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MATERIALS COSTING
BACKGROUND
- $30MM automotive components manufacturer
- Lack of materials management and cost accounting disciplines resulted in a poor understanding of costs by product line, as well significant materials variances
- Customer contracts allowed for price increases based on actual changes in raw material costs
INITIATIVES
- Implemented a comprehensive program to track materials usage by product
- Put in place operational disciplines for key MRP areas
- Identified over $500,000 in under reported raw materials costs that were subsequently passed along to the customer
- Established processes and improved visibility of information to enable continuous improvement
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