1. PRODUCT COSTING
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2. What is Product Costing?
 Product costing is the process of tracking and studying all the
various expenses that are accrued in the production and sale of a
product.
 It is roughly comprised of raw material expenses, process costs (e.g
RM profit, wire gas etc.) and other cost elements such as
transportation, tool cost, staff cost, spot welding etc.
 Product costing is reflected using Bill of Material (BOM) in ERP
Systems.

3. Existing Problems with the Product Costing
process
 Since TIER-1 vendors maintain these customer side BOM in Excel,
a range of issues are created
 Costing becomes person dependent: If the costing person leaves the
organization, other people cannot understand the files he has maintained.
 Costing becomes non-auditable: Its impossible to track which person has
made which changes and the reason behind those changes.
 Costing is not easily available to the management: Since BOMs are
maintained on someone’s machine, its hard for management to easily
retrieve the BOMs and study them.
 Change management and version control becomes a problem: Since
costing is maintained in an Excel file, new files need to be created for every
BOM change. It becomes very hard to track what changes were made
between revisions etc.
 No simulation support: If a price of raw material, process cost etc. changes,
there is no easy way to determine their impact across multiple products,
plants, customers. Everything has to be performed manually and the
provision amounts can be computed incorrectly causing huge losses to the
company.

4. Existing Problems with the Product Costing
process
 TIER-1 vendors need to maintain 2 separate BOMs as they do not
manufacture everything in-house and have to rely on TIER-2
vendors for certain components. They are the customer BOM (in
Excel) and the actual in-house BOM (in SAP/ERP). This opens up a
new set of issues for the vendor
 Vendors cannot systematically compare on a component level the difference
between customer and actual BOM. They rely on heavy manual calculations
and rule of thumb to identify and mitigate the differences.
 It can very well happen that TIER-1 vendors are receiving 100 INR to
manufacture a component and they are giving out 101 to get it
manufactured. This creates severe losses to the organization.
 They cannot figure out the profit margins on a vendor level in real-time to
adjust pricing and generate the maximum profit for their firm.

5. Features provided by our software for ERP Clients
 Bill Of Materials (BOM):
 You can create, edit, delete and manage your Bill Of Materials with our
software.
 We support multi-level BOMs with thousands of subassemblies.
 We also support version control and change management for BOMs.
 We give the facility to add, edit, delete nodes/components on the graph
itself making it very user friendly to operate on BOMs.
 We also give the facility to upload and download the BOM using Excel. This
is very useful in integrating the same with existing client ERP solutions such
as SAP, Microsoft Dynamics etc.
 Management teams can manage the BOM across all their plants globally as
they only need a browser to add/edit/view/delete the BOMs.

6. Features provided by our software for ERP Clients
 Simulations:
 Simulations can be defined as forecasting product prices with respect to changing
Product Costing components (such as raw material prices, process costs,
transportation costs etc.). In short a ‘what-if’ analysis similar to Excel.
 Simulations help both the OEMs and Vendors know the impact of changing prices
before they actually happen in the real world.
 In particular for TIER1 vendors, simulations help in calculating provisions before the
actual amendments come from the OEMs (which can take from 3 months to 2 years
depending on the OEM).
 Currently many TIER1 vendors do not have any process in place (other than manual
Excel calculation) to verify the FG amendment rates sent to them by the OEMs.
Hence they cannot effectively challenge the FG rate amendments which can
potentially cause them losses.
 We can integrate Foreign Exchange feeds into the software for export oriented clients
to simulate changing FX rates.
 Simulations can be highly customizable and can be run across a span of time (e.g 1st
Jan to 1st April) where the underlying raw materials change on different dates (e.g
CRCA D steel changes on the 10th Jan while HR changes on 25th Jan). Here the FG
price will be different from 1st Jan to 9th Jan, 10th Jan to 25th Jan and 25th Jan to 1st
April.

7. Features provided by our software for ERP Clients
 Gap analysis between Customer and Actual BOMs:
 TIER 1 vendors receive product costing from OEMs in an Excel format
(everything considered to be in-house) and then according to their internal
processes, they can create the sub-assemblies either in-house or buy them
from TIER 2 vendors. This creates a BOM gap on the TIER 1 vendor side.
 This BOM gap can cause real issues on the TIER 1 vendor side as they may
be passing on more than required costs to their TIER 2 vendors and
incurring losses in that process.
 Currently many companies check this manually using thumb rules, however
it becomes increasingly hard for clients having multiple FGs to keep a
systematic track on this aspect.
Customer TIER 1 TIER 2
OEM Actual BOM
BOM Vendor Vendor
Gap analysis

8. Features provided by our software for ERP Clients
 BOM versioning by date and type (Change Management)
 In our software, we can keep as many versions of a BOM by date and
type and do costing and simulation operations on them.
 We can also compare and do gap analysis on BOM across different
versions. This gap analysis not only shows the costing changes but also
highlights the engineering changes over the time period.
 This can be helpful for clients to do historic trend analysis per FG and
help them in making crucial strategic decisions.
 Clients tend to store historic BOMs in Excel files on their machines
which is prone to various issues such as data corruption, fat fingering
and accidently editing files etc.

9. Features provided by our software for SAP Clients
 Other strong product features
 We provide easy uploading of SAP BOMs and product costing
components using Excel into our system which provides a rapid return
on investment to the client.
 All data can be uploaded using or downloaded to MS Excel which
makes the software easy to use as traditionally costing people in
organizations are not SAP savvy.
 Support for multiple OEMs and multiple plants.
 No extra SAP licensing or hardware costs.
 It runs using cloud computing. So no need to install any additional
hardware and software on the client side. Since it’s a web-based
application, it can be viewed from anywhere in the world through internet
and hence can effectively synchronize client operations across multiple
plants.
 We support some basic business intelligence reports using BIRT and
provide details such as realtime pnl per product.

10. How can ERP Clients benefit?
(Cost savings and peace of mind)
 Both OEMs and TIER 1 vendors can benefit from the various features
provided by the software. OEMs can primarily benefit from simulations
while TIER 1 vendors can benefit from all the features provided by this
software.
 Gap analysis between customer and actual BOMs has saved our clients
lakhs of rupees per month as they were not aware of higher cost being
given to their TIER 2 vendors in many of their FG sub-assemblies.
(A client had savings of > 10,00,000 INR)
 Simulations can be used to verify the FG amendments provided by OEMs
and also for calculating provisions for the accounting team. This saves
clients a lot of man-hours during quarter-end and also protects them from
future losses due to under-pricing.
 Product Costing is a sensitive area and hence requires a lot of auditing
(even a single rupee can translate into huge losses). We tag every BOM
and RM change to the user and hence any discrepancies can be easily
traced back to the user)
 Thus our software product not only saves the client huge amounts of

11. Screenshots

12. • Login
• BI
• Simulation
s
• Reports
• Price
Differential
(Customer vs
Actual)
• Settings
Main Login Screen

13. • Login
• BI
• Simulation
s
• Reports
• Price
Differential
(Customer vs
Actual)
• Settings
BI widget showing FG count and the associated plant
location

14. • Login
• BI
• Simulation
s
• Reports
• Price
Differential
(Customer vs
Actual)
• Settings
BI widget showing Profit/Loss per FG

15. • Login
• BI
• Simulation
s
• Reports
• Price
Differential
(Customer vs
Actual)
• Settings
BI widget showing raw material Gantt

16. • Login
• BI
• Simulation
s
• Reports
• Price
Differential
(Customer vs
Actual)
• Settings
Running simulation for CRCA D price change

17. • Login
• BI
• Simulation
s
• Reports
• Price
Differential
(Customer vs
Actual)
• Settings
Products affected due to CRCA D price change

18. • Login
• BI
• Simulation
s
• Reports
• Price
Differential
(Customer vs
Actual)
• Settings
Detailed BOM for a single product affected by CRCA D
change (components with changes in price are
highlighted)

19. • Login
• BI
• Simulation
s
• Reports
• Price
Differential
(Customer vs
Actual)
• Settings
Multiple reports to gain further insight into costing

20. • Login
• BI
• Simulation
s
• Reports
• Price
Differential
(Customer vs
Actual)
• Settings
Report showing RM Price changes per customer *
plant

21. • Login
• BI
• Simulation
s
• Reports
• Price
Differential
(Customer vs
Actual)
• Settings
Report showing FG Price trend across multiple years

22. • Login
• BI
• Simulation
s
• Reports
• Price
Differential
(Customer vs
Actual)
• Settings
Difference report to show pricing differential between
customer and actual inhouse

23. • Login
• BI
• Simulation
s
• Reports
• Price
Differential
(Customer vs
Actual)
• Settings
Summary of Difference

24. • Login
• BI
• Simulation
s
• Reports
• Price
Differential
(Customer vs
Actual)
• Settings
Detailed difference – Red shows Loss

25. • Login
• BI
• Simulation
s
• Reports
• Price
Differential
(Customer vs
Actual)
• Settings
Vendor wise difference – Red denotes loss

26. • Login
• BI
• Simulation
s
• Reports
• Price
Differential
(Customer vs
Actual)
• Settings
Various settings to add customers, plants, vendors,
products, raw materials etc.

27. Tech Prana Team
 Saurabh Chobe (CTO)
 7+ years experience in software and finance domain
 Worked at top companies such as Microsoft and Goldman Sachs
USA.
 Software Development team of 6 engineers based in
Pune with a combined experience of 15+ years
Contact details:
Email : saurabh.chobe@gmail.com /
saurabh.chobe@techprana.com
Mobile : +91 88888 06272