Manufacturing
Finance that knows what a unit actually costs to make
A manufacturer's margin is decided on the shop floor and reported months later. We close that gap: costing that reflects what production actually consumed, inventory that agrees with the racks, and purchase control that puts approval before commitment.
What a unit really costs.
Material · labour · machine → actual cost, not standard
At a glance
Standard costs were set once and have not been tested against actual consumption since.
Costing and margin
Contribution by product, line and customer.
The economics
Why the numbers are harder here
Manufacturing is the sector where the books are furthest from the event. A unit is made in an afternoon; the cost of making it is assembled weeks later from material issues, labour bookings, machine time and an overhead rate set at the start of the year. Every one of those is an estimate until it is reconciled, and most are never reconciled at all.
The consequence is that pricing decisions get made on standard costs nobody has tested against actuals, and variances are absorbed into a single line that explains nothing. A business can be confident about its gross margin in aggregate and have no idea which products are carrying the others.
The problem
Where visibility breaks down
- Standard costs were set once and have not been tested against actual consumption since.
- Work in progress is valued by formula rather than by what is physically on the floor.
- Scrap, rework and samples move without a document, so yield loss never appears as a cost.
- Purchase orders are raised after the material has arrived, which makes approval a formality.
- Stock transfers between plants or states are recorded in one location and not the other.
Where we concentrate
How we focus the engagement
Costing and margin
- Product and job costing built from actual material, labour and machine consumption.
- Standard versus actual variance analysed to a cause, not absorbed into one line.
- Overhead absorption reviewed against real activity rather than last year's rate.
- Contribution by product, line and customer, so mix decisions have a basis.
- Yield and scrap quantified as cost rather than treated as an operational matter.
Inventory and procurement control
- Physical-to-book reconciliation on a fixed cycle, with differences investigated rather than adjusted.
- Work-in-progress valuation tied to the production record.
- Purchase-to-pay sequenced so that approval genuinely precedes commitment.
- Vendor rate and quantity variance checked at receipt, not at payment.
- Stock movement between locations recorded at both ends.
Reporting
Reports worth receiving
- Contribution by product, line and customer.
- Material yield and scrap, in quantity and value.
- Standard-versus-actual variance, split by cause.
- Inventory ageing and slow-moving stock.
- Working capital cycle, with the inventory holding period separated out.
Common questions
Questions we hear in this sector
Our costing is in the ERP. Why would we need help?
An ERP computes cost from what it is told. If material issues are booked late, scrap is not recorded and the overhead rate is a year old, the system will produce a precise number built on inaccurate inputs. The work is usually in the inputs, not the software.
How do you handle job work and subcontracting?
Material sent out and received back is tracked as a movement in both directions, with the conversion cost and any loss recorded against the job. Unreconciled job-work stock is one of the more common places value goes missing.
Can you work with our existing plant systems?
Yes. We work inside the accounting and production systems you already run rather than asking you to replace them. Where the gap is between two systems rather than inside either, that handoff is usually the thing to fix.
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