Proactive, targeted cost management is becoming increasingly important because businesses need to have a handle on their costs to successfully compete in the global market and achieve profitable growth. It is essential for all business divisions and locations to perform costing based on the same data and methods in order to achieve transparent, comparable product costs.
Enterprise Product Costing (EPC) is the management method that takes advantage of proactive, targeted cost management. It considers the value each business division contributes to effective product management.
For example, purchasing plays an important role in effective design as the number of purchased components in product manufacturing increases. Production changes and extensions require purchasing agents to quickly and flexibly compare and adjust prices. Today’s suppliers are also involved in preliminary planning of production workflows in order to represent cost factors long before production begins.
Purchasing agents can take advantage of concepts developed in different departments (e.g., development) to satisfy design requirements. To customize these concepts to meet the unique requirements of the purchasing department, there is a set of methods that puts procurement in a position to optimally respond to these new tasks, to make an essential contribution to cost optimization and to establish itself within the enterprise-wide cost management process with an eye toward EPC.
In practical applications, the EPC approach is best implemented with the help of a corresponding IT system. EPC systems 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.
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