Activity-based costing? In CORAX all events are stored in the data warehouse. This also allows you to map the performance of all employees, or for each individual employee. For instance, what is the average lead time of a product, how much time does it take to process an order or to load a trip, how much VAS do you perform and for which customers; and much more other data with which CORAX allows you to allocate direct costs to the production process.
How Does Activity-based Costing Work?
The idea behind activity-based costing is that you can use a granular method to assign costs to various cost centers. In this case, these cost centers could be employees, equipment, etc. Just about anything can be a cost center once performance can be evaluated against the requirements of the warehouse. Why would this be necessary?
If you adopt an activity based costing model, you usually have defined targets to meet and you are strategizing to ensure that you can attain them or that you maintain your position once you start to realize them. Much of this process often includes understanding how your variable costs are apportioned.
Doing this effectively means that you need to have a system behind you that is providing you with accurate insights to do so. Once the said insights are provided, it should not be too difficult for you to do an accurate assessment to determine proper cost separation.
How Does CORAX Facilitate Activity-Based Costing?
CORAX recognizes the need for business efficiency, and much of its design sits on the pillar of lending itself to being effective. To this end, the system ensures that all events are accurately stored in the data warehouse in an easily retrievable and human-readable manner.
With the kind of insights that are present there, you could evaluate your entire workforce or specific employees from a cost center perspective. This holds for product storage and your supply chain too.
Insights, such as product lead time, order process time, or load trip time are among the things you can effortlessly discover by using the WMS. When it is all said and done, you can reliably allocate costs directly to various aspects of the production process.
While accuracy is a big part of what allows the system to do this, there is also the real-time nature. Therefore, you have information at your fingertips that spans the current time as well as periods in the past.
How Can I Benefit from Activity-Based Costing?
While activity based costing sounds wonderful, you may have concerns about the benefits that it has for you. A couple of the general ones are more obvious, but here are a few that should help you realize how advantageous the system can be.
First, you can more accurately price your product offerings. Pricing is important to maintain a profit while taking care of whatever expenses the production and supply process generates. With such an insight, you can set the most competitive price possible that meets those requirements.
Decreasing overhead is also possible, as you can see where you could be over-allocating resources to a particular activity.
Activity-based costing also reveals where bottlenecks may be in your production and supply process. Once the revelation has taken place, you can then move to correct whatever anomalies may be at play.
It is a perfect opportunity for you to evaluate your performance against whatever KPIs you may have in place.