With turbulent supply chains and an ever-shifting industry landscape, there’s no way to know your precise manufacturing costs in advance. However, you can rely on standard costing to provide reasonable estimates – if you have the right tools to tackle the task. Advanced enterprise resource planning (ERP) systems can provide cost visibility, resource planning, and real-time analytics to make planning for the unpredictable possible.
What Is Standard Costing?
Standard costing is a specific method for manufacturers to predict costs over a certain period. Benchmarks and analysis can provide inputs for a costing standard formula that includes materials, labor, and overhead to estimate future expenses. However, many factors can lead to actual costs deviating from the standard costing.
The trick here is to leverage the most appropriate tools to ensure a close match between actual and standard costs. With accurate estimates, your team is better positioned to plan for the future and face any unexpected circumstances that arise.
Enhancing Cost Visibility and Allocation
Your team relies on accurate data to carry out effective standard costing. But fragmented data and a lack of integration of various systems often makes gathering that information a challenge.
An advanced ERP system overcomes this challenge by giving you better insights. Your team can track costs across every production stage, creating accurate benchmarks that provide a solid foundation for standard costing.
Plex ERP provides detailed reports and customizable dashboards for maintaining complete visibility over production costs. You can achieve complete monitoring and management of production costs to create more accurate cost estimates.
Optimizing Resource Utilization
An advanced ERP system lets your team better align your resources with production schedules and demand forecasts. You can ensure efficient utilization of machinery, labor, and materials to make the most of all available resources at any given time.
With Plex ERP, your team can allocate resources based on forecasts, but you also have the flexibility to pivot in response to real-time production data. With less downtime and greater operational efficiency, your operations extract higher value from existing resources, improving profitability.
Leveraging Real-Time Data
While planning ahead is vital for successful manufacturing operations, it’s not the only requirement. Resilient operations must be able to handle the here and now with the agility to adapt to changing conditions. An advanced ERP system can provide real-time analytics that give your team the insights they need to make decisions on the fly.
Plex is an integrated smart manufacturing platform that incorporates both an ERP and a manufacturing execution system (MES) in a single system to provide a real-time view of your entire production lifecycle. Respond to changes in production efficiency and other critical metrics immediately to minimize the impact of any disruptions.
Streamlining Human Capital Management
Human capital management plays a key role in standard costing, with direct labor costs second only to raw material costs in most industries. An advanced ERP tracks work hours, training, and other metrics to provide precise data for the most accurate standard costing possible.
With Plex ERP, you can visualize human capital data across your entire enterprise to create accurate labor cost forecasts. By analyzing benchmark data, you can estimate required work hours to meet demand forecasts and keep your standard cost as close to actual cost as possible.
Advanced Solutions in Production Cost Management
Relying on an advanced ERP system like Plex ERP significantly improves the accuracy of your standard costing. The improved visibility and control you gain over your production costs also boosts profitability through enhanced cost management and resource utilization. For more about how Plex ERP can solve your unique challenges, check out some of our demo videos and schedule your personalized demo today.
Related Articles