Material costs account for about 70% of a typical manufacturer’s cost stack, and therefore, any effort towards increasing profitability needs to take a close look at ways to reduce these costs.
Further, majority of the product costs are committed early on in the product development cycle, at a time when product details are least known and cost drivers least understood. Should costing provides a framework that enables a systematic focus on opportunities to reduce costs right from the conceptualization stage through the production life of the product.
It is, therefore, essential for companies to perform should cost modeling of all components they design, manufacture, and procure early in the product realization cycle. Early cost modeling provides the basis for cost reduction and waste elimination, prior to production by triggering the evaluation of alternative designs, processes, and sources to achieve quantifiable savings in material, tooling, labor, and overheads
Geometric’s should cost modeling teams have a deep understanding of product design, materials, and manufacturing processes, and this understanding enables them to perform detailed product cost analysis and provide precise cost assessments to customers during product development. We create accurate and robust should cost models for our customers to help them determine the most cost effective designs and manufacturing processes, thereby, achieving significant savings in product development costs. The cost models help in:
- Understanding the design features on the part
- Identification of manufacturing processes
- Calculation of cost drivers associated with each design feature to estimate component cost
COST KNOWLEDGE THROUGHOUT THE PRODUCT DEVELOPMENT LIFECYCLE
Product development demands a careful consideration of costs; however, design engineers usually lack a reliable method of managing and understanding these. Geometric helps in should cost modeling at this stage to keep the design team aware of movements in product cost, enabling them to review each part of their design for potential cost reduction opportunities. It is best to examine cost saving approaches during the design phase rather than in the manufacturing phase, where the ability to influence the product cost dramatically reduces, and any effort to make design changes entail huge expenses.
When the product reaches industrialization, our cost modeling team empowers the customer’s purchasing team with the power to effectively negotiate with suppliers and to ensure that these negotiations are based on analytical information. The costing analysis provides a basis to seek out the right supplier, by comparing between the actual procurement or manufacturing cost and the cost model; and reconcile differences.
Furthermore, should costing during engineering change provides precise cost impact assessments on design alternatives to evaluate the impact of various design decisions on product costs
Productivity solutions for should costing
Should costing is a fairly rigorous exercise, and while there are software tools available that help in the cost calculation, the critical phase is the development of an understanding of the product design, and what that means from a materials and manufacturing process perspective. The interpretation of the product design in terms of a manufacturing process is a phase that can be automated through the use of point solutions.
Geometric leverages its knowledge of the product realization cycle to create productivity solutions that complement contemporary engineering tools. Our proprietary tools and technologies help generate useful data during the cost modeling process to ensure greater accuracy and reliability in the should costing process
DFMPro – Identifies manufacturability issues with features on the part at design stage to ensure reduction in the set up cost as well as total time to manufacture the product.
NestLib – Helps optimize sheetmetal utilization to help reduce material costs.
Feature Recognition – Automatically recognizes features from 3D models and lists them in excel sheet for easy cost calculation
Should costing provides the following benefits:
- Product cost reduction through optimization of product design, manufacturing process, and supplier negotiations
- True cost visibility to everyone in the organization on drivers that impact cost
- Transfer of pricing power from the supplier to the purchaser
- Generation of savings opportunities through design optimization, simplifications, and improvements in manufacturability