IVP Chemicals Reduces Monthly Costing Time by 98%, from 4 Days to 2 Hours, with EML’s Automated Solution
Background
A leading chemicals company, known for its innovation in industrial applications, faced significant inefficiencies in its costing process. With two main divisions—Foundry Coating Division (FCD) and Polyurethane (PU) Division—the company served sectors ranging from automobiles and commercial vehicles to footwear soles and flexible packaging. Despite its industry leadership, the company’s finance team struggled with time-consuming and error-prone manual processes for calculating the costs of Finished Goods (FGs). Easemylife (EML) stepped in to automate and streamline this complex operation.
The Problem
The company’s finance team was responsible for calculating the monthly costs of Finished Goods, a process that was both labor-intensive and complex due to several factors:
Multi-level Bill of Materials (BOM): Many FGs were composed of other FGs, creating intricate layers of dependencies.
Manual Excel Processes: The costing was performed manually using Excel spreadsheets, which required 3 to 4 days each month.
Non-tabular ERP Reports: The company’s ERP system did not produce reports in a structured, tabular format, complicating data handling.
Data Inconsistencies: Some critical data, such as delivery dates, had to be manually maintained, adding further delays.
Special Costing Requirements: Different materials required alternate costs and utility costs, with some costs being pulled from existing stock and others from incoming purchase orders.
Custom Reporting Needs: Management required specialized reports to review and analyze costing, but the existing system could not efficiently generate these reports.
These challenges led to delays in monthly reporting and increased the likelihood of errors, ultimately hindering the company’s ability to make timely decisions.
Solution Offered
To address these issues, EML developed a fully automated system tailored to the chemicals company’s specific needs. The system was designed to handle the complexities of multi-level BOMs, data inconsistencies, and customized reporting requirements.
Key elements of the solution included:
Automating Data Structuring: EML added a process step to convert all ERP reports into a structured, tabular format, making data processing more efficient.
Custom Masters for Complex BOMs: Specialized master records were created to reflect the intricate product structures and multi-level BOMs.
Streamlined Report Integration: A structured process was built to import both ERP and manually maintained reports, ensuring data was processed in the correct sequence.
Exception Handling: Steps for handling special rates, alternate costs, and utility costs were incorporated based on user feedback.
Custom Reporting: EML developed custom reports for management, allowing them to easily review and analyze costing data in real-time.
Implementation Process
EML followed an iterative approach to implement the solution, working closely with the finance team to ensure the system met all requirements:
Initial System Setup: EML delivered a system based on the company's initial specifications. User feedback was continuously incorporated to refine the system.
Tabular Data Conversion: One of the first challenges was converting non-tabular ERP reports. EML’s development team created a separate program to clean and reformat these reports into a structured, tabular layout.
BOM Validation: Incorrect outputs occurred when the system referenced obsolete BOMs from the ERP. EML resolved this by introducing a master file to maintain only active BOMs, ensuring accurate cost calculations.
Managing Multi-level Product Structures: Given the complexity of some FGs, EML created a separate master file to manage multi-level product structures, ensuring accurate representation in the system.
Manual Report Integration: Two reports from other departments were manually maintained. EML integrated these reports into the automated system, provided the format remained unchanged.
Custom Reports: EML collaborated with the finance team to develop custom reports that met management’s specific requirements, allowing for detailed and actionable insights into product costing.
Results and Benefits
The implementation of EML’s automated costing system yielded significant improvements for the chemicals company:
Costing Time Reduced: The time required for monthly costing dropped from 4 days to just 2 hours, allowing the finance team to focus on higher-value tasks.
Error Elimination: Manual errors, common in the old Excel-based process, were entirely eliminated, ensuring accuracy across all calculations.
Increased Productivity: The automation of manual steps freed up time for the finance team, enabling them to focus on more strategic activities and reducing manual efforts to almost zero.
Enhanced Decision-Making: With faster access to accurate costing data and customized reports, management gained the agility to make quicker, more informed decisions in response to market changes.
Improved Efficiency: Handling of special rates, alternate costs, and utilities was seamlessly integrated into the automated system, ensuring that no exceptions were missed.
By partnering with EML, the chemicals company successfully transformed its manual, time-consuming costing process into a fast, efficient, and highly accurate automated system. The finance team saw a dramatic reduction in processing time, while management benefited from real-time insights, enabling quicker decision-making.