpin “how” you execute these similar flows can vary vastly from business to business. That is why Costpoint is designed to be extremely configurable. Again, this further supports the case that manufacturing implementations of Costpoint are inherently not ideal for a one-size-fits-all approach; they need to be done intentionally and designed to meet your specific business’s needs now and into the future. The goal is to reimagine your business processes with Costpoint integrated as a core element, not to awkwardly bolt it onto your existing processes. This eliminates waste, yielding lean business processes, and allows you to take advantage of Costpoint to the fullest.

Costpoint’s flexibility is a strength, but it can be overwhelming. With the right guidance, the flexibility can be easily explained, and you can be taught why the settings are configured as they are to support your specific business needs. The software has been built with design inputs from many industries, so there are many areas with a “This or That” toggle to support different business needs. While there are many areas that I configure similarly from client to client, there are many other areas where each client is almost always different in what they need, to varying degrees.

Coordinating Manufacturing Configuration with Accounting

The beauty of Costpoint is that it is really good at handling “costs,” amongst other things. With that said, Costpoint’s manufacturing modules are directly integrated with the GL via subledgers (i.e., the Inventory Journal and the Sales Order Journal). This is a strength of Costpoint. Unlike other ERPs in the project-based ERP space, Costpoint doesn’t require any separate manual processes to sync the Manufacturing system with the ERP system. Costpoint has them fully integrated within one seamless product (and they always have been). Why is this so important? For it to work properly, you need to design your accounting system with manufacturing as a core consideration. They work in tandem, not independently.

Some things to consider early in the Finance & Accounting (F&A) design process:

• What types of inventory do I have: Asset, Expense or Furnished?
• Do I manufacture based on the balance sheet and WIP projects, or do I perform expense-based manufacturing?
• Is my Project WBS “Product Based” (as opposed to “process” based), at least on the legs of the project that will be interacting with the manufacturing module and the associated Manufacturing Orders (MOs)?
• How do I want to track budgets on my projects?
• What types of contracts do I have, and which revenue recognition and billing methodology will I use?
• How will that impact my use of the Sales Order module?

The above list is only a small sample of the many F&A subjects directly impacted by manufacturing capabilities. For the manufacturing modules to function properly and produce accurate financial results, all of the above and more must be taken into consideration. They will all impact the core F&A design, including your Chart of Accounts (COA), Project Structure, Project Account Groups (PAGs), Revenue, and Billing, amongst other things. Including manufacturing in your design doesn’t have to make things more complicated. Often, it actually simplifies the F&A model, since manufacturing capabilities inherently provide additional features and financial reporting capabilities that would otherwise need to be designed elsewhere, with added complexity. The key is that Manufacturing and F&A need to work collaboratively during the design and implementation process to ensure an optimal configuration is implemented that meets the needs of the holistic business, not just one siloed department. People tend to fall into the trap of thinking of the ERP system as an “accounting” system. Still, it is critical to understand that it is not just your “accounting” or “manufacturing” system; it is your Enterprise system.

Manufacturing Setup Should Reflect How the Business Actually Operates

As noted above, while at the core, manufacturing businesses are very similar to one another, they are also drastically different in how they actually perform those common processes. It is critical that your Costpoint Manufacturing configuration be implemented in a way that takes your unique business needs into account. “Canned” setups generally won’t suffice for the dynamic needs of a manufacturing business. And if they do, they likely won’t be efficient for your needs and will likely lead to many “workarounds” to get the necessary data into or out of the system.

The decisions you make during implementation should be treated as long-term decisions, since they shape how the business will operate in the ERP system for the foreseeable future. They shouldn’t be made lightly or without consideration for how the business actually operates day to day. While more time-consuming, business processes need to be analyzed, unpacked, thoroughly reviewed, and, if necessary, even changed to some degree to integrate Costpoint as a core element within the business process. Avoiding a thorough business process analysis for short-term convenience can create long-term reporting and reconciliation challenges, potentially leading to a fatally flawed design. This will set you up for failure. Early design decisions shape daily usability, visibility, and control and need to be tailored to the true needs of the specific business.

Make sure you are considering how materials flow through the business. What does your procurement process look like, and what sorts of approvals are necessary for PRs/POs? Do you need the ability to attach documents to records (i.e., Costpoint’s CMI feature)? Do you need automated reporting structured to meet KPI reporting requirements for Customers and/or an ISO9001/AS9100 certified QMS? Are you capturing the data you need to run your business, and are you capturing it in a way that will be useful in the future? Conversely, are you capturing data just for the sake of capturing data? Sometimes, too much information can be inefficient and paralyzing. It’s a lot to consider.

Designing with Growth and Change in Mind

With a little forethought, you can configure Costpoint so it meets your current needs while being structured to grow with you, rather than impeding growth. The goal is to set up Costpoint once and not need to reconfigure it as the business evolves and grows. Considering settings early that may not be needed currently, if enabled and set up, would be useful in the future, as it can set you up for success.

Think about where you hope to be in a few years and what sorts of contract mix, volume, and other needs you may have. Design with those things in mind, even if they are not currently needed. Set up the system fully, not just the small pieces you may need at this moment. That way, it is ready to use when the need arises.

Think about the business process when many people are doing it, not just now when a single person is handling low-volume transactions. Saving a few seconds here and there may not seem like much now, but when volume increases, those savings add up.

A sampling of areas to consider when “designing for growth”:

• Inventory Location Structure- i.e., R01S1 instead of R1S1 (for Rack 1 Shelf 1), since you may need more than 9 racks in the long term and would want them to sort logically.
• Avoid getting too “smart” in your naming conventions. Sometimes, trying to build smarts into every record-numbering schema is counterproductive and doesn’t scale in a large business. Inventory abbreviations are a common place where people overcomplicate naming conventions that don’t scale as the project density and complexity grow.
• Have you established a scalable Part Master naming convention?
• Have you established a scalable, intelligent Ship ID naming convention?
• Are you designing Business Intelligence (BI) Reports that can serve multiple purposes without the need for separate reports by harnessing optional filter criteria that can be utilized for automating report delivery for different stakeholders?

Putting Growth-Oriented Design Into Practice

Redstone GCI consultants work alongside government contractors through each stage of a Costpoint Materials and Manufacturing implementation, from initial business process analysis through final configuration. That includes coordinating the manufacturing and Finance and Accounting design, structuring the Chart of Accounts and project hierarchy to support manufacturing integration, and establishing inventory and naming conventions with long-term scalability in mind. Our team has managed supply chain and manufacturing operations in the industry prior to entering consulting, which means the guidance we bring is grounded in how these environments actually function, not just how the software is designed to work. That experience informs every configuration decision we make on a client’s behalf, with the goal of reducing the need to reconfigure as the organization grows, rather than treating implementation as something to revisit every time the business grows.

Frequently Asked Questions (FAQs)

• What is Costpoint manufacturing and why is it important? Costpoint manufacturing is a set of modules within Deltek Costpoint that supports materials management, production, and inventory tracking. It is important because it integrates directly with accounting, allowing contractors to manage both operations and financials in one system.
• Why can’t companies use a standard setup for manufacturing? Manufacturing processes vary significantly between companies, even within the same industry. A standard setup often leads to inefficiencies or workarounds because it does not reflect how the business actually operates.
• How does manufacturing impact accounting in Costpoint? Manufacturing transactions flow directly into the general ledger through integrated subledgers. This means accounting structures, project setup, and inventory decisions must be designed with manufacturing in mind.
• What happens if the system is not designed for growth? If scalability is not considered early, companies may face costly reconfiguration later. This can disrupt operations, create reporting issues, and require significant time and resources to correct.
• What should companies focus on during implementation? Companies should focus on aligning system configuration with real business processes, coordinating accounting and manufacturing design, and planning for future growth and volume increases.