Think Globally, Adapt Rapidly: How DELMIA Apriso Mitigates COGS Volatility from Market Shocks

For CFOs and VPs of Operations, market volatility is a direct assault on the Cost of Goods Sold (COGS). A sudden spike in commodity prices, a logistics crisis forcing a shift to expensive air freight, or a supplier quality failure that triggers massive rework—these events inject immediate and unpredictable costs into the production process. The true danger lies in their invisibility. These cost deviations are often hidden from view by traditional accounting methods, only revealing themselves at the end of a financial period when the damage to profit margins is already done.

This creates a high-stakes battle for profitability fought in a fog of outdated information. The winners will be those who can see and act on cost fluctuations not next month, but right now. To do this, they must bridge the gap between financial ledgers and the physical reality of the factory floor.

The Lagging Indicator: Why Standard Costing Fails in a Volatile World

Traditional cost accounting, managed within the ERP, is built on a foundation of “standard costs.” These are engineering estimates—pre-determined costs for materials, labor, and machine time. At the end of a month or quarter, the finance team compares these standards to the actual spend in the general ledger to calculate variances. In a stable, predictable world, this system is adequate. In an era of constant market shocks, it is a dangerous liability.

The moment a disruption forces you to use an alternate, more expensive material or pay overtime to meet a deadline, your standard cost becomes a fiction. The critical weakness is “information latency”—the significant delay between a cost-incurring event on the shop floor and its reflection in the financial system. That extra material consumed or that hour of unscheduled downtime disappears into a data black hole, only to re-emerge as a surprise negative variance weeks later. To effectively manage COGS, manufacturers must evolve from periodic, historical reporting to real-time, activity-based analysis.

From Standard to Actuals: An MES/MOM as the Source of Costing Truth

A modern Manufacturing Operations Management (MOM) platform like DELMIA Apriso is the essential technology that provides the source of truth for real-time costing. As an enterprise-wide Manufacturing Execution System (MES), it captures the “actuals” as they happen, serving as the bridge between physical operations and financial performance. It achieves this by delivering a high-fidelity stream of data on:

• Actual Material Consumption: Through granular genealogy and traceability, Apriso tracks the exact consumption of every component, from every lot, for every single unit produced. There are no estimates, only facts.
• Actual Labor and Machine Time: By tracking operator logins/logouts and integrating directly with machine PLCs, the platform records the actual labor and machine cycles used, precisely capturing the cost of any inefficiencies caused by disruptions.
• Actual Quality Costs: Every scrap, rework, and non-conformance event is captured in real-time and linked directly to its root cause, quantifying the “hidden factory” costs that silently destroy margins.

By feeding this live stream of “actuals” to the ERP, a MOM platform transforms the COGS calculation from a periodic estimate into a dynamic, live metric. This empowers leaders to make decisions based on what a product is costing to build right now.

The LIXIL Case: Real-Time Control of Manufacturing and Cost Visibility Across the Globe

LIXIL, a global manufacturer of building materials and housing equipment, faced the challenge of unifying operations across geographically dispersed plants, each with its own legacy systems and varying visibility into production and cost data.

To standardize execution and gain real-time cost control, LIXIL implemented DELMIA Apriso across multiple facilities. The platform enabled LIXIL to capture actual material consumption, track labor and machine time, and analyze cost deviations in real-time. The result was a fully traceable production environment that minimized disruptions and allowed management to respond immediately to COGS-affecting events—before they escalated into margin-killing surprises.

By implementing DELMIA Apriso across our global sites, we achieved real-time visibility into inventory and production performance, enabling us to make faster decisions and improve customer satisfaction,” said Masashi Shoda, Executive Officer, LIXIL Corporation. (Source: Andea Systems Case Study – LIXIL + DELMIA Apriso)

LIXIL’s digital transformation shows how Apriso empowers manufacturers to move beyond standard costing and gain actionable control over their true production costs—even in highly complex, volatile environments.

Conclusion: You Can’t Control the Market, But You Can Master Your Costs

Market volatility is the new constant. The manufacturers who win will be those who can see, understand, and act on cost fluctuations in real time. Relying on outdated standard costing is a path to failure. A modern MES/MOM platform like DELMIA Apriso provides the operational truth required to master your COGS, protect your margins, and turn a reactive financial exercise into a proactive, strategic advantage.