Automotive
& Suppliers

The automotive industry is going through one of the most profound upheavals in its history: changing drive technologies are shifting volumes and cost structures, call-off quantities develop differently than planned, and price pressure from customer negotiations remains as high as ever. At the same time, tooling, pre-series production and inventories tie up capital over long periods.

In this environment, suppliers need to know their manufacturing costs precisely – and be able to prove them to their customers.

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Typical challenges

Cost breakdown demands without a reliable data basis of your own

OEMs demand disclosure of costing down to individual cost components. Anyone who cannot derive their own manufacturing costs on a cause-based basis negotiates from a weak position.

Margin pressure in series production with rising factor costs

Annual price rounds meet higher material, energy and personnel costs. Without reliable post-calculation, neither the price floor can be determined nor a demand rejected on a sound basis.

Overhead allocation via flat-rate surcharges

The share of direct production wages has fallen, while plant, tooling and quality costs have risen. Costing based on historical surcharge logic distorts the results of individual parts and variants.

High capital commitment through tooling, pre-series production and inventories

Up-front costs arise long before the start of series production, and tooling cost reimbursements are made with a time lag. Without clean accruals and working capital management, liquidity bottlenecks arise.

Valuation issues for tooling, ramp-ups and provisions

Capitalisation of tooling, deferral of development services, provisions for warranties and impending losses from series contracts require traceable derivations for auditors and banks.

Transformation pressure with changing volume expectations

Shifts in the product mix call existing capacity, fixed-cost and site structures into question. Decisions on these need reliable data on the earnings impact per product, customer and plant.

How we help

Transparency as the starting point

In the K² Readiness Review we analyse the P&L, balance sheet, account logic and account quality as well as the structure and organisation of accounting. In parallel we assess the end-to-end processes across P2P, O2C and R2R and the level of digitalisation in finance and upstream areas. Process mining shows the actual process flow as opposed to the documentation. The result is a reliable assessment with prioritised measures.

Costing based on operational reality

In Cost & Value Engineering we set up the cost centre structure, overhead rates, bills of materials and routings in the ERP system on a sound business basis and assess them commercially – so that they reflect the actual value flows in production. On this basis, manufacturing and full costs per part, variant and lot become reliable.

Cost breakdowns that hold up in negotiations

We create the data basis to derive costing transparently for OEMs: cause-based allocation of material, production, tooling and overhead costs instead of flat rates. This allows demands to be assessed on a sound basis and excessive claims to be rejected objectively.

Earnings transparency per product, customer and project

Setting up cost-object accounting with a clear separation of fixed and variable components. It shows which parts, variants and customer relationships contribute to earnings – the basis for price floors, renegotiations and portfolio decisions.

Planning, forecasting and working capital management

In Performance Management we develop planning calculations, forecasting models and management reporting with KPI systems. One focus is the management of inventories, tooling costs and payment terms, as well as mechanisms through which changes in factor costs feed promptly into costing and pricing.

Closing and audit certainty

In Accounting Advisory we take on accounting under German GAAP (HGB), the valuation of inventories, tooling, accruals and provisions, and the clean-up of complex accounts and account classes. In addition, we build governance structures: procedural and work instructions, an internal control system, documented posting logic and document flows.

Process integration and digitalisation

We optimise the end-to-end processes across procurement, production, sales and finance and close the interfaces between production and finance systems. We use automation and AI where they deliver demonstrable benefit.

Implementation through to impact

Finance Systems & ERP Advisory for system-side implementation, Interim Management to bridge vacancies in key functions, K² Academy for knowledge transfer to your team and Business Process Outsourcing for services that are to be outsourced permanently.

How we proceed

Step 1

K² Readiness Review

Analysis of finance structures, costing and end-to-end processes. The result is a clear picture of the situation with prioritised measures.

Step 2

Prioritisation

Assessment of measures by impact and feasibility, together with your departments.

Step 3

Implementation

Realisation in system, process and accounting – with support through to measurable impact.

Typical project outcomes

Costing down to individual part level

Manufacturing and full costs per part, variant and lot

Verifiable cost breakdowns

Traceable derivation as the basis for price negotiations

Transparent surcharge logic

Cause-based overhead allocation instead of flat rates

Clean cost-object accounting

Results per product, customer and project

Well-founded price floors

Clear separation of fixed and variable costs for quoting and renegotiation decisions

Improved working capital management

Inventories, tooling costs and payment terms in view

Faster closings

Reliable valuation of inventories, tooling and accruals

Less manual effort in finance

Automated P2P and O2C processes relieve accounting

Our approach

We combine financial reporting and accounting expertise with an understanding of processes and systems. This sets us apart from pure process consultancies that work with the figures the system produces: we first check whether these figures reflect operational reality – the actual value flows and processes in the company – and only then optimise.

We work pragmatically and in small, experienced teams. Instead of handing over concepts, we implement together with your departments: in the system, in the process and in accounting. This creates acceptance at all levels and ensures that results last beyond the end of the project.