Manufacturing costing software helps factories calculate and control the cost of products, operations and processes. Costing is important because a factory can be busy and still lose money if product costs are not understood correctly.
Many companies calculate cost using Excel templates. Excel can work, but it becomes risky when material prices change, cycle times change, overhead assumptions change or process routes are updated.
What manufacturing cost includes
Manufacturing cost may include raw material cost, bought-out component cost, labour cost, machine cost, tooling cost, power cost, consumables, overhead and rejection or rework cost. In some industries, packing, logistics and inspection cost are also important.
Material cost
Material cost should come from BOM quantity and supplier price. If BOM is wrong, costing will be wrong. If supplier price is outdated, quotation may become unprofitable.
Labour and machine cost
Labour cost depends on manpower time and labour rate. Machine cost depends on machine hour rate and cycle time. A product with small material cost can still be costly if it uses expensive machine time.
Operation costing
Operation costing is important when products go through multiple processes. Each operation may have different cycle time, manpower, machine, setup and overhead requirement. A single average cost may hide the real cost driver.
Why costing software should connect with production data
If costing uses standard cycle time but actual production takes longer, profit assumptions will be wrong. Costing becomes stronger when connected with time study, production tracking and actual shopfloor data.
How Factovare helps
Factovare is being built to connect costing with product details, cycle time, resource requirement, manpower and production data. This helps factories move from isolated costing sheets to connected cost visibility.
Conclusion
Manufacturing costing software should not only calculate a number. It should show why the cost is high, which process is driving cost and how factory data affects profitability.