Toni sent a hamper every December. Cured ham, a wine from Jumilla, good turrón. He sent it to Grupo Herrán, his biggest client, and he sent it with a handwritten note, because his father wrote them by hand and he carried on doing it.
Talleres Bermejo made metalwork on an industrial estate in Molina. Fourteen people. The year we met they had billed one million ninety thousand euros. Of that million, three hundred and forty thousand came from Herrán.
—That client is the company, Toni told me on the first day. If Herrán leaves, we close.
He said it without drama, the way you report the weather. In the office there was a calendar from a hardware shop and a whiteboard with the week's orders. On the whiteboard, the Herrán jobs were written in red. The rest in black.
What got looked at and what didn't
Bermejo had had a management system since 2016. It worked. It issued quotes, delivery notes and invoices, and it produced a sales-by-client report that Toni looked at on the first of every month. The report had two columns: client and euros billed. Sorted highest first. Herrán, always at the top.
Other things were stored too, though nobody ever put them next to the first ones. There were the workshop timesheets, where each operator noted the hours he put into each job. There were the material delivery notes, with steel and fixings charged to each order. There were the rework tickets: when a piece came back because it didn't fit, a ticket was opened and someone went out in the van.
And there were the payments. Herrán paid at a hundred and twenty days. Not always. Sometimes a hundred and forty.
None of that data appeared in the first-of-the-month report. The first-of-the-month report said three hundred and forty thousand euros and the conversation ended there.
What he asked for and what he needed
Toni called me about something else. He wanted a dashboard to see the workshop load: which week was full and which wasn't.
—So I know when I can say yes to a new order.
—And how do you decide today?
—By asking Ginés.
Ginés was the foreman. He had been there twenty-six years and knew the workshop load better than any dashboard would. I said so. Toni laughed.
—I know. But Ginés retires in three years.
So we started there, with the load. And to work out the load you had to join the timesheets with the orders. And once those two files sat side by side, something else showed up that nobody had asked for: how many hours each order really cost. With the hours next to the price, the margin works itself out.
Toni wanted to know when he could say yes. What he needed was to know what it was worth saying yes to.
How it works, no smoke
Nothing exotic happened. The management system already stored everything in a database; what it didn't do was cross that database with itself.
We built a real margin calculation per order. Five things get subtracted from each order: the material on the delivery note, the workshop hours charged on the timesheets (at real hourly cost, not the rate charged out), the transport, the hours spent on rework tickets —which until then weren't charged to anyone— and the cost of financing the days it takes to get paid. That last one is the one almost nobody counts: if you're paid at a hundred and twenty days, somebody is fronting that money for four months, and that somebody is you.
Then the dashboard groups by client and shows two columns side by side, which was all that had been missing: what they bill and what they leave.
What this calculation is not: it isn't certified cost accounting, it can't be filed anywhere, and it depends entirely on the timesheets being filled in properly. If the operators note things badly, the dashboard lies with great confidence. We spent the first three weeks fixing timesheets, not programming.
What came out
Herrán billed three hundred and forty thousand euros and left a two per cent margin.
They asked for short lead times, so their orders jumped the queue and scrambled the week. They changed dimensions halfway through fabrication. Their pieces generated the most rework tickets: nearly half of all the year's tickets were theirs. And they paid at a hundred and twenty days.
In the same table, fourteen rows further down, there was an industrial maintenance firm billing eighteen thousand euros a year, paying at thirty days, never changing an order, and with not one rework ticket in three years. It left thirty-four per cent.
Toni sat quietly for a while, looking at the screen. Then he said:
—So I've spent ten years buying ham for the one who leaves me the least.
—More or less.
—And this was on my computer?
—It was spread across four places on your computer.
What changed
They didn't drop Herrán. Nobody drops a client worth thirty-one per cent, and anyone who says otherwise has never had a payroll to meet.
What they did was go and see them with the table. They asked for three things: a nine per cent increase, payment at sixty days, and dimension changes after fabrication had started to be quoted separately. Herrán accepted the increase and the change surcharge; the payment terms settled at ninety days. Toni signed anyway.
With the dashboard in front of them they also stopped quoting for two kinds of job that came out at a loss nearly every time, and an awkward thing surfaced: orders under six hundred euros cost more in admin and transport than they left. A minimum was set.
At the close of the following year, turnover was down six per cent. Pre-tax profit was up forty-one.
Ginés, by the way, still estimates the workshop load better than the dashboard does. But now the dashboard knows it too, and that was half the reason for the job.
Two hampers
In December Toni sent two hampers. One to Herrán, with his handwritten note, as always. And one to the industrial maintenance firm worth eighteen thousand euros, which had never received anything from anyone and rang two days later to ask whether there had been a mix-up with the address.
—No, Toni told them on the phone. It's that until this year I hadn't noticed.
Billing isn't earning, and most reports only show the first one
Almost every management system produces a client ranking by turnover. Almost none produces one by real margin, because that means crossing the invoice with the hours, the materials, the rework and the days to payment. That data is usually already inside the company, in four different places nobody has ever joined up.
When they get joined, the order of the list changes. And with it, decisions that had been going the wrong way for years: who gets a price rise, who gets told no, and who you should actually have been looking after.
Do you know what each client leaves you, or only what they bill you?
If your management system stores timesheets, delivery notes and payment dates, the figure is already inside: it just needs crossing. It's usually a matter of weeks, not months. Tell me what you use and we'll see whether it can be done.
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