Impact on cost accuracy and profitability from implementing product configuration system – A case-study

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This article aims at analyzing the impacts from implementing a product configuration system (PCS) on company profitability and improved cost estimations in the sales phase. Companies that have implemented PCSs have achieved substantial benefits in terms of being more in control of their product assortment, making the right decisions in the sales phase and increased sales of optimal products. Those benefits should have direct impact on improved profitability in terms of increased contribution ratios and more accurate cost estimations used to determine the price in the budgetary quotations. As the literature describes, there are various benefits from implementing a PCS, however the effects on the company’s profitability have not been discussed in details. This study analyzes the impact from implementing a PCS on the accuracy of calculations in the quotations and the impact on the relative contribution ratios. For that reason, a configure-to-order (CTO) manufacturing company has been investigated. A longitudinal study is performed where both the accuracy of the cost calculations and the profitability is analyzed before and after implementation of a PCS. The comparison reveals increased profitability and accuracy of the cost estimation in the sales phase can be achieved from implementing a PCS.
Original languageEnglish
Title of host publicationProceedings of the 17th International Configuration Workshop
EditorsJuha Tiihonen, Andreas Falkner, Tomas Axling
PublisherUniversity of Helsinki
Publication date2015
Pages11-17
Publication statusPublished - 2015
Event17th International Configuration Workshop - Vienna, Austria
Duration: 10 Sep 201511 Sep 2015
Conference number: 17

Conference

Conference17th International Configuration Workshop
Number17
CountryAustria
CityVienna
Period10/09/201511/09/2015
SeriesCEUR Workshop Proceedings
ISSN1613-0073
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