Operation Planning Industrial Costing

From Efikton

Operation Planning Industrial Costing

There is a lot of information today inside the Companies.


Information provided from many system (with backbone the ERP) allows the departments to run the daily normal operations. But when we arrive in the Top Management level where the decisions are taken, we see that the information to serve the tasks of the Top Management is very limited. For example, the financial statements of the Company are generated every 3 months. This can be acceptable in stable economy times. But in AN unstable, very floating environment where sale prices, quantities, raw materials vary a lot inside an economic period and the profit margins fall under the global competition, it is necessary to improve the information and the understanding of the company in the Top Management level, so to serve the purpose of better understanding, the decision making, fast reaction to the problems and closer control. When the Management can only receive financial results once in a trimester or can’t identify the causes which provoke the problems or to understand quickly what advantages will provide the possible available solutions, then all this cycle is problematic, because the delay in understanding and reaction to resolve the problem is too long for today’s economic situation.


The problem becomes greater when a company produces and sells many different products with different margins, raw material values, and elaboration costs as is the case for the manufacturing industries.


Companies to survive and prosper in the next decade will need to prepare the information framework for the Top Management. This information framework must be designed for the Top Management, to facilitate the understanding of the company, the control, the decision making and the communication with the rest of the company.


Nexoft is offering the consulting and the IT-Solutions to the Top Management to succeed in their today mission.

Nexoft is offering a series of control models and solutions which will radically improve the way that the Top Management understands the Company, its dynamic and possibilities, its resilience to problems, the reasons of the actual results, the weak and the strong points and the real product costs. In this way they will be taking more realistic decisions and they will be able to react faster in the changes.


Here are some of the possibilities which will be able to use and exploit, to improve the decision-making process:

To get the financial statements and the profit and loss of each business unit and for the whole company weekly or monthly and not every three months as it is today.

To understand the reasons of the financial results which are not possible to be understood from the normal financial statements

To understand the real cost of the products without assumptions and simplification averages. The understanding of the exact cost of a product is very critical in the manufacturing industries because determine the sales policies, the development of new products and the strategy against competition

To be able to plan the operations of the Company (Purchases, Production, Human Resources, Sales, Machine usage, Expenses, etc.) and to see the result which are generated from the operations. Today the planning of the Company usually is understood as a copy of the financial expenses of a previous year with some simple modifications which are not reflecting the actual reality of the company.

To be able to understand the Budgeted Cost of each product and the exact components of the cost. This is done in relation with the Operation Plan from the point 4.

To understand the resilience and the results of the Company if various parameters (raw material price, sales price or quantity, production, productivity, expenses) will change.

7. To understand the strong and the weak points of the company. Also, the cost or the benefit of such strong or weak points. This will make easier for decisions and corrective actions in the structure of the Company but also in the decision for investments, because will be clear the operating advantages of such investments.

To run various what-if scenarios so to understand how the company will behave under certain structure or conditions.