Cost Correction for Manufacturing Process

Overview

About the Client

The client is focusing on getting the correct costing for the Items they manufacture after using different components/raw materials at different processes of Production.

In today’s competitive market, accurate costing is crucial for any manufacturing company to stay profitable. One of our clients is currently facing this challenge as they use various components and raw materials at different stages of production.

Executive Summary

The client is using Advanced Manufacturing and also using Tablet version for manufacturing activity. They are currently getting wrong per unit cost of finished goods due to the reason because they manufacture each Work Order Quantities into multiple batches/parts.

The challenge      

• The client was getting incorrect pricing for per unit of finished goods due to the reason they manufacture each Work Order Quantities into multiple batches/parts.
• Manufacturing activities were done including around 3-4 processes.

Our Solution        

• We helped the client by setting up a customized solution for the entire manufacturing processes.
• We have divided the entire manufacturing process into different parts as per processes.
• Semi-finished Item after every manufacturing process is done.
• Average cost of semi-finished items is calculated automatically.
• Sub-assembly Item is used as component for next process.
• Now the finished goods are getting the correct cost.

Results

The Impact  

With the help of Blueflame Labs, the client was now able to get the accurate cost of Finished Goods and able to analyze the correct Gross Profit percentage. Correct pricing ensures that your business is profitable and competitive in the market. Thus, minimizing the time and manual efforts to calculate manual cost of each SKU, able to get the correct profitability in the financial statements, and monitoring. The implementation was well documented for future reference and client’s training purpose.