Capacity and cost modeling
Financial and operational modeling, Capacity estimation, Costing
A large agricultural chemical conglomerate was preparing to acquire a site in Northern China. Before proceeding with the transaction, it needed to understand the target’s capacity to manufacture a specific product and estimate unit costs. The deal would be predicated on cost advantages and available capacity. Existing data needed to be collected, verified and combined into a comprehensive manufacturing model, to arrive at final capacity and cost estimates / ranges.
Led information gathering effort on major production inputs
Built detailed process maps, detailing process times, raw material inputs, labor, machine and utility usage
Identified constraints, calculated maximum factory capacity for product in question
Advised on additional investment, quantifying incremental throughput gains for each
Estimated per-kilo standard cost of product, including allocation of overhead
IIn short, we built a digital twin of the financial statements in a dynamic model that supported scenario analysis so that global leadership could visualize the operations, quantify the risks and plan for post-merger integration.
Product costing insights supported merger negotiations, enshrining as a deal point a key product transfer price ~85% lower than current pricing
Built detailed process maps, including process times; raw material inputs; labor, machine and utility usage at each step
Identified constraints, calculated maximum factory capacity for product in question, advised on additional investment, quantifying incremental throughput gains for each