Below is our recent interview with Alexander M. Swoboda, CEO at FACTON Inc.:
Q: Could you provide our readers with a brief introduction to FACTON?
A: The FACTON EPC Suite is the leading Enterprise Product Costing (EPC) solution for the automotive, aerospace, mechanical engineering, high tech/electronics and medical device industries. It enables manufacturing companies to calculate product costs on the basis of the engineering BOM. Its specific solutions offer robust answers to the requirements of management and individual departments within the enterprise. FACTON EPC enables standardized, enterprise-wide costing independent of location and department for maximum product cost transparency throughout every phase of the product lifecycle. Businesses accelerate their costing, achieve pinpoint cost accuracy and secure their profitability.
FACTON was founded in 1998 and has locations in Potsdam, Dresden, Stuttgart and Detroit. Hasso Plattner, founder and chairman of the supervisory board of SAP SE & Co. KG, has supported this innovative company since 2006. For the past two years, FACTON has started to incorporate artificial intelligence into our product.
Q: You’ve recently published White Paper on “Predictive Costing”; could you tell us something more?
A: When I attended a McKinsey Alumni conference on artificial intelligence in Berlin in 2017, I realized that AI is no longer science fiction like Terminator or Hal2000, but is instead a technology with a serious potential to change business processes, including product costing. When we dug deeper, we came up with some ideas on how to leverage AI in our business, both to make product costing more efficient and to generate new insights, based on the data generated. We also found a number of challenges, which the industry as a whole needs to overcome on the way to get there. In a way, this journey to predictive costing is described in the white paper.
Q: Can you give us insights into your features?
A: Interestingly, we started paving the way for AI without knowing it, when we initially came up with the Enterprise Product Costing concept 10 years ago. The key feature of FACTON EPC is its ability to handle all costing information across the organization in one system. By doing so, the enterprise standardizes and digitizes costing information. It is critical to understand what price you should pay for your purchased parts, to present your B2B customers with consistent quotes and to enable management to analyze different strategic scenarios, e.g., when it comes to product portfolio decisions or even acquisitions. And this very feature is a prerequisite for using artificial intelligence. Even today, there are many companies out there using spreadsheets to calculate product costs. However, putting numbers in a spreadsheet does not mean that they are digitized and certainly does not mean that they are standardized. If you try to feed such spreadsheets into AI, it will – so to speak – choke on it. The data our customers have in FACTON is portioned exactly the way an AI solution needs it organized to learn complex dependencies.
One feature we started out with in the AI world is what we call “smart initial values.” The system helps the user to populate the calculation based on past experience. It is a perfect use case in which we can leverage FACTON’s and our customers’ domain knowhow and existing data.
Q: Who are your customers? Which types of businesses can use FACTON’s solutions?
A: Companies that develop complex products in complex processes that require both technical and financial finesse stand to benefit most from a comprehensive EPC system: whether an automotive supplier needs to provide its customer a transparent proposal calculation, an aerospace company wants to evaluate its products in the earliest stages of development or a mechanical engineering firm needs to determine how to cost-optimize purchased modules and components, FACTON EPC enables them to address these challenges quickly, completely and securely, and with the least possible expenditure.
From automotive to mechanical engineering, high tech and electronics to aerospace and medical engineering, businesses can only make informed, competitive decisions if they have full transparency over the cost structure of complex products. Lately we are also seeing companies in the consumer goods, and medical engineering industries benefiting from costing software. Faced with the pressure to complete and innovate, shorter lifestyles, global competition, businesses in today’s market environment require full transparency and control of cost-relevant factors. FACTON EPC provides manufacturing companies from every industry this transparency and control.
FACTON EPC international portfolio of customers includes Ford Motor Company, Henniges Automotive, DURA Automotive Systems, Airbus, Mahle Behr, MANN+HUMMEL, Porsche and other renowned manufacturers.
Q: What are your plans for the future?
A: While there is still plenty of work for us to do getting companies away from spreadsheets and onto a standard automated system, the really exciting part of the job is working on the next generation of product costing solutions. I can’t reveal too much about our plans yet, but I can promise that AI will play a role in it and that it will be exciting.