Costing Re-Design: Gaining insights into profitability at Miraclon

Miraclon is an international player in the printing industry with headquarters in Belgium, manufacturing facilities in the US and Japan, and distribution centers worldwide. The company is a global carve-out from Kodak.

In recent years, Miraclon faced challenges related to their financial processes in relation to the manufacturing and product cost management. To gain better insights into profitability, budgeting, and operational tasks, they needed to re-implement costing in their Infor M3 ERP system. The Infor M3 implementation was accelerated during the Covid-19 pandemic due to potential business continuity risks, and only the essential finance and controlling aspects were initially implemented.

"It is really excellent that we are capable of discussing and analyzing the costing figures as we do today," Miraclon CFO Henk Rogiers says. "A year ago, the manufacturing performance and costing of the materials were a black box. We had limited insight into which expenditures exceeded or fell short of expectations. Now, we can take focused action to improve our product costing, which is essential to our business."

“Our team was engaged to support the client's ERP re-implementation of costing in Infor M3,” Project Manager Cosie Goudesone says. “The partial implementation during the pandemic had a significant impact on the financials of the company. This encompassed, amongst other things, the budgeting process, cost accounting, procurement and management reporting.”

The CFO chose to join forces with TriFinance because of their expertise in costing and management reporting, as well as their hands-on approach. A specialized MI&S team demonstrated a willingness to dive deep into Infor M3 and collaborate closely with the local teams and the integrator.

The project’s main goal was to gain insight in the profitability of customers, materials, distribution centers and manufacturing facilities, creating the ability to act upon inefficiencies or other unexpected costs, reflected from variance reporting.

Other goals included compliance with IFRS inventory valuation regulations, transitioning from moving average costing to standard costing, valuing raw materials at landed cost, redefining cost components, implementing integrated transfer price calculations, aligning logistics with finance, and addressing various other initiatives.

Key challenges encompassed project management and change management. The overall purpose was to improve financial analysis, margin comprehension, and variance control.

Throughout the project, the Finance, Accounting, Procurement, Manufacturing, and IT teams of the client, along with consultants from both the system integrator and TriFinance, worked together to upgrade costing methods on a global scale.

As a Project Manager, Cosie, who has a profound knowledge of process industries, teamed up with Business Analyst Katleen Cloots to tackle the following challenges:

• Encouraging a willingness to change.
• Aligning with IFRS inventory valuation rules
• The transition from moving average to standard costing.
• Valuing raw materials at landed cost.
• Redefining cost components.
• Aligning logistics with Finance.
• Setting up, testing, documenting, training and executing costing runs.
• Including yields in the costing runs.
• Enabling transfer price calculations in M3.
• Creating reports on total plants cash cost (Wall-to-Wall Cost), plant performance, scrap generation, labor cost, variances, etc.
• Developing a new more robust and automated budget process, tool and template.

‘It was an interesting project because we linked management reporting with the functionalities of an ERP system,’ says Katleen Cloots. “During the implementation of the new setup, the reporting had to be managed effectively as well, and the bridge between the old and the new reports had to be made.”

The project management in itself included an analysis of the current and future state, a definition of the project scope, the development of a project plan, and the organization of status updates and steerco meetings with the COO and the plant controllers & managers in the USA and Japan.

Preliminary reporting was established during the analysis phase, later replaced by automated PBI reports, and various tracks were fine-tuned along the way, yielding the desired results.

“From their side, the Miraclon team was really focused and driven,” Cosie Goudesone says. “Both the customer’s team and the integrator were willing to change the current way of working, and the close communication line with the CFO enabled swift decision taking. Building a team that embraces change and collaboration leads to positive outcomes.”

Inevitably, there were instances where assigned tasks encountered obstacles. But the team's collective commitment to understanding and resolving issues collaboratively fostered an open atmosphere, enabling transparent and honest communication.

“The combination of functional knowledge with in-depth ERP knowledge is needed in these kinds of projects,” Cosie adds. “Only functional knowledge would be insufficient, as would only technical ERP knowledge be.” The fusion of functional and in-depth ERP knowledge proved instrumental in addressing the multifaceted challenges encountered during the project.

The project let to the upgrade of the financial module of Infor M3. With multiple successful go-lives, all tracks were completed across various legal entities. 

Miraclon now has the ability to analyze their financial data, understand the margin generated and steer on the variances, to achieve a higher margin versus the past. The client's margins and financial analytical capabilities improved as a result of the project's success.

Projects that involve active C-level engagement, where executives are approachable and decisive, substantially enhance the probability of success. Their participation promotes streamlined decision-making and guarantees alignment with strategic objectives.

To summarize, successful project execution relies on effective planning, comprehensive upfront analysis, a change-ready team, and robust communication with C-level executives. 

When all stakeholders collaborate cohesively, the project is more likely to be successful.

For more info you may contact Cosie Goudesone.