Whitepapers on Product Cost & Enterprise Cost Management
Featured Whitepaper: Reducing Cost of Goods Sold with Enterprise Cost Management
As discrete manufacturing companies experience increasing price pressure from customers, rising supplier costs, overseas competition, and income growth pressure from investors, they are forced to scrutinize product margins and cost of goods sold (COGS) with renewed vigor. Across a variety of market sectors, COGS are typically as high as 70-90% of revenue. The ability to directly reduce COGS presents the opportunity to significantly impact a company’s bottom line. According to a recent industry analyst report1 in which 150 of the top US manufacturing companies were surveyed, “cost estimation and control” were identified as management’s number one concern.
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1/2/2008 - The Anatomy of Product Cost (572.48 KB)
Manufacturing a component requires tangible physical resources -- the material mass, the labor time, time on machines, life of tools, machines, factories, energy, shipping, warehousing costs, and a whole lot more. The fair-market economic cost of these resources, in a truly efficient market, with zero mark-up at any point in the supplier chain is the True Economic Cost of manufacturing the item. This paper will outline what makes up product costs today and why having a better understanding of the True Economic Cost of a product will measurably benefit manufacturing organizations.
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