In an increasingly competitive global economy it is becoming a bigger challenge to remain competitive and to protect profit margins and shareholder value.
The process manufacturing industry, in particular, faces many challenges in today’s international marketplace. Just a few of these challenges are:
Globalization with customers and suppliers on every continent
Manufacturing locations around the world with very different manufacturing and logistic costs
Overcapacity in regional markets
A commodity market with cost focus
Information Technology issues and challenges pose further complications for the process manufacturing industry. For example:
Mergers & acquisitions have created large companies with diverse IT environments
Different types of systems are used on the corporate, mill and process/production levels
Process and quality systems are often isolated from the enterprise systems
In order to overcome these challenges and make the right business decisions quickly, large international process manufacturing companies must have access to accurate, timely and actionable cost and profitability information. An enterprise cost management approach that integrates cost management and profitability analysis at the corporate, mill and process/production levels is the most effective way to ensure you have this important information at your fingertips.
This is very interesting, but “does it apply to me?” If you answer “YES” to even one of the following questions, an enterprise cost management approach will help your company better manage costs and profitability.
Do you make cost management and profitability decisions based on insufficient, out-of-date or hard-to-obtain information?
Do you have a legacy costing system that is complicated, difficult to maintain and labor-intensive to manage?
Is costing done in Excel with no common method or business logic?
Does your current costing system run on a legacy mainframe server that is expensive to maintain?
Do the mills or manufacturing facilities perform costing using different methods and systems?
Are you unable to perform cost benchmarking between mills or manufacturing locations?
Are you unable to clearly understand which products, customers, or mills are profitable and which ones are unprofitable or inefficient?
Utilizing an enterprise cost management approach can be highly advantageous to your company because, at a minimum, it:
Provides cost and profitability transparency throughout the organization
Allows the corporation to work as one unit with focus on optimizing profits and reducing costs
Supports continuous cost reduction efforts
Additionally, an enterprise cost management approach solves several IT-related challenges by:
Allows for harmonization of cost management methology and analysis
Supports integration of diverse accounting, production and process systems for effective business support
Leverage previous investments in transaction-based systems (ERP and MES) and process historians
Reduce production costs through faster access to reliable information for better and faster decision-making
Enterprise Cost Management