Cost Accuracy and Cost Granularity

As our clients expand from a customer base within a single sales or distribution channel to multi-channel, from a few SKUs to multiple SKUs, from a single location to multiple locations, their ability to derive accurate costs and accurate P&Ls by customer, product, and channel often becomes problematic. To compensate spreadsheets spring up with different departments producing their version of the truth. It can be incredibly frustrating for the executive team.

We can often trace the problem to siloed systems or improperly setup transaction journals or general ledger segments.  Within an ERP system, virtually every master record is mapped into the accounting transactions and can get very specific…and very specifically incorrect. 

We need to review the master record standards and general ledger setup to ensure that the correct foundation exists for the desired reporting. Out of this review, we often see an effort to reconfigure the system, improve discipline on master records, and occasionally a need to implement a more robust ERP system like Ramco Food and Beverage ERP.

We need to step systematically backward through the feeds to Cost of Good Sold and examine each element and the source of the data. What confidence do we have in the processes and feeding systems? 

Some areas that are typically problematic include properly allocating inbound and outbound freight, cost allocations via backflush, decisions on raw material valuation and the inclusion of landed cost, allocation of scrap and loss,  formulation accuracy, overhead allocations, and transfer pricing. Our team can help you step through these challenges to design the best costing system to meet your needs.


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