FAQS - Solutions

EasySource Cost Modeling and Analysis

1. What is Cost Modeling and Analysis?
2. Does this solution help me analyze my operating costs and also help me track it?
3. Can my costs come down simply by using this solution?
4. Does this solution help buyers and suppliers?
5. How secure is my information once it is used by this solution?
6. What are the benefits of this solution?
7. Does this software proactively alert me on problem areas?
8. Apart from cost analysis, are there any other functions available with this solution?
9. Can I get a comparative analysis about the suppliers' prices that'll help me make a better choice?
10. Do I need any particular software in my system to make use of this solution?

1. What is Cost Modeling and Analysis?

Cost Modeling and Analysis is the process of building costs of components and aggregates through a granular approach. Among the various cost parameters, a change in any of the parameters affects the final cost. These changes can be because of different processes, raw materials cost, manpower cost etc. The cost modeling and analysis process analyzes these effects to help reduce the final costs.

2. Does this solution help me analyze my operating costs and also help me track it?

Yes, this solution tracks and builds costs through templates for different components and product lines. This analysis is enhanced by the ability to simulate and build supplier components, sub-components and sub-assembly costing that enables accurate negotiations, analysis and forecasts of inbound cost components.

3. Can my costs come down simply by using this solution?

The Cost Modeling and Analysis solution captures raw materials, process and overheads information for a variety of technologies like Aluminum die-casting, forging, etc., for supplier and internal production processes. CMA provides the visibility and ability to simulate component costing combined with a platform to capture and share costing knowledge across the purchasing organization. This helps reduce organization costs. Cost reduction can also be achieved through:

• Better negotiation: Building supplier costs to enable factbased negotiation
  
• Raw material price reductions: The prices of raw materials and components can be reduced. This tool simulates the price reduction component accurately to enable negotiations.
  
• Transactional overhead reductions: This tool automates and manages the costing expertise and hence reducing transactional overheads and lead times.
  

4. Does this solution help buyers and suppliers?

This solution is a win-win for both interest groups - buyers and sellers. Buyers have better control and better knowledge of costing. This in turn helps supplier identify and correct inefficient processes that add to their costs.

5. How secure is my information once it is used by this solution?

Your data is protected using multiple dimensions
Privacy: Strong database and application level security ensures privacy of costing data from external and non-authorized internal users
Authentication: All users' rights are monitored and controlled to ensure that only authorized users access defined sections of the systems
Non-repudiation: All transactions are archived for audit. Any change in the system passes through a defined approval workflow.

6. What are the benefits of this solution?

1. Vastly improved spend management resulting in lower costs

• Visibility into actual spend and utilization enabling strategic pricing and costing decisions
  
• objective and fact-based negotiations enabling powerful and logical data to manage vendor pricing

2. Accurate target prices leading to better pricing decisions. True visibility of effect of price changes on contribution

3. More efficient project management

• In depth impact analysis leading to better costing, resource planning and risk mitigation
  
• Quick product cost rollout

4. Increased strategic bandwidth through reduced transaction effort. Improved ability to support organization's strategic sourcing objectives

5. Reduced dependence on individuals. Better risk mitigation.

6. Process efficiencies

• Uniformity of process and standardization opportunities improving efficiencies and accuracy of costing decisions
  
• Increased throughput through workflows and approval cycles
  
• Integration with ERP and other data stores to leverage existing knowledge and transaction base

7. Savings on sourcing

• Identification of focus areas in cost reduction initiative.
  
• Comparative analysis to highlight high potential categories
  
• Make/buy, outsourcing, process improvement focus by further split up of cost drivers.

8. Supplier Relationship and management

• Ability to store and analyze process and raw material costs across vendors
  
• Objective identification of supplier weakness and strengths
  
• Ability to suggest process optimization to handle future requirements
  

7. Does this software proactively alert me on problem areas?

The solutions have a powerful reporting and analysis module that allows you to set variance limits. You can track cost variances across cost drivers, components, sub-assemblies or finished goods. Detailed reports like Cost Driver analysis, RM ratio reports etc would indicate cost creeps due to increase in parameters like raw material prices.

8. Apart from cost analysis, are there any other functions available with this solution?

This solution is a powerful Knowledge Management and decision making tool that provides a robust framework for costing knowledge capture and sharing. It has incorporated workflow, access control and other features to optimize costing processes in your organization.

9. Can I get a comparative analysis about the suppliers' prices that'll help me make a better choice?

Yes, The CMA Solution provides comparative analysis across parameters (VBC vs VBC) across suppliers to analyze root causes for differences across supplier prices.

10. Do I need any particular software in my system to make use of this solution?

No. The CMA solution is a comprehensive costing analysis and modeling tool that operates on a standalone basis. It can integrate with ERPs if required for Item master, vendor master and BOM details if required. The modular architecture ensures that it can leverage on existing databases and applications.