“…In this market, sensitivity to price is very high. GaussSoft Profit is the strategic tool we use to establish price and analyze the competitiveness of every product. Some of the most important decisions Diaco makes—price setting, discontinuing a product or supplier renegotiation—rely on information provided by GaussSoft Profit”.

Javier Buitrago – Chief Accountant

Diaco is a large iron and steel company with three manufacturing plants producing thousands of products.

For Diaco, most of the costs come from materials, energy and specific manufacturing processes. Unlike assembly processes where you start with thousands of parts, this is a manufacturing company where you start with a small array of raw materials and end up with many products. Costing is not as simple as adding the costs of the parts, but rather adding the value of costly interdependent processes and then carefully assigning it to an elaborate set of products.

In manufacturing processes, you need to be able to store added value through different periods of time and to account for such things as reprocessing or product degradation. You have materials that are split into sub-products, and costs have to be allocated in a special way.

In 1991, when Javier Buitrago entered the company as chief accountant, the company had no costing system. They started costing using a spreadsheet system. At that time, Diaco also initiated a culture of profit performance and cost control that required the engineers to engage in formal training. However, by 1994, the increasing number of products, the complexity in operations, and the need for more detailed costs made the spreadsheets an impractical solution. Diaco began the search for something better. “We have to analyze and control the performance and profitability of every end product back to the raw material and to the supplier that sold it” explained Gonzalo Galán, Diaco's CIO.

In 1996, Diaco selected GaussSoft Profit and Cost after a set of trials and moved the existing cost models to this tool. Initially, they used GaussSoft Profit and Cost for only the main manufacturing processes, but after mastering GaussSoft Profit and Cost and understanding its capabilities, they began to cost with more detail and reached amazing levels of control, accuracy and resolution.

Over the last decade, Diaco has relied on GaussSoft Profit and Cost to provide the intelligence they need to make informed decisions. Furthermore, GaussSoft Profit and Cost has also provided them with information for improving manufacturing processes.