Active Cost Management with Enterprise Product Costing

    Product Costs Under Control

    Download Whitepaper: EPC Basics


    1. Proactive, Interdisciplinary Cost Management through the Entire Product Lifecycle
    2. Comprehensive Costing in an Interdisciplinary Team
    3. Every Department Uses Its Own Systems
    4. Enterprise Product Costing: Collaborative Costing
    5. The Three Pillars of Enterprise Product Costing 
    6. Implementing Enterprise Product Costing with IT Systems


    Challenges such as the volatile global economy, rising competitive pressure, technical innovations, new demands for product features and quality along with changes in consumer behavior are forcing businesses to constantly adapt to evolving market conditions. For manufacturing companies this not only means continuously advancing and optimizing their products, but also their own processes and methods.

    Proactive, interdisciplinary cost management throughout the entire product lifecycle

    Proactive cost management that accounts for product costs incurred as early as the initial product idea offers tremendous optimization potential. Often product cost management or cost management is subsumed under and steered by product and project controlling even though other areas of the company directly influence the cost development of a product. This is why it makes more sense to proactively involve all areas of the company that have a major impact on costs in the costing process.

    The prerequisite for proactive, interdisciplinary costing that starts with development and continues throughout the entire lifecycle is a comprehensive management method such as Enterprise Product Costing (EPC). This creates uniform, cross-functional and standardized processes enterprise wide to ensure that costing is accurate, transparent and complete.

     Download Whitepaper: EPC as management concept

    Comprehensive costing in an interdisciplinary team 

    Product costing cannot be viewed as an isolated discipline. Rather, every area of the company that influences product costs should be involved in the costing process.

    WEBINAR ON DDownload free webinarEMAND:


    • How to assess your current state in costing.
    • Why Excel falls short in company-wide cost management,.
    • How FACTON Enterprise Product Costing (EPC) provides the support and tools, efficient product costing needs.

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    The challenge of interdisciplinary cost management lies in bringing all of the different teams together: Every department brings its own understanding of costs and targets to the table. This also means that every department defines its own priorities with respect to cost calculation. Misunderstandings or inaccurate calculations can arise if cost management is interpreted in different ways, is assigned different priorities or is implemented using different methods. 

    The result: Incorrect calculations create an inaccurate view of the company's financial situation and, in the worst-case scenario, lead to decisions that prove disastrous to the fate of the company. 

    Every department uses its own systems 

    In practical applications an additional vulnerability also generally arises: Every department uses its own IT tools and systems with its own data. If employees then search through their own databases this can result in incomplete or incorrect manual entries. Moreover, there is no guarantee that the data is current. System discontinuities inevitably lead to high error rates and an inability to compare data.


    • Obstacles to reliable cost management
      • Colleagues with different perspectives
      • Sandwiched between customers and suppliers
    • Finding common ground
      • First step: A common goal
      • Enterprise Product Costing
      • Real-world benefits
        • Advantages for employees: Greater work efficiency
        • Advantages for communication: Transparency for more clarity
        • Advantages with regard to expertise
        • Advantages for management: Comprehensive reporting and benchmark data

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    Enterprise Product Costing: Collaborative Costing 

    Enterprise Product Costing has been established itself as a comprehensive cost management approach in recent years that eliminates the problems outlined here. EPC is a method of standardized, enterprise-wide product costing independent of location and department. The aim is to transparently present costs early on and throughout every phase of the product lifecycle to identify and eliminate cost drivers. Standardized processes and methods promote a consistent, enterprise-wide understanding of costs. This results in comparable cost calculations that follow a common logic. Individual project costs are actively monitored throughout the entire lifecycle, i.e. calculated, simulated, analyzed and ultimately optimized. 

    The three pillars of enterprise product costing 

    The three pillars on which the EPC approach rests are easy to understand at first glance. Nevertheless, very few companies follow these basic principles: 

    1. Uniform standards: Every individual and department must be able to cost using the same database and logic.
    2. Consideration of the entire product lifecycle: Calculations that only take the status quo into account are not sufficient to make confident, long-term decisions. In the coming years costs must also be simulated and evaluated depending on other projects.
    3. Enterprise-wide integration: It is not enough to define generally applicable standards and agree on analysis and calculation types. The difficulty lies in firmly and permanently establishing these standards within the enterprise so that they can also be consistently applied in every department.

    As a general rule, and especially in today's uncertain economic times, achieving full transparency over development, manufacturing and product costs is existential for business success. After all, the only way to fully leverage cost reduction is to understand all of the options available to you. 


    Implementing Enterprise Product Costing with IT Systems 

    In practical applications, the EPC approach is implemented with the help of a corresponding IT system

    EPS systems unify all of the enterprise's cost information in a centralized database. This ensures that every employee works with the same data.


    This includes information from Enterprise Resource Planning (ERP), Product Lifetime Management (PLM), Product Data Management (PDM), Computer-Aided Design, Excel and external benchmark data. Cost data is collected, edited, processed and clearly presented in the application. This gives users access to the valid, standardized and comparable basis of data they need in order to make solid product and investment decisions. Facton_Infografik_Integration__ENEPC systems also define standardized processes, calculation methods and calculation standards along with a calculation logic to promote a uniform understanding of costs and ensure that it is possible to compare results.


    White Paper: Enterprise Product Costing

    When used holistically, EPC effectively enhances the transparency of the cost situation in the entire enterprise.

    White Paper: Enterprise Product Costing

    White Paper: Predictive Costing

    Predictive costing with artificial intelligence will simplify decision-making processes for rapid cost-based pricing.

    White Paper: Predictive Costing

    White Paper: The path to a profit-oriented enterprise

    An integrated EPC system standardizes calculations and helps users perform costing across all departments.

    White Paper: The path to a profit-oriented enterprise

    Webinar on demand: 7 ways to win the costing game

    Companies that win the costing game have a highly developed costing approach for delivering the necessary calculations and data.

    Webinar on demand: 7 ways to win the costing game