Even in the early stages, risk is an important consideration throughout the product lifecycle. Redesigns may be necessary multiple times, labor and raw materials fluctuate in price, or products launch but aren’t successful in the market. Since costs are designed into a product during early concept decisions, the implementation of cost-cutting measures at a later time is only possible with significant effort. How can you plan and control for costs accurately right at the beginning of the product development phase?
Product Costing Methods in Manufacturing
Understanding product costing methods in manufacturing has never been more important, regardless of business model or market segment. In order to maximize profits, you need to be tracking the cost implications (which are often in flux) of designs, materials, manufacturing facilities and equipment, and much more at each stage of the product lifecycle across your entire portfolio. But, with today’s regulatory pressures, changing consumer preferences, complex product innovations, and intense global competition, achieving the best ROI from cost management efforts has never been trickier.
Typically, enterprise resource planning (ERP) systems do not provide sufficient support for a reliable cost analysis for each phase of product development. Without the right tools, product cost management is a tedious and decentralized function that can only be done once or twice per new product development and introduction (NPDI) cycle – severely limiting the windows of opportunity to identify product cost savings and maximize profits.
