Today, the ability to quickly and accurately calculate production costs has become a critical factor for a company’s success and competitiveness. Traditional costing, often manual and laborious, can be inefficient and prone to errors. Hyperlean, with its suite of innovative software, offers an effective solution to simplify and accelerate the cost calculation process: LeanCOST.

What is meant by “product costing”?

Product costing is an in-depth analysis of all the expenses incurred in producing a good, from raw materials to labor, including overhead costs. This analysis is fundamental because it defines competitive prices for the company in line with the market, while ensuring an adequate profit margin. In addition to maximizing revenue, well-executed costing enables the application of more flexible pricing policies, improved decision-making, and the identification of areas where production costs can be reduced without compromising quality.

In summary, two significant results can be achieved through product costing:

• increased visibility into business processes: a better understanding of costs allows for the identification of inefficiencies and the optimization of production processes.
• support for better-focused production strategies: thanks to accurate and up-to-date data, it is possible to make more informed strategic decisions, such as resource allocation or the development of new products.

Until recently, costing relied on traditional methods, such as manual calculations or spreadsheets, which required a significant expenditure of time and resources. Moreover, data collection and processing could be subject to human error, compromising the accuracy of the results. Time, accuracy, and flexibility were the main challenges for traditional costing:

• time: the cost calculation process could be long and complex, requiring days or even weeks to complete a detailed analysis.
• accuracy: the presence of manual errors and the difficulty of tracking all variables could compromise the reliability of the data.
• flexibility: modifying a quote or analyzing different scenarios could be very complex and require a manual recalculation of all costs.

Technology supporting costing

A recent survey indicates that competitive pressure can be a significant driver for digital transformation. Considering that precision and accuracy are fundamental components of costing, these can be achieved by digitizing the process and relying on technologies and tools that embrace a holistic view of business processes. The advent of dedicated software has made it possible to:

• automate and speed up calculations: by eliminating manual operations, processing times are drastically reduced.
• increase accuracy: thanks to integration with company information systems, data is more accurate and up-to-date.
• facilitate analysis: advanced software allows for rapid analysis of different scenarios and identification of areas for improvement.
• improve transparency: data traceability is complete, facilitating control and analysis.
• integrate data from various sources: costing software can integrate data from ERP, MES, PLM, and other systems, offering a complete view of costs.

In conclusion, rapid costing has become a fundamental element for the competitiveness of companies. Hyperlean, with its LeanCOST solution, offers an innovative and comprehensive response to the needs of companies that want to optimize their production processes and reduce costs. Specifically, LeanCOST is an advanced costing software that, thanks to an analytical calculation model, allows for:

• reduced design times: thanks to cost analysis during the design phase, it is possible to identify and resolve any errors in the early stages of the product lifecycle.
• optimized purchasing costs: LeanCOST helps select the most competitive suppliers and negotiate the best commercial terms.
• increased margin: accurate costing allows for the setting of more competitive selling prices, increasing product margins.
• improved decision-making: thanks to precise and up-to-date cost information, companies can make more informed strategic decisions.

Want to improve your company’s costing? Try LeanCOST! Request a demo.

Sources and Resources:

Perché la costificazione non è solo un calcolo e come farla bene (cata.it) 

insights.prophet.com/the-state-of-digital-transformation-2018-2019