Identifying cost drivers

and optimising cost structures with FACTON EPC

The cost of a product is the result of a number of cost-driving components. In order to make cost savings, these cost drivers need to be identified. FACTON ABC analyses assist customers in identifying areas where they can reduce costs in order to achieve the costing target. In addition, such analyses also help develop product cost structures that are more competitive in the long run.

The cost of a product is the result of a number of cost-driving components. In order to save costs, all relevant cost drivers need to be first identified: FACTON EPC contains all the tools that make this process easier, for example, by means of an ABC analysis.

 

In FACTON EPC, cost driver analyses for the purpose of cost optimisation can be carried out in a most targeted way, taking into account only the main components known as the A objects that make up the largest part of the product costs. In addition, B and C objects, whose contribution to the production costs is below that of the A objects, can be included in the analysis. The objects are classified as follows:

 

  • A objects: share in production costs > 20%
  • B objects: share in production cost between 5 and 20%
  • C objects: share in production costs < 5%

With this approach, the cost structure of products can be broken down quickly for further evaluation. Based on this classification, costly processes, assemblies, and individual components (A objects) can be examined separately from the overall product costs.

 

For development-accompanying costing, the integrated ABC analyses of FACTON EPC help identify the main cost drivers, be it processes, assemblies, or individual components.

 

Based on the ABC analysis, companies can identify suitable measures to reduce their costs, and to optimise their cost structure.