Validation of Standards

What is Validation of Standards?

Validation of Standards pertains to the process of ensuring the accuracy of cost standards within manufacturing operations. These standards are instrumental in determining the true cost of producing products. Their precision influences a company's ability to set realistic selling prices, subsequently affecting profitability, competitiveness, and market share. Furthermore, the robustness of these standards directly impacts a company's capability to pinpoint cost-saving opportunities and make well-informed decisions regarding both pricing and production strategies.

What common challenges do Validation of Standards present?

• Inaccuracies in cost estimation leading to mispriced products.
• Difficulty in staying competitive due to improperly gauged selling prices.
• Challenges in identifying genuine cost-saving opportunities.
• Hindrances in negotiating better deals with suppliers due to lack of clarity in production costs.
• Delays in streamlining production processes, affecting profitability.

How can Libra Europe help?

• Provide expert analysis to review and recalibrate current cost standards.
• Offer insights into industry benchmarks for more competitive product pricing.
• Identify and recommend areas of potential cost savings.
• Facilitate negotiations with suppliers by providing accurate cost estimations.
• Assist in refining production processes for enhanced efficiency and reduced costs.

What benefits can be expected?

• Enhanced profitability due to accurate product pricing, potentially boosting profit margins by up to 15%.
• Increased competitiveness in the market, possibly leading to a 10% rise in market share.
• Identification and realisation of cost-saving opportunities, which can reduce production costs by 5-7%.
• Strengthened supplier relationships through well-informed negotiations, potentially yielding a 3-5% reduction in raw material costs.
• Streamlined production processes that could result in labour cost reductions of up to 10%.