Cost Identification and Management

Identify cause and effect relationships to objectively assign costs.

Accurate costing data helps organizations with:

• Set a selling price
• Determine profit drivers
• Better manage the business
• Costing rates to prepare quotes
• Make/Buy decisions
• Identify problem areas
• Set goals
• Measure impacts
• Negotiate with suppliers and customers
• “What if’ scenarios
• Capacity management

Implementing Activity-Based Costing (ABC) management allows businesses to accurately gather data about their operating costs and stop guessing. Costs are assigned to specific areas—such as planning, engineering, or manufacturing—and then the activities are associated with different products or services. In this way, the ABC method enables a business to decide which products, services, and resources are increasing their profitability, and which are not.

This approach presents the principles and benefits of Activity-Based Costing (ABC) management. Solutions provided by ABC will be presented, beginning with an overview of the shortfalls of many typical costing systems. Applications  focus on the transactional aspects of running a business as well the manufacture of products, or delivery of services.  The transactional aspects may include the costs of the relationship with the various material and service providers that must be maintained, as well as the costs of the relationships with customers. Examples of product, production cell, process, value stream or “wall to wall” applications are presented.   

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Value Stream Costing

Development of a process map with costs over 4 days on a specific product or service
The flow of organizational processes defines your value streams. The efficiencies of all processes are measurable. Time is money —whether assigned to product, materials, engineering, design or information flow. Applying Value Stream Costing identifies wastes and constraints in your current value streams.

Value Stream Costing uses activity-based process modeling techniques to capture cost, time and other operational data along any given Value Stream. It offers a unique view, across the functional silos or departments which enable any business system to:

• fully understand what it costs to provide services to customers
• measure resource capacities and utilizations
• identify process bottlenecks and constraints
• perform what-if scenarios based on changing market volumes

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Mentoring

Costing mentoring days are designed to help clients diagnose various costing problems or tune-up an existing model. Issues might include update current activities, processes, products or customers. Other costing mentoring activities might include targeting areas of high cost and developing implementation plans for waste/cost reduction.

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Total Asset Management for Manufacturers (TAMM)

Total Asset Management for Manufacturers (TAMM) is a methodology which facilitates decision making regarding asset use, acquisition and profitability. TAMM is targeted for companies seeking to understand how to measure and diagnose equipment performance, reliability and maintainability through data analysis. In addition, this information can then be merged with product costing data to identify production improvement opportunities including increased capacity (higher throughput) and profitability with the current assets.

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For more information on MMTC's Costing program, contact us at 888-414-6682 or via email at inquiry@mmtc.org.