Costing sits at the core of successful manufacturing operations. It directly impacts pricing, profitability, and strategic decision-making. Understanding the true cost of producing a product—across materials, labor, overhead, and logistics—is absolutely essential to staying competitive. However, costing in manufacturing often rely on disconnected systems, spreadsheets, and manual updates, making it difficult to maintain accuracy and respond quickly to change.
Real-time manufacturing costing
Manufacturing costing involves far more than tracking raw material prices. It includes direct labor, machine time, energy usage, overhead allocation(s), subcontracting, scrap, rework, and logistics. These costs fluctuate constantly due to supplier price changes, demand shifts, production variances, and operational inefficiencies. Without a centralized system, manufacturers risk inaccurate product costing, margin erosion, and delayed financial insights.
This is where a modern Enterprise Resource Planning (ERP) system such as Microsoft Dynamics 365 Finance and Supply Chain Management transforms the costing process. By unifying financials, production, procurement, inventory, and logistics into a single platform, Dynamics 365 provides manufacturers with real-time visibility into costs across the entire value chain.
Key benefits of Dynamics 365 for real-time costing
Dynamics 365 supports multiple costing methodologies, including standard costing, FIFO, LIFO, weighted average, and actual costing. This flexibility allows industrial and equipment manufacturers to align their costing approach with regulatory requirements, operational needs, and business strategy. Costs are automatically captured at each stage of production, reducing manual effort and minimizing the risk of errors.
Real-time data integration
One of the biggest advantages of using Dynamics 365 for costing is real-time data integration. As materials are consumed, labor is recorded, or production orders are completed, costs are updated immediately. This allows finance and operations teams to monitor variances between planned and actual costs as they occur, rather than discovering issues at month-end. Early visibility enables you to take corrective action quickly, whether that means adjusting production schedules, renegotiating supplier contracts, or optimizing processes.
Inventory costing
Inventory costing also becomes more accurate and transparent. Dynamics 365 tracks inventory valuation across multiple sites and warehouses, accounting for transfers, scrap, and rework. Manufacturers gain a clear understanding of how inventory levels and movements affect working capital and overall profitability.
Analytics and reporting
In addition, embedded analytics and reporting tools provide deeper insights into cost drivers. Users can analyze costs by product, production line, plant, customer, or time period. Dashboards and Power BI integration make it easier for decision-makers to identify trends, uncover inefficiencies, and evaluate the financial impact of operational changes.
Scalability
Scalability is another key benefit. As manufacturers grow, expand into new markets, or introduce new product lines, D365 F&SCM adapts without requiring complex system overhauls. Consistent costing rules and centralized data ensure financial control even as operations become more complex.
As companies continually evaluate ways to increase margins, accurate costing is no longer optional. With Microsoft Dynamics 365 Finance and Supply Chain Management, manufacturers like you gain the tools needed to simplify costing, improve visibility, and make confident, data-driven decisions that protect margins and support sustainable growth. Contact Sikich experts to see how D365 can give you true costing visibility.
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