Unit economics is critically important for product-centric businesses. If you don't understand your true cost, you might be selling at a much higher price, which would mean that you might not be able to win against your competitors. Also, if you are selling at a lower price as you may be missing on some cost elements, you might be losing money or selling unprofitable products. Product costing has deeper implications on your finance, supply chain, and operations. It could especially be trickier to implement if you have multiple systems involved in the process and don't have a consolidated plan for master data and inventory. So what are the best practices to implement product costing for a business? How much is too much? And how much is not enough?
In today's episode, we invited a panel of cross-functional experts for a live interview on LinkedIn who brings significant expertise to discuss product costing business processes best practices. We covered many grounds, including several stories related to costing and the implications of poor costing practices. Finally, we covered concepts such as how to ensure the actual run rate of the machines, aging inventory and the inventory not tracked, how to reconcile inventory when it may be off during the physical and cycle counting processes, how to capture overhead appropriately, and finally the costing differences in the custom vs. commoditized businesses.
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