Business problem:
- Material cost was 3% higher than the estimated requirement
- Understanding and validation of cost sheets with accurate costing methodology
Solution Approach:
- Understanding balance sheets
- Understanding calculation of cost for each item
- Profitability analysis
- Study losses in material during procurement, rework and rejection. Also scrap due to improper storage and aging.
- Monitor incoming material losses
- Excel application to track and report the progress
- Implementation of recommendations
Key Outcome and benefits:
- Profitability, revised costing: $1.4 million
- Material control: $400,000
