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Global Cost Management with Enterprise Product Costing

Managing product and production costs profitably across supply chains

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How can production costs be reliably planned, margins consistently optimized and the value chain optimally designed for corporate success?

Read how global cost management with Enterprise Product Costing (EPC) supports manufacturing companies from the automotive, aerospace, mechanical engineering and medical technology sectors in ensuring profitable products and productions, controlling costs along the supply chain more efficiently and guaranteeing uniform processes and costing methods throughout the company.

Calculate profitability with enterprise product costing

  1. Controlling costs over the entire product life cycle
  2. Why are products and productions not profitable in the end?
  3. Each functional area and department uses its own systems and data
  4. Cost Engineering: How do product costing teams succeed?
  5. How does global cost management support production and business processes?
  6. What are the characteristics of strategic cost management?
  7. Implementation of Enterprise Product Costing with a software solution


Controlling costs over the entire product life cycle

Project cost management that records product costs in the early phase of product development and actively monitors them throughout the life cycle offers a high level of flexibility and reliability. Cost management is often located in product and project controlling and controlled from there. With global supply chains and cross-company cost influence, areas such as product development, purchasing and sales have a direct impact on cost development.

Companies exploit margins in a targeted manner and achieve higher profits if all functional areas are integrated into the costing process for product and production costs. 

Successful costing from product development through the life cycle requires a company-wide approach. Enterprise Product Costing (EPC) is a management method that enables uniform and standardized processes throughout the company in order to make costing accurate, transparent and trackable.

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Why are products and productions not profitable in the end?

The challenge of successful cost management processes lies in connecting the different teams: Each department brings its own understanding of costs and its own targets, which are defined with different priorities. 

3 situations that often cause misunderstandings and incorrect costings

  • different perception on costs
  • different importance of cost elements
  • different implementation of costing methods

Inaccurate and erroneous calculations lead to a wrong view of the financial situation and possibly also to wrong long-term decisions.

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Each functional area and department uses its own systems and data

Another weak point usually exists in practice: Each department uses its own IT tools and systems with its own data. If each team member individually compiles their own database for a calculation, this often leads to an incomplete information base, incorrect manual entries and outdated data. Media breaks complicate costing processes, make them error-prone and basically not comparable.

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Cost Engineering: How do product costing teams succeed?

The calculation of product and production costs, but also of digital services, development, software and IT projects cannot be viewed as an isolated discipline. Rather, every area of the company that influences product and project costs should be involved in the costing process.

Learn in our webinar video how to implement company-wide product cost management in seven simple steps.

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

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Get to know the seven steps now.

How does global cost management support production and business processes?

Under what conditions are productions profitable? What are the total production costs for unplanned ramp-down / ramp-up times? How can the development of cash flow be effectively managed or influenced in the event of a decline in demand or longer supply chain times?

With the appropriate tools, companies can use Enterprise Product Costing to:

  • Make costs transparent at an early stage and across all phases of the product life cycle.
  • Quickly identify and eliminate cost drivers.
  • Justify investment and project decisions with clear key figures

Costing teams can counter the volatility of forecasts by effectively managing more iterations of quotations. They are able to quickly simulate 'what-if' scenarios and make decisions based on clear metrics. Simulating different scenarios that may occur during the life of production and projects also provide greater certainty when submitting quotes.

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What are the characteristics of strategic cost management?

For a higher return on investment, complete transparency of development, manufacturing, purchasing and product costs becomes essential.

Enterprise Product Costing relies on standards in cost accounting and thus enables traceable and comparable costs in global process and supply chains.

  • Uniform standards are implemented in every costing.
  • Products are specifically controlled throughout their lifecycle.
  • Standards and processes are systematically integrated in the cost calculation within the company.

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The standardization of processes and methods enables employees to implement costing processes uniformly and faster.

Functional areas from product development to controlling and management work with comparable calculations and a common logic. Cost engineering teams operating worldwide benefit from a uniform view of key figures, costs, and calculations.

Bühler Motor, a leading company in the field of drive technology, works with up-to-date cost information worldwide. Learn more about the success story here.

Implementation of Enterprise Product Costing with a software solution

EPC software solutions enable globally operating companies to implement uniform cost management processes quickly and reliably and to use a central database for cost management plans and cost calculations.

EPC systems can be easily linked to existing enterprise systems. This means that costing-specific data from systems such as Enterprise Resource Planning (ERP), Product Lifetime Management (PLM), Product Data Management (PDM), Computer Aided Design (CAD), Excel and external benchmark data can be made accessible in a central platform.

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With the comprehensive functions of an EPC solution, companies implement global cost accounting for products, manufacturing processes as well as projects and services quickly and reliably.

  • More quotation iterations with many variants and quantities.
  • Consistent pricing for better negotiations and trackable quotes
  • Systematic and fast implementation of price analyses, benchmarks and cost comparisons
  • Simple cost assessment through cost models
  • More security through simulations, maturity levels and calculation against target costs (target costing)
  • Reliable key figures for evaluating the profitability of projects and multi-projects

Find out more about EPC software on our website

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