Target Costing
The OEM sets the target price. Your job is to find a way to meet it — without guessing. ORAGO Cost Controlling gives you a structured approach to identify the cost gap, simulate reduction scenarios using real process definitions with configurable parameters, and track progress toward the target across every cost element.
The Target Price Is Given.
The Cost Gap Is Yours to Close.
In most OEM-supplier relationships, the buyer sets a target price — derived from benchmarks, previous projects, or competitive pressure. The supplier must either meet it or lose the business. In Excel, target costing means a single cell with a target number and a hope that the calculated cost lands below it. There is no structured way to decompose the gap, simulate reduction scenarios, or track which cost elements have been optimised and which remain above target.
Structured Gap Analysis. Not a Single Cell.
Define the Target
Enter the OEM target price and map it to your cost structure. The system immediately shows the gap between your calculated cost and the target — broken down by material, process, overhead, and commercial elements.
Simulate Reductions
Run what-if scenarios using the extensible process engine: alternative materials, process parameter changes, volume adjustments, tooling optimisation. Each scenario shows the impact on the overall gap — with live cost recalculation as you adjust parameters.
Track Progress
As the team implements cost reductions, the gap narrows. Track progress by cost element, by process step, and across the entire project. Know exactly where you stand at any point before committing to the OEM.
Simulate with Real
Manufacturing Parameters
Target costing simulations are not generic percentage adjustments. They use the same extensible process definitions that drive production costings — dedicated parameters per process type, strategy-based cost calculation, and plausibility validation. When you simulate switching from a 400t to a 630t press, the system recalculates cycle time, energy consumption, and tooling amortisation based on real process models.
- Extensible process definitions with dedicated parameters per manufacturing type
- Strategy-based calculation engine computes cost and cycle time from real process parameters
- Plausibility rules flag unrealistic assumptions (cycle time vs. weight, rate vs. benchmark)
- Process categories: Forming, Joining, Machining, Surface Treatment, Assembly, Casting, Additive, Custom
When Rates Change,
the Target Gap Recalculates.
Machine hourly rates in ORAGO are a 6-component structure: direct labour, indirect labour, machine fixed cost, machine variable cost, depreciation, and overhead. When Controlling updates any component — a new electricity rate, a shift model change, a depreciation revision — every open target costing that references that cost centre recalculates the gap automatically.
- Simulate rate changes at the component level to see which driver closes the most gap
- Material price index sync (LME, ICIS) triggers drift alerts when market prices shift
- Overhead methodology (surcharge, activity-based, or hybrid) applies automatically
From Gap to Action Plan
Gap Decomposition
See the cost-to-target gap broken down by every cost element — material, direct labour, machine cost, tooling, overhead, logistics. Know exactly where the biggest opportunities lie.
Scenario Simulation
Test material substitutions, process parameter changes, and volume effects using real process definitions. Compare scenarios with full cost version history. Every simulation uses the same engine as production costings.
Progress Tracking
Monitor cost reduction progress over time with version-locked milestones. Dashboard-level visibility for management, detail-level drill-down for engineers. Field-level audit trail documents every change.
Close the Gap. Win the Business.
See how ORAGO Cost Controlling structures target costing — from gap analysis to cost reduction tracking.