For discrete manufacturers, reconciling your monthly, quarterly, or yearly standard product costs with the same time period’s actual costs can be a stressful process. Given the soft costs accrued on stocked inventory, the monetary differences in your product costing estimates can be significant.
However, your standard, or projected costs and the actual product cost numbers don’t necessarily have to reflect such discrepancies. By introducing ERP software, designed to effectively improve procurement and supply chain procedures, manufacturers can substantially reduce the labor, administrative, and inventory housing expenses that contribute so heavily to your actual costs, while simplifying your product costing technique immediately.
Better Procurement Methods
Standard product costing leaves multiple gaps in your projected expense amounts because shrinkage ratios, FOD instances, and accidents are unknowns in the equation. You can limit these expenses with procurement controls available in ERP software. Some of these controls include the ability to arrange replenishment shipments at the point of assembly, negotiate consignment plans with suppliers, or other lean strategies that eliminate the soft costs of consumable materials.
Workforce Efficiency Improvements
With ERP Software specific to discrete manufacturers, you can determine actual product costs for better cash management and cost controls, allowing you to make informed decisions regarding profitability margins. Furthermore, the ease of use decreases confusion and creates an atmosphere that enhances efficiency, saving labor and administrative costs.
Rather than continue with an antiquated “push” manufacturing system, become educated in product costing solutions that can allow your company to see the real picture of actual costs? The benefits to your production output and procurement control procedures can have a real benefit on your bottom line. Want to learn more? View this 30 minute on-demand webinar on the topic today- It’s free!