Costs in production without illusions – from model to reality

DAIHO CZECH: Successful production costing project with BDO and Aimtec

 

Why accurate production costing cannot be based solely on accounting data, but must reflect how production actually works 

How DAIHO CZECH, together with BDO and Aimtec, connected a new cost model with digitalised production data collection 

How better use of cost and production data can improve controlling, planning and management decision-making 

 

When a manufacturing company starts talking about costing, it may initially sound like a task for the finance department. However, the project at DAIHO CZECH has shown that modern production costing is not just a matter of accounting or Excel. In fact, it is a comprehensive transformation solution that connects production, controlling, technology, planning, IT and management decision-making.

DAIHO CZECH implemented such a solution in cooperation with BDO and technology partner Aimtec. The aim was to modernise the company's approach to cost calculation so that it would meet both the requirements of the Japanese parent company and the real needs of local management in the Czech Republic.

The result is a new cost model, a new economic structure for the company, digitalised production data collection and a solid foundation for the further development of data-driven production management.

 

Initial situation: a detailed request from Japan and Czech production reality

DAIHO CZECH is a subsidiary of the Japanese company DAIHO INDUSTRIAL, based in Osaka. The Czech plant operates in Pilsen, where it manufactures plastic parts for various industries. Its main areas of production include parts for air-conditioning systems and heat pumps, automotive components and products for the medical industry. Production includes, among other processes, plastic injection moulding, painting and assembly.

The impetus for the project was the parent company's request to create a new structure for production cost models. The request included four types of costing: business, standard, actual and target.

It was necessary to understand how the production plant in Pilsen actually operates.

BDO played a crucial role here. A team led by Kamil Vaniš, Head of Strategy and Operations Advisory at BDO, helped translate the requirements of the Japanese headquarters into a practically usable methodology. It was not simply a matter of applying the requirements, but of interpreting the assignment, setting up the economic logic and finding a reasonable level of detail.
 

The role of BDO: methodology, economic logic and connection with production

In the implementation, BDO acted as an advisor on the cost calculation methodology, economic structure and management view of costs.

One of the key tasks was to decide what the new costing formula should look like, how many items it should contain, how costs should be broken down and how closely the company should monitor individual cost components. The original assignment from Japan was very detailed, but not every level of detail was efficient for the local production and economic reality.

The BDO team therefore helped find a balance between the requirements of the parent company, the possibilities of the available data sources and the practical usefulness of the outputs for company management. It was important that the resulting model should not only serve as a formal reporting tool for headquarters, but also provide value to Czech management, sales, production and controlling.

The project gradually expanded from the creation of a costing formula into a deeper transformation of the company's economic management. It was necessary to redefine cost centres, redistribute assets and employees, establish relationships between individual centres and change the approach to financial planning. Costing therefore became an impetus for a broader redesign of the company's internal structure.
 

Understand production first, then calculate

One of the key principles of the entire process was that high-quality costing cannot be created from behind a desk.

The BDO team therefore did not work only with financial statements and spreadsheets, but went directly into production. It was necessary to understand how individual processes actually work, how they are interconnected, where costs arise and what information can be objectively measured.

For example, the project team examined how to correctly capture the costs of injection moulding, painting and assembly, how to allocate shared costs, how to account for clean-room operations, how to approach energy consumption and how to distinguish significant cost items from those whose separate monitoring would be excessively administratively demanding.

Energy allocation was also a major topic. For such a significant cost item, it was necessary to design a technically defensible model that would be transparent and usable for further management purposes. The project was therefore not merely a financial exercise, but required the involvement of technical specialists, production teams and operational staff.

This approach is essential for the success of similar implementations. If costing is to truly reflect the economic reality of production, it must be based on an understanding of production processes, not merely on accounting data.
 

Cooperation with Aimtec: digitalisation as a prerequisite for accurate data

BDO's methodological design had to be connected with the data and system reality. This is where Aimtec, DAIHO CZECH's long-term SAP implementation partner, played a key role.

As part of the implementation, the Aimtec SCIx system was deployed as a digital link between the production line and the SAP system. Its purpose is to collect production data in real time, reduce errors caused by manual data entry and ensure that the information in SAP reflects what is actually happening in production.

The original process relied on paper production documents and manual transcription of data into the system. This created a risk of errors, illegibility, delays and incomplete data. The deployment of a digital solution enabled production data to be recorded continuously and automatically.

Operators now work with simple screens on terminals, while supervisors enter and manage production. The system records manufactured units, component consumption, downtime, scrap rates and maintenance data. This information is then available for reporting, analysis and the future calculation of actual costs.

The digitalisation of production was therefore not a side effect of the project, but a necessary prerequisite for ensuring that the costing model can be based on high-quality actual data in the future.
 

New costing model and launch of standard costing

An important milestone in the entire process was the launch of the new costing formula in the SAP system. From 1 April, the standard costing model went live.

The new costing model reflects DAIHO CZECH's production processes. It includes sections dedicated to injection moulding, painting, assembly and shared costs. The solution also includes customised reports in SAP, which make it possible to display calculations for multiple finished products at once, export them to Excel and use them as a basis for reporting to the parent company.

In addition to costing reports, outputs were also created for the sales perspective and for comparing planned and actual figures at cost-centre level. This gives management a better opportunity to monitor how planned costs translate into reality and where deviations arise.

Importantly, the project was managed realistically from the outset. Standard costing was launched as the first step. Actual, target and business costing will follow in subsequent phases, as they require a robust data foundation and further methodological discussions.

This approach shows that the success of the entire process does not lie in rapidly completing all parts on a formal basis, but in responsibly establishing the foundations on which the company can continue to build.
 

Project challenges: data, level of detail and a change in thinking

The implementation brought several major challenges.

1. The first challenge was obtaining relevant data. In some areas, it was not easy to determine where accurate data could be obtained, how it should be measured and how it should be reflected in the costing model. Typical examples included energy consumption, use of clean-room facilities, sharing employees between processes and monitoring material consumption for specific production operations.
2. The second challenge was agreeing on the appropriate level of detail. The Japanese assignment worked with a very detailed structure, but in practice it was necessary to assess which items were genuinely important for management. An overly detailed model could be difficult to manage, while an excessively simplified model might not provide a sufficiently accurate picture of costs.
3. The third challenge was communication between the local company and the parent headquarters. The assignment evolved during the project, and it was not always possible to simply escalate every methodological issue. The Czech team therefore had to take on a significant degree of leadership, make decisions and find solutions that would be defensible both locally and in Japan.
4. The fourth challenge was the change in thinking within the company itself. The project opened a discussion about the business plan, capacities, cost allocation, performance measurement and how the results of the costing model would be used by sales, purchasing, production and management.

Benefits for DAIHO CZECH: transparency, data and better decision-making

Although the project began as a response to the requirements of the parent company, its benefits for DAIHO CZECH are much broader.

The company has gained a new way of looking at its own costs. The costing model makes it possible to better understand where costs arise, how they relate to specific production processes and how they are reflected in product prices. This is important not only for controlling, but also for business decision-making, capacity planning, production optimisation and communication with the parent company.

The implementation also helped kick-start the digitalisation of production. Thanks to real-time data collection, a data foundation is being created that will make it possible to evaluate actual production times, consumption, downtime, scrap rates and other indicators. This moves the company towards data-driven decision-making.

There is also a significant overlap with transfer pricing. A robust and transparent data structure can help the company document product costs and explain the methodology to tax authorities. This is an area that is becoming increasingly important for manufacturing companies.
 

Success confirmed by feedback from Japan

An important confirmation of the quality of the project was a visit by top management from Japan, who recognised the high standard of implementation and expressed strong appreciation for the results.

For DAIHO CZECH, this is significant recognition. The entire process has shown that the Czech plant is capable not only of responding to the requirements of the parent company, but also of actively proposing solutions that have the potential to inspire other parts of the group.

From BDO's perspective, this is a successful example of a consulting project that connected strategy and operations advisory, controlling, the reality of manufacturing and system implementation. The ability to understand production in detail, translate it into an economic model and at the same time keep the transformation practically achievable was crucial.
 

A project that does not end with the launch of the costing model

The launch of standard costing is not the end, but an important milestone. The next phase will focus on determining actual costs, working with deviations between plan and actual results, and making further use of production data.

This is where the greatest value lies. Today, DAIHO CZECH does not simply have a new costing formula. It has a methodology, a data foundation and a system framework that will enable it to manage production more effectively, plan costs and gradually develop data-driven controlling.

The DAIHO CZECH project demonstrates that modern production costing is not an isolated financial tool. It is a bridge between production and finance, between technical reality and management decision-making, and between a local plant and a global group.

And it is precisely this bridge that BDO, together with Aimtec and the DAIHO CZECH team, successfully helped to build.