Case study
Product costing the shop floor actually recognises
Standard costs that had drifted for years rebuilt against real routings and consumption, with shop-floor capture on rugged terminals and variance reported per production order.
- Client
- Multi-plant engineering manufacturer
- Profile
- Two plants · discrete manufacturing · 600 staff
- Duration
- 20 weeks
- Services
- SAP Business One · Process Reengineering · Power BI · GRC & SoD
01 — CHALLENGE
What was actually broken
The company knew its total cost of production and almost nothing about its composition. Quotations were being priced from standard costs last reviewed three years earlier.
- Production, scrap and downtime were recorded on paper and keyed in a shift or two later, so work-in-progress was always an estimate.
- Standard costs had not been rolled up since the previous ERP; actual material usage was reconciled only at year-end stock count.
- Inventory accuracy sat at 82%, with adjustments posted at month-end to force agreement.
- The same person could create a vendor, raise a purchase order and approve the payment.
02 — APPROACH
The sequence we used
Process first, capture second, costing third — in that order, because a costing model built on unreliable capture is a more precise wrong answer.
01
Observed process mapping
Four weeks shadowing both plants across all shifts to record the real flow of material, paperwork and approval — including the workarounds that existed because the designed process did not fit the floor.
02
Capture redesign
Reporting points reduced from fourteen to six, each placed where material physically changes custody, with rugged terminals and barcode scanning that buffer locally when the plant network drops.
03
BOM and routing rebuild
Multi-level bills of material and routings rebuilt with production supervisors, including scrap factors and setup times measured rather than assumed.
04
Costing and variance model
Standard cost roll-up with actual capture, and purchase-price, usage and efficiency variance reported per production order — reviewed monthly by plant management, not only by finance.
05
Role and SoD remediation
A segregation-of-duties matrix mapped to actual Business One permissions, conflicts removed, and compensating controls documented where headcount made full separation impractical.
03 — RESULT
Where it landed
Costing is now a management tool rather than a year-end reconstruction, and the floor reports into the ledger the same day.
- Inventory accuracy sustained above 99% across both plants for three consecutive quarters.
- Floor-to-ledger reporting lag reduced from around two days to under six hours.
- Eleven points of previously unexplained margin variance traced to specific routings, scrap rates and purchase-price movements.
- Quotations now priced from current costed BOMs, with a documented review cycle.
- All identified segregation-of-duties conflicts closed at permission level ahead of the annual audit.
Our board finally reads the same numbers we do. Month-end reporting dropped from eleven working days to four, and nobody rebuilds a spreadsheet to get there.
Services used
What this engagement drew on
SAP Business One
Proven mid-market ERP for manufacturers who need tight production and costing control.
SAP_B1Process Reengineering
Fix the process before you automate it — otherwise you buy a faster version of the problem.
BPRPower BI
A governed semantic model first, then dashboards executives actually open.
POWER_BIGRC & SoD
A control framework and segregation-of-duties matrix enforced inside the system.
GRC_SODMore engagements
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