Overview:
Located in Las Vegas, Nevada, Kalco Lighting LLC has been in business since 1980. A reputation for superlative design and quality iron craftsmanship has established Kalco Lighting as a leader in the decorative lighting industry. They offer thousands of lighting fixtures, furniture and accessory items largely in coordinated design collections. Whereas many fixtures and furniture in today's market are made using thin gauge metal tubing, most KALCO products are hand-forged wrought iron available in more than 20 rich, hand painted finishes. Their products begin as premium iron stock heated in a fire pit and shaped through with hammer and anvil in their facility in the Philippines.

Business Challenges:
Kalco Lighting needed a feature and function rich manufacturing software system to track inventory held at their Las Vegas headquarters then dispensed to more than 12 outside vendors and sub-contracted manufacturers. They didn’t want to get rid of their current Peachtree accounting system but needed multi-level bills of materials (BOMs) and multi-locations for tracking work-in-process (WIP). The challenge was to merge their existing Peachtree Accounting with a robust manufacturing system to provide an integrated system for all their manufacturing and accounting transactions.

Solution:
Kalco Lighting maintained Peachtree Accounting at their Las Vegas headquarters and added MISys Small Business Manufacturing (SBM) for controlling inventory, purchasing, BOMs and WIP. With MISys SBM they use the production scheduling and material requirements planning to automate purchase orders and work orders to facilitate inventory control both in the main warehouse and at their sub-contractor’s locations.  Together, MISys SBM and Peachtree account for their raw materials and finished goods inventory.

Results: 
The combination of Peachtree Accounting and MISys Small Business Manufacturing allowed Kalco Lighting to:

• Have bills of material down to 16 levels
• Control inventory of more than 13,000 raw material items
• Control 9,200 BOMs
• Control inventory on more than 4,000 finished goods
• Track WIP for more than 15 sub-contractors
• Track WIP for outside vendors
• Provide unlimited multi-locations for tracking materials
• Directly integrate sales with manufacturing
• Significantly reduce inventory holding times and costs
• Reduce manpower needed to keep track on inventory and WIP
• Maintain real-time accounting of materials and logistics
• Convert currencies for purchasing and receiving
• Have full integration of manufacturing and accounting

Solution Overview:
When Danny Martinez first took over operations at Kalco Lighting he was faced with a daunting task.  Kalco did business with 15 sub-contractors who provided many of the manufacturing components for Kalco’s product lines. Raw materials were ordered and shipped to each sub-contractor for assembly then returned to the Kalco headquarters for either other outside vendor actions or final assembly for their growing line of over 4,000 lighting products.

When raw materials were shipped from Kalco to an overseas manufacturer, they recorded the item movement then tried to track them at the contractor’s location. Kalco maintains BOMs with 10 levels of sub-assembly so tracking which of them are out at sub-contractors and which are in-house created a lot of double entry of information as materials flowed back and forth. This created potential serious mistakes in data entry and timeliness of reporting.

Since Kalco does business in international markets they have inventory in multiple currencies moving back and forth from their vendors. Tracking costs at different currencies and valuing their inventory was a struggle and extremely labor intensive.  Not having a good grip on the inventory holding costs became a nightmare. They had no ability to properly schedule production based on lead times so purchasing material to prevent shortages produced panic buying when inventory levels reached critical mass.

Peachtree accounting just didn’t have an industrial strength manufacturing system that could handle this level of detail and complexity. Danny turned to MISys Small Business Manufacturing (SBM) as an add-on product to Peachtree. MISys provided the missing pieces for the manufacturing side while maintaining the accounting transactions that could be seamlessly transferred to the Peachtree General Ledge for financial reporting.

MISys SBM brought key functionality to the table. MISys is able to retrieve sales orders from Peachtree, convert those sales orders into work orders in MISys and track the WIP as they moved between sub-contractors. With MISys MRP capabilities and production scheduling Danny was able to plan ahead based on sales forecasts and existing customer orders to purchase materials and schedule work orders so that no shortages would occur during the product production cycle.
Using unlimited multiple locations in MISys, Danny assigned a location to each of his sub-contractors then dispensed items as needed to those locations. When everything was completed they moved the items back into stock and transferred them to finished goods in Peachtree ready for shipping.

Using standard costing he was able to project his inventory holding costs and keep track of his entire inventory at every location. Now his WIP inventory was readily available for reporting. MISys SBM also kept track of average, recent and FIFO/LIFO costing so Danny could see at any time his real costs and could adjust his standard cost as need.  Since some of his sub-contractors were in different countries he used the multi-currency functions of MISys to value inventory in different currencies converting to his home currency of US dollars. Now he could purchase in Pesos and receive in US dollars using currency conversion rates.

Since installing MISys SBM, Kalco has significantly reduced their cost of operation, have better control of purchasing to avoid shortages, and track WIP across all vendors and sub-contractors. This has saved countless man hours of data entry and the accuracy is to the penny every time. A major plus to Kalco was that they were able to keep their Peachtree Accounting system since MISys SBM integrates seamlessly with Peachtree.

Danny Martinez was able to get MISys SBM up and running within three months of installation and now he is considering adding more MISys functionality.

“It’s worked out so well in such a short amount of time that I’m anxious to implement other MISys functionality as soon as I can,” stated Martinez. Kalco now feels comfortable with their financials and their inventory control. Peachtree Accounting and MISys SBM has been the perfect fit.