STEELMAN: Cost Management

The Cost Management Module is designed to collect all costs incurred during processing of an order and to utilize the Production Routing Module to generate product costs by group. Improved costing data will improve the management of process costs, yields, and the equipment efficiency through the monthly process cost reports and comparisons to plan. Improved knowledge and consistency of data will tighten margin/profitability calculations by product group.

These calculations would use the MRPII model to develop the input needed at each step of the process for each group, taking into account the actual yields for the period. The actual year to date costs on a per ton/tone basis for prime materials would be input into the MRPII model, as well as the year to date processing costs on the same basis. These costs would accumulate through each Processing Unit in the process routing, with the cost per ton/tone of the overhead cost centers added at the final product stage, to provide full product group costing.

Cost Management: SPECIAL FEATURES

• Cost centers are designated as:
  • Processing Cost Centers (hot rolling mill, pickle line, etc.)
  • Direct Support (energy, transportation, roll grinding, acid recovery, etc.)
  • Overheads (plant management, purchasing, etc.)
• The system allows the costs of the prime material to be calculated in each cost centre and to be rolled forward, at cost, to the next Processing Unit cost centre.
• The calculation of yield losses for the month and year to date for each processing cost centre are calculated and reported as a separate cost.
• The system allows the costs in the Direct Support departments to be allocated to those Processing Cost Centers which are directly supported, in order to assure that all direct process costs have been captured in the relevant Processing cost centers. This allocation would take place monthly, upon instructions from the appropriate accounting group.
• Cost Management calculates the cost of each process on an average per ton/tone basis, and compares with the annual planned cost of the process.
• The system allows the Overhead Cost Centers which are not allocated to the Processing Cost Centers to be reported and become part of the Product costing work to ensure that the product costs contain all costs. The Overhead Costs Centers are also reported monthly along with all cost centers.
• The system receives the production tons/tones and the input tons/tones for each processing cost centre monthly, as well as the tons/tones of all non-prime material produced, and yield losses.
• The system produces product group costs on a year to date basis, using the actual production data for each Processing Cost Centre. These are average costs for all thicknesses, widths and grades processed during the period.
• Costs accumulate through each processing unit in the process routing, with the cost per ton/tone of the overhead cost centers added at the final product stage, to provide full product group costing. Future refinements can be done to move toward individual product costs.
• The Cost Management Reporting Module prints standard and custom costing reports.
  Data can be transferred to decision support tools or spreadsheets for analysis and preparation of custom reports such as cost analyses, projections, statistical reporting and presentations.
• The following data is used in Cost Management:
  • Costs of all purchases from the purchasing modules or accounts payable modules i.e., Ferro alloys, raw materials (coal, iron pellets, ore, etc.), supplies scrap from scrap inventory by type or grade, other costs.
  • Costs of coke oven and blast furnace gas from the production module and costs of electricity and natural gas from cost centre on allocated basis or metered basis.
  • Cost of roll usage and roll grinding, as allocated by the roll department.
  • Costs of work in process inventory, from inventory release documents.
  • Costs of labor for each cost centre to which personnel are assigned including overtime and benefits allocated from general ledger accounts.
  • Costs of parts, labor and contractor's charges used on maintenance projects.
  • Tons/Tones produced - prime product and seconds, by steel grade. Tons/Tones used - iron, scrap, alloys, etc.
  • Processing volumes for special treatments such as scarfing, desulphurization.