Target Costing - Target Cost Evaluation for Purchasing

Target costing and target cost evaluation with modern IT methods for purchasing: fast - efficient - transparent.

It will work for you, too, guaranteed.

Huge article inventories and even more master data make it difficult for the purchasing department to achieve the best prices. They fail to see their way through the jungle and run the risk of buying at unfavorable prices without knowing what they are buying. Using target costing and target cost evaluation with modern IT methods for purchasing is a very effective tool. SIMILIA's automated BOM-Compare-Process (BCP) supports the purchasing department in target costing. Shadow costing can also be applied via this process.

Tradition, experience, and digitization in the procurement process only unfold their power together.

Rising material costs, higher quality requirements, shorter delivery times, volatile markets, and many more are just some of the challenging constraints. Strategic purchasing and operational purchasing have a more important role in companies today than in the past.

We do not want to hold any theoretical lecture about purchase processes here but want to optimize the procurement processes with modern and automated processes.

Purchasing is currently playing a much more important role in the company than in the past. Rising material costs, higher quality requirements, shorter delivery times, volatile markets, more complex products, and much more are just some of the challenging constraints. At the same time, the number of master data and parts lists is increasing rapidly. In the supplier environment, the number of suppliers is also increasing.

The traditional image of purchasing and the demands placed on it has consequently changed significantly. Purchasing, which focuses on interdisciplinary, networked, and systematic optimization of the entire supply chain, is in demand today. At the same time, purchasing must free itself from technical constraints and devote itself to the core issues. Without powerful and "smart" IT solutions and process know-how, these tasks will not be handled efficiently.

For target costing, or effective target cost evaluation, it is of great importance to have the entire article and master data inventory on the radar and to permanently reconcile and check it against each other. On the one hand, supplier data, prices, and call-off figures are updated. On the other hand, master data is continuously updated with new item statuses that are entered into the procurement process. The BOM Compare Process (BCP) from SIMUFORM is able to permanently and continuously monitor the stock of master data.

Your benefits with the BOM Compare process for target costing and for target cost evaluation:

+ Automated parts list matching of hundreds of thousands of master data records.
+ Efficient target cost evaluation through transparent data comparison.
+ More price certainty and increase in the share of default prices.
+ Referencing prices via similar items from the inventory.
+ Support iterative shadow costing with actual costs.
+ Identification of best supplier prices.

Let the software work for you: Automated, efficient, and sustainable.

No complex applications should overload your work. The focus is on simple and effective evaluations. Established processes and working methods are not interrupted. They are just processed faster and more efficiently than usual. The automated merging of technical and commercial data plays an outstanding role here. This makes everything transparent and recognizable.

Shadow costing and target cost analysis

In the early concept phase of a project, it is important and useful to make a quick cost calculation for an entire system - especially for customized special machines. The result of the calculation would be more accurate than a usual estimate from experience because it is based on real ACTUAL costs. However, in the early phase, there are no release stocks or bills of materials and consequently no master data. Nevertheless, SIMILIA BCP is able to support here.

Validate your target costs with simple but effective methods.

This procedure can be further refined in such a way that validated price information is successively stored for the reference parts if it is not already available. In this way, regression methods can be used to determine the target price for each material group as a function of the number of pieces, material price, and weight. It makes sense to use the regression method at this point because it is only applied to a selected material group together with technology and material complexity information. Compared to the conventional method and the manual assignment of the drawing parts to the respective material groups, the effort involved in this solution is only a fraction.

Download the free information brochure on the topic of "Target Costing" with further practical examples here:

...and if you want to know how it works, download our free brochure:

"Optimize the procurement process in purchasing in three steps."