How did an auto component maker standardize costing across 73 plants?

The context

Client and industry

The client is one of the world's leading developers, manufacturers and suppliers of diverse auto parts.

With more than six decades in the industry, the group supplies proprietary automotive solutions to OEMs across the globe. It runs 73 manufacturing plants in more than 8 countries and over 30 R&D centres worldwide.

The problem

The challenge

All 73 manufacturing plants followed a manual costing process, with no standard format and no central record.

Without an automated costing solution, costing data was neither standardized nor centralized across the plants. That limited visibility when shortlisting suppliers and optimizing costs, and made it hard to keep confidential costing data secure.

The problem

Why existing methods fell short

Spreadsheets, emails and manual ERP updates could not keep 73 plants consistent, and the gaps showed up in seven ways:

• Undue wastage of time and manpower managing unorganized data in Excel sheets and emails
• No detailed cost breakups, so cost leaks went unidentified
• No insightful, actionable reports, because costing data was not standardized or centralized
• Losses from human omissions while reviewing multiple Excel sheets for changes
• Unjustifiable, non-competitive supplier costs from a manual RFQ process for bought-out parts (BOPs)
• Data and knowledge loss when employees left
• More errors from manual updates of price change data in the ERP

The solution

How Cost It Right solved it

Cost It Right deployed its full costing estimation and management solution and integrated it with the client's existing systems.

With CIR, the client standardized organization-wide costing data on one centralized platform. The company onboarded Cost It Right in the second quarter of 2021.

• A system-driven, transparent RFQ process
• Digital cost cards with detailed cost breakups
• A digitized, hierarchy-based approval process with deviation highlights and full system records
• Automated reports
• Automated data updates to the ERP and other software on specific approvals
• Raw material (RM) amendments in under 3 minutes

The impact

Results and business impact

The end-to-end costing process takes 60% less time, and costing data from all 73 plants now sits on a single platform.

The insights helped the client reduce operational costs and work more efficiently, which marked a significant increase in profits. Digital cost cards with detailed cost breakups removed unidentified cost leaks, automated reports reduced manual labour and assumption-based decisions, and the client avoided manual errors and hidden cost disparities that could cause large losses over time.

The impact

Key takeaways

• Manual costing across many plants breaks down fast: one standard platform for current and historical data fixes visibility.
• A system-driven RFQ process for bought-out parts tackles non-competitive supplier costs.
• Digital cost cards with detailed breakups expose cost leaks that spreadsheets hide.
• Hierarchy-based digital approvals with system records protect confidential costing data.