5.3.

2 Product Costing / CBD

To-Be Process Map Definitions_Level 3

L3 Process #

Process name

5.3.2 Product Costing / CBD

Reference 5.1 - Material

Development,
Classification and Setup
Reference 5.2.3 - Product
Spec Development &
Sample Mgmt

Key activity
Update costing tables for the
season (e.g. freight, tariffs,
exchange rates)
Update LOP database with
standards for different product
categories, COO's, factories, and
complexity
Update material library with
negotiated material prices for the
season

Create Tech Pack

Functional Owner

Input / Dependency & Source

Finance/Logistics

Costing

CBD cost information from confirmed /

adopted projects

Tools (if any)

Ongoing activity as seasonal history is captured

PLM

Output (and to whom)

LOP library / database

PLM
Development sends tech pack (which includes the BOM) to factory;
or factory accesses tech pack directly in the PLM system . All tech
packs to include latest projections of volumes.

Development

Tech Pack

Develop prototype sample and

deliver to Asia Development; CBD
must be completed for each sample Factory
Receive sample and CBD, validate
components and iterate changes
required before sending to US
Development
Asia Development

Reference 5.3.3 - Tooling

Costing & Amortization

PLM

Materials

Receive tech pack and develop CBD

(avg. FOB cost for style, color & size
range) based on initial BOM; Incl.
component level-costs, LOP, other
adjustments & est. tooling costs
(incl. estimated tooling costs across
multiple shoes if same tooling is
used for multiple styles at a factory) Factory

Review and scrub CBDs: Based on

priority agreed with category teams
(e.g. new upper & outsoles first, by
buy-ready date); Validate costs &
yields based on comparison to
other styles & historical costing
standards
Decision: Agree w/ material prices
& yields?
If no, re-negotiate material prices as
needed
Revise material prices, yields and/or
other adjustments and provide
updated CBD
If yes: Verify estimated duties to
identify any duty implications and
notify U.S. Costing of any
opportunities

Business policies and procedures (additional activity detail)

Finance and Logistics maintain their respective tables in each
function's respective systems/tools; with the assumption that those
tables are fed into the PLM system

PLM

CBD template for a style/project is automatically generated based on

the BOM completion.
PLM
New policy: all physical samples must be accompanied by a
copmpleted CBD.In most cases (i.e. totally new shoe or upper, etc.),
factory will make a prototype first, but can go directly into an ILR or
FLR sample (especially if it's a carryover).

Tech Pack / BOM

CBD

CBD in PLM

What gets reviewed and iterated on in detail (with the factories) will
be driven by project priorities and level of complexity.
CBD in PLM

Asia Costing
Asia Costing
Materials

Input / feedback from Costing on material

costing opportunities

Leverage costing history / database

Factory

Asia Costing

PLM

UA customs tariff table in PLM; Should be able to estimate / verify

duty implications for any country of destination

PLM

To do this effectively, assume an integration

of Merchandise Planning / Forecasting with
Pull latest FOB from CBD, standard freight rates are applied
PLM (whereby projected volumes are fed into (provided by Finance), duties are estimated and added, pull latest
the PLM system)
forecasts

PLM

Costing
Validate tooling cost; Receive latest
forecasts; Validate estimated
landed cost (ELC) by style and
destination and aggregate margin
estimates for each product category Costing

Updated CBD

5.3.2 Product Costing / CBD

To-Be Process Map Definitions_Level 3

L3 Process #

Process name

Key activity

Functional Owner

Generate margin analysis roll-up to

each category team and leadership Costing
Receive and review sample (with
associated CBD FOB cost)
POD
Review margin analysis with
category teams and conduct topdown costing what-if analysis to
reach target margins (including
comparing CBDs from multiple
suppliers, etc.); Recommend
changes to achieve targets
Decision: Change material, usage,
design
If yes, repeat Product Spec
Development & Sample Mgmt
process, and iteratiev costing
process
If no, decision: Change vendor?
If yes, repeat Product Spec
Development & Sample Mgmt
process, and iteratiev costing
process
If no, decision: Adjust volume?
If yes, revise material prices, yields
and/or other adjustments and
provide updated CBD - repeat
process
If no, decision: Accept FOB?
If no, drop style (if all other options
have been exhausted)

Costing

Input / Dependency & Source

Business policies and procedures (additional activity detail)
To do this effectively, assume an integration
of Merchandise Planning / Forecasting with
PLM (whereby projected volumes are fed into
the PLM system)
PLM system-enabled reporting

Tools (if any)

PLM

To do this effectively, assume an integration

of Merchandise Planning / Forecasting with
In parallel with Development doing what-if analysis on a per-style
PLM (whereby projected volumes are fed into basis to determine what acceptable changes may be made; PLM
the PLM system)
system enabled reporting

PLM

Output (and to whom)

POD

POD
Costing

POD
POD

Work with Merch Planning to determine

Factory
POD

PLM

POD

If yes, finalize CBD (including LOP

and tooling amortization) based on
final product specs/BOM in prep for
'buy ready' milestone
Costing
Obtain most recent forecasts and
finalize CBD and negotiated FOB
cost (e.g. volume-based discounts),
in prep for 'buy-ready' milestone
Costing
Decision: Changes post Buy
Ready?
PDO
If yes, revise material prices, yields
and/or other adjustments and
provide updated CBD - repeat
process
Factory
If no, process ends

Buy-Ready milestone is about 30 days prior to issuing a PO

(everything is locked in by Buy Ready)

PLM

Buy-Ready milestone is about 30 days prior to issuing a PO

(everything is locked in by Buy Ready)

PLM

PLM

Finalized CBD

5.3.3 Tooling Costing & Amortization

To-Be Process Map Definitions_Level 3

L3 Process #

Process name
Tooling Costing &
5.3.3 Amortization

Key activity

Functional Owner

Reference 5.2.2 - Mold &

Other Tooling Development Decision: New tooling developed? POD
Estimate cost per tool/mold for
entire shoe in an estimated size run
(the A set); (incl. estimated
tooling costs across multiple shoes if
Reference 5.3.2 - Product same tooling is used for multiple
Costing / CBD
styles at a factory)
Factory

If no, run open amortization reports Costing

Decision: Existing tooling fully
amortized?
Costing
If yes, process ends
If no, Determine where tooling is
used across multiple sytles
Costing
Reference 2.1.3 - Line
Planning & Product Briefs

Obtain forecasts by size ranges

Determine # of tools needed based
on forecasts and size ranges and
ratios
Estimate tooling amortization ([Tool
cost * # of sets] + Sample tooling
cost)/Total estimated units and
update CBD
Create (and refine) monthly
production schedule and assess
production schedules impact to
total product cost
If production plan results in
additional molds that need to be
open to accommodate for peak
production volumes, work
stakeholders to smooth production
in order to lower FOB if needed,
based on number of molds that
need to be opened
Finalize estimated amortization and
input into CBD to finalize FOB for
Buy-Ready milestone; Lock down
house margins
Run open amortization reports
Decision: Tooling fully amortized
for season?
If yes, proceed to Tooling
Commercialization (Production
Tooling Authorization) - 7.1.2
If no, decision: Use tooling for
future seasons?
If yes, agree with factory to use
tooling for future seasons

Costing

Costing

Input / Dependency & Source

Tech Pack

Supply Planning

Factory obtains volume estimates from tech pack (incl. ability to

aggregate volumes across multiple styles if tool is used for multiple
styles in a factory.
Assume that Costing team will leverage a tooling amortization
reporting capability where they can easily view and assess status of
any tooling amortization

Line Plans, Merchandise Plans, Demand Plans Assumes integration on systems into PLM to pull volume data
Forecasts must include estimated peak production volumes (e.g. if
production spans over 3 months, when will peak production occur
and what is that peak)

PLM

Estimates at this stage may not be based on planned production

schedules and known peak volumes

Output (and to whom)

PLM

PLM

PLM

Merch Plans, Demand Plans (incl. required set

dates)

Production Schedule / Plan

Depending on what the discrepency is (# of molds vs peak volumes),

stakeholders may include Merch Planning, Development, Sourcing,
etc.

Costing
Costing

PLM
PLM

Supply Planning

Supply Planning
Supply Planning
Supply Planning

Tools (if any)

Tech Packs

Costing

Supply Planning

Business policies and procedures (additional activity detail)

Tooling costing & amortization process is conducted per tool; Tools
will be used across multiple styles

This may be a proactively planned amortization over several seasons

or an un-planned spread into subsequent seasons.

Finalized amortization
schedule and finalized CBD

5.3.3 Tooling Costing & Amortization

To-Be Process Map Definitions_Level 3

L3 Process #

Process name

Key activity
Proceed to Tooling
Commercialization (Production
Tooling Authorization)
If no, decision: Can FOB be
adjusted to fully amortize?
If yes, adjust FOB
If no, issue payment to factory for
remaining balance
Proceed to Tooling
Commercialization (Production
Tooling Authorization)

Decision: Changes after

authorization (e.g. size run,
volume)?
If yes, receive approval on
changes and re-issue PMA
If no, process ends

Functional Owner

Input / Dependency & Source

Business policies and procedures (additional activity detail)

Tools (if any)

Supply Planning
Costing
Costing

Finance
Supply Planning

Supply Planning
Supply Planning

PLM

Costing to work with Finance on terms of payout and Finance /

AP conducts the payment

Output (and to whom)