Client: Major Multi-National Manufacturing Company
Problem:
A large multi-national corporation needed to understand their true costs for almost 7000 items. They were looking for ways to improve profitability by making changes to their product line ups and they needed an auditable way of tracking their cost-to-produce each item in the targeted inventory range.
Scope of Work:
The client asked Quantalyst to document auditable costs for each item using item complexity analysis and activity-based cost accounting concepts.
What Quantalyst Did:
- Mined data systems to acquire auditable production detail on an item-by-item basis. Included data mining from a large ERP system, several departmental satellite systems, and a large number of spreadsheets. Quantalyst also interviewed key personnel to obtain undocumented cost information which was a significant cost factor for several key products.
- Implemented an item review method and schedule to allow a comprehensive cycle time analysis for all items across all manufacturing plants.
- Developed auditable complexity profiles for each item.
- Integrated cost-to-produce functions into the existing ERP system.
Results:
- Improvement opportunities identified to achieve target cost goals on selected ranges of product offering.
- Identified MIS improvement opportunities that have enabled development of data capture systems and data warehousing concepts.
- The above moved the focus of IS development from "wish lists" to pragmatic, managerial useful data access structures.
- Product rationalization opportunities moved from strict volume-based measures to a matrix analysis which incorporates complexity factors.
- In an unexpected spin-off opportunity, the work was prominent in a plant capacity rationalization effort.
