Concept Development and Execution Support to Connect Cost Planning and Cost Management in the Manufacturing Industry

In conventional cost planning and management, due to reliance on person-dependent estimation operations and fragmentation of cost information between the planning stage and the mass production stage and beyond, there are many cases where product cost competitiveness and cost variances are not fully utilized in improvement activities or management decision-making. In response to these challenges, ABeam Consulting evaluates cost planning and management not as isolated functions, but from the perspective of overall optimization, including the engineering chain, supply chain, and management control. By structurally organizing maturity based on a proprietary framework and extensive support experience, the locations of issues and their root causes are clarified in a short period of time. Based on this, support is provided for the formulation of highly feasible initiatives and execution roadmaps.

Japan's manufacturing industry is facing intensifying global competition, diversifying customer needs, increasing environmental requirements, and is required to create higher added value and secure stable profits than ever before. Under these circumstances, cost planning and cost management are important factors that determine the competitiveness of products and companies; however, it cannot be said that many companies have systems in place that sufficiently respond to today's situation.

In many companies, cost planning tends to rely heavily on person-dependent estimation based on past data, and deficiencies or insufficient accuracy in assumptions at the design stage lead to repeated corrections and rework in subsequent processes, resulting in increased man-hours and costs. In addition, the cost planning process at the product planning and development stage and the standard cost and actual cost management process from mass production onward are not necessarily linked, and there are many cases in which cost information and assumptions are not sufficiently handed over. As a result, it takes a great deal of time to grasp and analyze actual costs, making it difficult to utilize the factors behind cost variances for improvement activities and management decision-making.

The background to this situation is that cost planning and cost management have been regarded as individual tasks or handled on a departmental basis. To resolve this, organizing and reviewing the overall picture, including the engineering chain, the supply chain, and management control, is required.

ABeam Consulting takes a comprehensive view of the engineering chain, the supply chain, and management control to organize issues in cost planning and cost management and clarify the "ideal state."
Based on this, in-depth knowledge of related systems such as PLM, ERP, and MES is leveraged to support the formulation of initiatives that take into account relationships among operations, data, and systems.
For the initiatives under consideration, a roadmap toward realization is formulated, taking into account constraints, expected effects, and priorities.
Through this, advancement of cost planning and cost management is achieved in a fully optimized manner across the engineering chain, the supply chain, and management control, rather than being limited to optimization of individual tasks or departments.

Evaluation is conducted not by viewing cost planning and management as standalone processes, but from an end-to-end perspective spanning the engineering chain, supply chain, management control. Using a proprietary framework, maturity perspectives structured from extensive delivery experience, both surface-level issues, structural issues, underlying causes are clarified. Assessment covers practical dimensions including cost planning assumptions, estimation processes, methods for capturing actual costs, management granularity, approaches to variance analysis, improvement activities, enabling rapid, in-depth understanding of "where issues exist and why they occur." This approach clarifies essential issues that drive next actions, rather than stopping at issue identification alone.

Based on issues identified through current state analysis, underlying causes, the "ideal state" for cost planning and management is defined in concrete terms. The ideal state, not merely an aspirational image, a highly feasible model reflecting on-site operations, organizational structures, roles, existing system constraints. Based on this, initiatives to move toward the ideal state are organized across business processes, data management, KPI, system utilization. In formulating these initiatives, expected effects, implementation difficulty, cross-functional impact scope are considered, phased priorities clarified. Furthermore, an execution roadmap is formulated, reflecting constraints, resources, to ensure steady implementation. Through parallel pursuit of short-term improvements, mid- to long-term advancement, field effectiveness ensured, continuous advancement of cost planning and management enabled.

In advancing cost planning and management, envisioning the future state and initiatives alone is insufficient; the execution phase, incorporating constraints such as on-site operations, existing systems, organizational structures, roles, is critical. Issues and initiatives identified in the conceptual phase are translated into concrete actions, including business process redesign, organization of data definitions, management units, cross-functional role design, with support for phased implementation. In addition, by organizing priorities and approaches for implementation and modification based on relationships between business operations and related systems such as MES, PLM, ERP, gaps between concept and execution are prevented. Through such hands-on support, formalization of initiatives is avoided, enabling continuous advancement of cost planning and management, establishment in operations.

• Organization of issues through an end-to-end perspective: A cross-functional view spanning the engineering chain, supply chain, and management control; organization of business, data, organizational fragmentation, and key issues, centered on cost planning and actual costs
• Clarification of key issues based on maturity perspectives and case examples: Leveraging maturity perspectives and benchmarks based on support experience, other company case examples, to clarify positioning and priority issues to address
• Definition of the ideal state and initiatives: Organization of a highly feasible ideal state and concrete initiatives for cost planning and management, reflecting constraints such as on-site operations, roles, existing systems
• Formulation of a phased execution roadmap: Development of a phased execution roadmap from short-term to mid- to long-term, considering initiative impact, implementation difficulty, cross-functional impact
• Accompaniment support for implementation and establishment: Consistent support from business, data, role design through implementation and establishment, based on relationships between operations and systems such as PLM, ERP, MES

An approach to advancing cost management that spans the engineering chain, supply chain, and management control, providing end-to-end support from cost planning through execution and establishment. Issues such as fragmentation across business, data, and organization, centered on cost planning and actual costs, are organized from an overall perspective. Maturity perspectives based on support experience, along with case examples from other companies, are leveraged to clarify the company’s positioning and priority issues to address. In addition, a highly feasible ideal state and concrete initiatives are defined, reflecting constraints such as on-site operations, roles, and existing systems, and a phased roadmap is formulated, considering effects, implementation difficulty, and cross-functional impact. Based on relationships between operations and systems such as PLM, ERP, and MES, consistent accompaniment support is provided from design through implementation to establishment.