Hello.
We currently have the following concerns.
Even the same part (FG, Assembly) has a different cost depending on the production location (outsourcing).
I know that standard cost can be set only for each part.
If so, we have to create two parts even for the same item. This is a very laborious and complex structure.
Is there any other way?
If you outsource the part is it purchased? Or does it use an alternate method? If you do not want to change the part number you can still see how much it cost for that part to be manufactured using different methods, you will just have different variances from the standard. Another option is to set the part to average cost instead of standard
Some parts of it are being purchased. And, some parts of it are outsourced.
I want to use the average cost, but there is a big difference. So each Std Cost must be managed.
There seems to be no other way than to separate the parts.
Is the outsourcing production location a supplier (outside process, purchased) or a different site/plant? You can have different cost IDs by site/plant and that part shared in both plants.
The outsourcing production location is a supplier.
We are using one Site.
Is this situation where you normally produce in your plant because it is less costly, but sometimes have to buy from a more expensive supplier because you need more than your plant can produce?
If so, normal practice is to use one part number, and set the standard cost to be your internal plant cost. When you buy from the outside supplier, it will cost more, which will result in a variance. Having a variance is a useful tool, giving you data to show when you should invest in additional internal production capacity.
It is not produced in an in-house factory. All are outsourced.
The situation is the cost of production in factories outsourcing cheaper than the cost of production inside the plant.
So I’m buying from several suppliers, and they all have different costs.
I agree with Jeff. Either use Average Cost for the part or pick a standard that is a best effort calculation that takes into account cost and volume for cost planning. You’ll have favorable and unfavorable variances, but that’s just reflecting your reality.
This is the hairy part of standard costing.
Normal practice is to set the standard to the most used vendor and incur PPV related to the others.
As Jeff mentioned, seeing the PPV is quite valuable for analytics and supplier management.