Service Offering - Conversion Cost Analysis that builds improvement for key Cost Drivers.
All operations, when you strip back the layers, are really no more than sausage machines. You stick in the material, you turn the handle, and out come the sausages. Understanding with crystal clarity, the cost of converting material to finished product, and the relative contribution of operational levers in driving the cost of goods trajectory, is a powerful business tool. Stated another way, Activity Based Costing meets World Class Operations.
Deliverables :
- Develop a conversion cost framework for understanding cost drivers in operations. Examples of cost drivers include OEE rates, set up, campaigning strategies, routine waste and catastrophic waste, indirect operations on product families, department overhead and programmatic costs.
- Aggregate translation of these cost drivers into their impact on cost of goods.
- Determination of CGS evolution (both history and trajectory) for key product families.
- Definition of critical success factor programme, in order to drive cost of goods improvement and taking account of CGS impact of movement in business levers, costs of achieving such movements and the likelihood of success.
- Management mechanisms in place for the annual budgeting process.
Typical Duration :
(contingent on operating unit complexity, EIS capability and robustness of the operations budgeting process)
Typical Sponsor
- Senior director Supply Chain Operations, Finance or Materials.
Site Director Finance, Operations, Materials, or General Manager.
Related Offerings : Conversion Cost Benchmarking
Publication Available!