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Good reasons for Cleansheet Solution™

McKinsey has supported clients' product development efforts for many years. As one aspect of our service offering is DtV, we have built up extensive in-depth knowledge of product target costing and the underlying drivers. Reaching this high level of cost transparency in our consulting work has enabled McKinsey to support more than 150 DtV projects each year, helping clients across a range of industries increase their profit margins by an average of 10 percent. Our Cleansheet Solution™ software is a cornerstone of this proven activity-based target costing approach, from which companies can derive a number of benefits.

Full cost transparency

The Cleansheet method makes all product cost drivers fully transparent across all production locations and product lifecycle stages. The regularly updated repositories of data on materials, equipment, and labor costs allow for reviewing and recalculating product target costs at any time. The scenario function also allows users to simulate the should cost of different production locations and volumes. The result is full cost transparency – and the ability to immediately take advantage of the benefits it entails.

Cost-optimized decisions

Companies are increasingly aware of the importance of DtV. However, product developers often lack access to the information they need to make cost-relevant decisions, resulting in unnecessary product costs. Including the calculation of a simple cleansheet should cost in the product development process prevents this drain of resources.

Optimized purchasing prices

Rigorous product target cost calculations deliver hard facts to be used as a basis for negotiations – and enable the sourcing organization to set and achieve cost targets. The Cleansheet application can also serve as a platform for better communicating with and developing suppliers.

Benchmarked product costs

Many companies use product benchmarking to gauge their own competitiveness. But such efforts can fall short without having a standard method for assessing competitors' product design and feature costs. Cleansheet cost breakdowns keep everyone on the same page, even when performing complex tasks, such as assessing the monetary value of functional differences or generating improvement ideas that create competitive advantage.

Cleansheet Solution™ leads to cost transparency and strengthened cost control