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Strengthen the cost management of non-standard parts

The so-called "non-standard" refers to equipment manufacturers or suppliers who provide customized products that have not yet been standardized or are specially designed on the basis of existing standardized products according to the special requirement

Therefore, it is necessary to analyze and study the characteristics of multi-variety, small batch, and non-standard production cost management based on internationally accepted accounting standards and PMBOK and other theories and methods, and put forward specific solutions that can effectively solve the cost management of equipment manufacturing enterprises’ non-standard order items. method.

   Strengthen the cost management of non-standard parts items, and make the machining quotation more reasonable!

   One. Problems in cost management of non-standard order items

   Most of the non-standard order items have the characteristics of multiple varieties, small batches, long cycle, short delivery time, high value, low profit, customization, non-standard and rapid change. The design, production and delivery of products and services have typical temporary and one-off project characteristics, and project cost management is very difficult. Sujiawang summarizes common cost management problems based on years of experience in non-standard parts processing.

   1. "Beat the head" quotation at the bidding stage

   In order to cope with the fierce market competition, many companies did not have or too late to conduct a comprehensive cost estimation during the bidding stage. They often bid on the basis of past experience, which is very risky.

   2. There is no project budget and cost control in the project implementation stage

   After winning the project, the company often does not formulate the project budget and cost benchmark. Sometimes, in order to ensure that the project is delivered on time, even at any cost, the project cost cannot be controlled.

  3. There is no project cost summary at the end of the project

After the project is over, the experience and lessons of the project are basically not summarized, and it is impossible to calculate the cost separately for each project; even if the company is profitable, it is not known which project has made the contribution or which project has made the greater contribution, which is typical "Cauldron Rice". This approach is not conducive to continuous improvement and improvement of enterprises.

   2. Reasons for non-standard order cost management problems

   has been engaged in the fast-screening of non-standard parts processing, for everyone to analyze in detail, the causes of common problems in non-standard order cost management

   1. There are many varieties of products

   Fierce market competition has made it impossible for equipment manufacturers to mass-produce the same product in a relatively short period of time. To gain a firm foothold in the market, companies must produce customized products that meet the individual needs of customers on the basis of existing standardized products.

   "Multi-variety" is the first feature of non-standard orders. Generally speaking, in order to meet the individual needs of customers, equipment manufacturing companies will develop various forms of products accordingly. The variety of products will inevitably lead to a huge variety of raw materials and specifications. The combination of "multiple varieties of raw materials" and "short delivery cycle and fast capital turnover" has increased the difficulty of material cost management for non-standard order items.

  2, the number of products is small

  Non-standard orders are generally small batch production. "Small batch" refers to a small number of products, generally dozens, dozens, a few, or even a single product. Especially for products that consume a lot of materials, are complicated in structure, and are expensive, the same customer basically has no follow-up batches, and most of them are "déjà vu". This "a la carte" product is to a large extent a product that the company has already produced, and its structure is basically the same.

  3, short lead time

   The vast majority of non-standard order items are "progress-driven items". In order to meet customer requirements, shortening the lead time has become a norm.

  4, the organization is not sound

  Many companies do not have a dedicated bidding team, or there are no professional financial personnel in the bidding team, and no professional personnel conduct a comprehensive cost estimation during the bidding phase, nor do they carry out project cost control under the guidance of financial personnel during the project implementation phase.

   5. The system is not perfect

For the vast majority of private enterprises, due to the input-output ratio, it is unlikely to invest huge sums of money to establish a complete project management information system, such as Enterprise Resource Planning (ERP, Enterprise Resource Planning) systems; for state-owned enterprises, There are not many people who can invest a huge amount of money to establish a complete project management information system (such as the enterprise management solution SAP, namely Systems Applications and Products in Data Processing). The imperfect information system is the main obstacle to effective project cost management.

   Multiple varieties, small batches, short lead times, and non-standardized production are the common features of most non-standard orders. This requires companies to have sufficient management, technology, production, information and management capabilities, otherwise they will lose sight of one another, and cost management will be difficult to achieve.

   3. To solve the problem of non-standard order cost, summarizes the following points

   1. Establish a professional bidding team, do a good job in project cost budgeting and control

   Establish a professional bidding team, the bidding team should include financial personnel. In the bidding stage, it is helpful to comprehensively estimate project costs and formulate reasonable bid prices. In the process of project implementation, it is helpful to formulate project budgets and cost benchmarks, and at the same time control project expenses and costs.

   2. Establish a project transfer system and clarify the responsibility interface

   Once the bidding project is successful, the bid manager shall hold a project handover meeting to formally hand over all project documents (including cost estimate documents) to the project (execution) team, and sign the handover record. For technical, commercial and other matters that have not been closed during the bidding stage, the bidding manager and the project manager jointly sign a memorandum to explain the measures to be taken in the future.

  3. When setting up a project team, it is necessary to clarify project cost management responsibilities

   After the project is handed over, the project manager should immediately set up the project execution team. In order to ensure that the project cost is controlled from the beginning, the project team members must include financial personnel, and the work related to project expenses and costs should be managed and controlled by professionals to assist the project manager.

  4. Improve the project management information system and integrate this data in a timely manner.

   Due to the many characteristics of non-standard order items, manual collection and statistics of project cost data is a very backward method, which cannot meet the needs of project cost management. Establishing a complete project management information system (such as SAP, etc.) and collecting cost data in the project process through system technology is the basis for ensuring that project costs can be effectively controlled.

   5. Using earned value management technology, once cost deviations are found, timely measures will be taken to correct them.

  Earned Value Management (EVM, Earned Value Management) is a method that integrates scope, schedule, and resource performance to evaluate project performance and progress. It is a commonly used method of project performance measurement. It integrates scope benchmarks, schedule benchmarks and cost benchmarks to form a performance benchmark for the project management team to evaluate and measure project performance and progress.

  As a project management technique, earned value management requires the establishment of integrated benchmarks for measuring performance during the project. It calculates and monitors three key indicators of planned value (PV), earned value (EV) and actual cost (AC) for each work package and control account of the project work breakdown structure (WBS); it also monitors the actual performance and the benchmark Deviations: schedule deviation (SV), cost deviation (CV), schedule performance index (SPI) and cost performance index (CPI). As the project progresses, the project team can make predictions on the Estimated Completion (EAC) based on the performance of the project, and the predicted results may differ from the Budget as Completion (BAC). If it is obvious that BAC is no longer feasible, the project manager should consider timely remedial measures or adjustments to the project cost budget.

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