Globalisation increases market and cost pressure on manufacturers and suppliers in the manufacturing industry. Customers’ expectations of innovative product design and quality are rising and consumers are often not willing to purchase at a higher price. Keen competition among manufacturers and suppliers demands a diversification of modules and models.
The more complex automotive industry projects become, the more interfaces emerge between OEMs, development and module suppliers. Internal personnel resources are often too scarce to allow international projects to be run effectively. The outsourcing of responsibility for cost and development makes it difficult to maintain transparent target cost management and does not allow costs to be identified .
As a consequence, manufacturers are facing some of the following challenges: reducing product and project costs during the development phase, and improving alignment of planned time-line, budget and quality in strategic projects. A survey conducted by PA Consulting Group based on over 200 cost reduction projects clearly shows that companies in the automotive, consumer goods and mechanical engineering sectors have a cost reduction potential of up to 40 percent.
PA has combined its insights and experience to develop a new highly efficient approach: Best Practice Costing. The bottom-up process of Best Practice Costing determines the actual costs, provides a valid and transparent indication of cost reduction potential, and realises the identified potential effectively. This approach is strongly focused on project and product costs as the main cost drivers and uses continuously updated databases.
Three modules
Best Practice Costing comprises three modules, which can be applied separately, combined individually or implemented together:
Best Practice Calculation
Best Value Stream
Best Practice Product
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