Reduce Product Costs with aPriori

aPriori’s mission is to enable leading manufacturing organizations to drive costs out of their products prior to production. With real-time product cost assessments from the aPriori Enterprise Cost Management software platform, manufacturers can reduce product costs earlier in the development process to significantly lower Cost of Goods Sold (COGS) and measurably improve overall financial results.

Enterprise-wide Product Cost Management

aPriori’s mission is to help our customers reduce costs, specifically Cost of Goods Sold (COGS), commonly referred to as product costs. In the discrete product manufacturing industries, COGS is always the largest expense on a company’s income statement (typically between 70% to 90% of revenue). With a COGS percentage this high and typical net profit margins being 3% to 8%, even a slight reduction in COGS provides a tremendous opportunity to improve the financial results of an organization. If aPriori is able to help companies reduce COGS by 1%, they can add 10% to 30% to the bottom line. There is no driver of net profit margins as powerful as Cost of Goods Sold.

A reduction in product costs gives organizations a great deal of flexibility. Companies can use the savings to improve their bottom line (net profit or free cash flow), grow revenue while maintaining constant margins, invest in capital, develop new products, or even make acquisitions. Where aPriori customers use the savings is up to them. Giving them more control over their income statement is why aPriori exists.

aPriori believes that the most powerful way to impact financial results is to provide manufacturing companies with visibility into the True Economic Cost of their products at every point in the product lifecycle. When everyone who impacts and manages costs (designers, manufacturing, procurement, management, etc.) is able to see the effect of their decisions on product cost in real-time, they will be able to take appropriate actions that reduce it. Clearing the fog and uncertainty around product cost (from the very beginning of product development) is what aPriori does.

The choices and decisions made during the design, manufacturing planning, and sourcing phases are what fundamentally determine a product’s cost when it is finally manufactured. To provide organizations with true visibility into product costs, aPriori:

1. Links directly to the engineer’s CAD system and automatically assesses the Geometric Cost Drivers (GCDs) from the solid model, so that every time the design is changed, product cost is predictively re-calculated in real-time.
   
   
2. Calculates product cost through a patented understanding  of the physical resources (time, mass, etc.) required to build the product.
   
   
3. Automatically derives a manufacturing plan based on the company’s own manufacturing environment or that of one of their suppliers. Additionally, aPriori provide the flexibility to allow manufacturing experts to modify every routing, process, machine, tool and set-up that will drive cost from a manufacturing point of view.
   
   
4. Supports Virtual Production Environments for every internal or supplier facility in which the product could be made, enabling procurement experts to switch between facilities and receive instant and precise assessments of what the product would cost using any supplier in the system.
   
   
5. Deploys rapidly to all business functions that impact product cost. This is how aPriori provides cost visibility to any person in the company making decisions that could effect how much a product will cost to produce.

Click here to learn more about how the aPriori Enterprise Cost Management software platform is helping leading manufacturers reduce product costs.