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I worked on ... costing a new car model.

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Vincent

After completing a postgraduate degree in 2003, I started my career on the graduate programme at Amalgamated Beverage Industries, a big manufacturer of soft drinks in South Africa. My tasks there included internal auditing, project work and completing a value-chain programme. Working in each part of the business showed me how best to apply management accounting principles.

I passed my CIMA exams in 2005, but sought a job in the auto industry to gain the practical experience required for membership. I joined Toyota South Africa in late 2005 as an assistant manager. As part of a team of three, I was involved in cost planning the launch of the new Corolla model here and in other markets in Africa and Europe.

At least five years before a new model is launched, the parent company in Japan chooses a management model for plants across the world to cost. Toyota South Africa vies globally with other affiliates to maintain a competitive production cost.

The process starts with etermining the existing cost base. Then, at what we call the macro stage. a cost estimate is established, based on the existing model. In the next stage, targets are set and designs are drawn to cost. This is followed by the goshi (test) stage, where a small number of units are made and costed as a trial before the full launch. A "post-mortem" compares the actual costs against the estimates after the assembly line starts.

Cost planning from macro to goshi can last up to three years. During this period, the aim is to ensure that agreed cost and profit targets will be achieved by the time the new vehicles start coming off the line. These are corporate targets, so they're shared with other departments: purchasing, engineering, production, sales and marketing.

Based on the production drawings, our engineers draw up the bill of materials, which indicates the conversion cost (process time) and the material cost (type of steel blanks etc). Standard rates, adjusted for capex and efficiencies, are applied to the conversion cost. At the same time, we review usages for materials with the engineers and adjust these for spoilage, waste and efficiencies. The resulting rates are used in making cost estimates for the manufacture of various in-house part assemblies...

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