Technical Cost of Production (TKW): Knowledge Compendium for the Industry

Monitoring the costs of running a manufacturing business is one of the fundamental tasks every company must undertake. It helps determine whether the products being manufactured are even profitable. However, in a world of intense competition driven by factors such as globalization, this is no longer sufficient.

Manufacturing companies face numerous challenges daily, such as high variability – whether it concerns customer demands, raw material costs caused by disruptions in supply chains due to geopolitical instability, or climate regulations that impact the prices of components and materials, and even their logistics.

All of this means that simple expense tracking is far from enough.

Yet, many organizations still calculate their costs monthly, attributing them to products in a highly imprecise manner. This process is too slow and overly generalized. Such an approach, especially with high production volumes, can quickly lead to uncontrolled cost increases and a sharp decline in the profitability of certain products.

This is precisely why measuring TKW (Technical Cost of Production) is so valuable. Ideally, this should be done continuously, with precision down to each production batch, or in serialized production, even to individual units. This allows businesses to not only avoid unexpected surprises but also dynamically shape their pricing strategies, enhancing the appeal of their offerings and gaining a competitive edge.

You can learn more about this in our webinar on TKW and in our series of articles that explain the concept in detail. These resources also demonstrate, through practical examples, how to measure TKW effectively and where to look for optimization opportunities.

Warm regards,
Michał Zieliński
Head of Product and Digital Consulting | Board Member