Services > Manufacturing Consulting > The Cost of Complexity

Today's competitive marketplace demands a wide variety of products, sizes, packaging and volumes — and all of this faster and cheaper! Manufacturers are under increased pressure to manage production runs, raw materials, packaging, and changeovers more efficiently. HMC can help you understand and manage this complexity. Our experienced consultants and an innovative costing tool give our clients a better understanding and control of complexity in the production process.

Complexity comes from a variety of sources, and while there is a need for some complexity, much of it is not essential. A detailed analysis of the production process can help identify some areas of opportunity, such as combining SKUs to generate longer, more productive runs or rationalizing packaging to reduce changeovers and material costs. A thorough analysis may also show other areas in the production process where complexity exists, but is not required.

In addition to this analysis, HMC consultants apply an Activity Based Costing (ABC) technique to identify the true costs of producing each product. Unlike the Traditional Cost Accounting (TCA) method normally used, ABC more accurately reflects the specific costs of producing various products. Armed with this information, manufacturers can make informed, cost-effective production decisions.

At HMC, we use software tools developed by ABC Technologies (now SAS), a leader in the field of activity based costing. These tools enable us to allocate our clients' manufacturing costs to the activities that produce them, and then analyze more accurately how those costs flow through their production process. This analytical technique produces a more accurate assessment of production costs and the cost of complexity, and yield a better and more reliable solution to the complexity problem.

To read more about our Cost of Complexity Service, click here.

If you would like assistance in solving your manufacturing complexity problems, please contact HMC.

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