Accurate calculation

of own and external production costs for transparent make-or-buy analyses

Make-or-buy analyses are used to decide whether a component should best be manufactured internally or purchased from a third party. With FACTON EPC and FACTON Content, such product cost calculations can be produced quickly and accurately, and the resulting project comparisons generated with the integrated reporting tool provide a sound basis for make-or-buy decisions.

Make-or-buy analyses are performed to decide whether a component is to be produced internally (in-house production) or purchased from a supplier (external production). In order to compare the various options, FACTON EPC not only allows companies to determine the in-house production costs based on existing production data, but also compiles external production costs based on generally accepted benchmarks in EPC Content.

Generating accurate internal and external production costs analyses

For comparisons, FACTON EPC first calculates the internal production costs for output in transparent BoM lists. For this purpose, the software uses internal cost parameters such as hourly rates and overheads, which are retrieved through master database of the EPC solution from ERP systems and similar software applications. To prepare the documents required for a make-or-buy decision, companies also need accurate costing figures for external production. For this purpose, the cost parameters of the internal calculation are simply replaced with benchmark figures from FACTON Content. This benchmark-based costing can then be saved as a version of the initial internal cost calculation. The same approach also allows for the evaluation of alternative production locations or methods, for example, if a company considers changing the degree of automation in the production process.

Basis for make-or-buy decisions

Given the high validity and consistency of the benchmark data, the user-friendly interface of FACTON EPC and the comprehensive range of evaluation methods that allow for direct integration with management, make-and-buy decisions can be made on a sound and transparent basis. The integrated reporting functions allow for the simulation and comparison of various commercial and technical scenarios.