Whether your organization is in the service, manufacturing or distribution sector, making a profit is never quite as easy as you might have hoped.
Many companies ask themselves the same questions:
If you find yourself asking any one of these questions then production cost analysis is for you! Regardless of their size, many companies have trouble with this issue. Indeed, very few understand their production costs well enough to use them as a reliable decision-making tool.
Around the end of the 80s, companies began talking about different costing methods: activity-based costing (ABC), theory of constraints, process costing, function costing, etc. Each of these has its own particular pros and cons. At DECIMAL, extensive experience has taught us that, no matter what method you use, the most important thing is to know your organization inside out. Also, the person in charge must be 100% convinced that their costing method is the most appropriate and be a good communicator, as these qualities will ensure an integrated, long-term production cost solution.
Before we discuss implementing production costs, we must first pinpoint the major factors that increase company value. Knowing these factors will enable you to:
Your production cost model should do more than simply evaluate the cost of your products/services. It must take into account the main performance indicators used by management to set company strategy. These indicators must be incorporated into the model so upper management can assess different scenarios and the model can be put to optimum use.
For the past twenty years we have been developing structured, proven management methods to help companies improve their market position. Over the years, a single theme has emerged that unites production costing, profitability analysis and budgeting: namely, to understand operations or, more simply, to set up a cost behaviour model.
In order to evaluate the cost of your products/services, you must make sure your production cost system reflects your actual operations. Do any of the following sentences apply to you?
If any of the above situations sounds familiar, DECIMAL can provide speedy assistance! For over twenty years, DECIMAL has been offering effective consulting services and technological solutions that can help you to:
Since its inception, DECIMAL’s focus has been on implementing production cost, profitability analysis and budgeting systems in a wide variety of organizations. Once equipped with these systems, many organizations realized just how many of their products/services were incorrectly priced, thereby sabotaging the company’s strategies.
Utilizing its specific and exceptional expertise in activity-based cost management, DECIMAL has been a consistent and vocal proponent for technological and practical progress in this field, as evidenced by its active association with different research groups associated with cost management, such as the Consortium for Advanced Management International (CAM-I) and Université Laval’s Chair in Cost Management. DECIMAL also provides training for CPA Quebec, CMA Alberta, CMA Canada and at a number of Quebec universities.
The methods devised and used by DECIMAL are being adopted by an ever-growing number of companies and research groups because they make it possible to obtain much more accurate production costs. These enable managers to make better strategic decisions that take corporate reality and executive concerns into account.
Adopting DECIMAL’s proposed cost identification methods gives managers a whole new company vision, obliging them to call into question the relevance of many operations. By optimizing the resources allocated to each operation (rather than the opposite), company work habits are transformed, leading to a dramatic improvement in financial performance.
The main advantage of these methods is that they pinpoint the performance measurements best suited to the company, thereby focussing cost control initiatives where they are most needed. This also leads to better planning and better follow-up of established objectives.
Implementing a production cost model enables companies to:
Additional advantages of a good production cost model: