Driving Organizational Alignment Around Your Enterprise Product Cost Management Initiative
Interview with Ed Zraket, aPriori Client Engagement Manager
Effectively aligning an organization around a strategic initiative is a challenge for any organization. And typically, the larger the company, the more complex it is. Product lifecycle management and cost management are no exception.
I recently sat down with Ed Zraket, client engagement manager at aPriori, to discuss this topic and why organizational alignment is so important to the success of enterprise product cost management. Ed works closely with many of our clients – some of the leading manufacturers in the world – providing business consulting, process change assessment and project management during their product cost management implementations. He has seen organizations that do it well, and others that struggle mightily. Ed has over 20 years of experience managing complex product development programs in discrete manufacturing before joining aPriori.
Watch the video, to hear Ed share some of his learnings and provide specific recommendations for organizations looking to gain tighter alignment and bigger impact from their enterprise product cost management efforts.
Common Objectives; Different Methods
“Engineering is trying to meet or beat their cost targets. Program Management is looking to have the most cost-effective designs so that they increase profitability. Supply chain is trying to take cost out of existing products. Those goals can conflict in some cases. If groups don’t get aligned on how they’re going to measure their success on these efforts, it can lead to a lot of unnecessary inefficiencies.”
Views of Product Cost
“Manufacturing will have an internal cost that they’ve calculated in their own way. Supply chain is focused on taking that number to the market to beat it. But they may not reflect all the detail that went into the cost estimate from manufacturing. There are many other considerations that go into making a decision; e.g.: What’s the potential impact of different designs? What are the quality requirements? Can the supplier deliver the same quality of the internal manufacturing facility? Has the supplier made the part before? Where does that part fit into a higher-level product assembly and how it’s going to interact with other products? Who is making those?”
Common Success Factors
“A strong project lead is vital. There’s got to be a focal point for the project at the working level. That project lead needs to be empowered to make decisions. An executive team and executive sponsor are also very critical. The initiative needs visibility at the highest levels of the organization. If there is a clear strategy and then everyone knows what the project has to execute on in order to make it successful.”
Key Performance Indicators
“Defining key metrics and aligning them across functional organizations is critical to success. This enables executives from those different organizations to align on what success looks like whether its material cost savings, cost of sourced parts, time to market, value engineering or cost avoidance.”
Start by Aligning PCM Initiative with Discrete Projects
“Breaking your product cost management initiative into logical phases is important. If you try to do too much, too soon, you’re going to be biting off more than you can chew and you really won’t get the impact that you’re looking for. We recommend that people break their product cost initiative into phases that are logical. Target areas where you know there is opportunity. Most folks will start at the end of the process, in the supply chain. They know they’ve got existing parts and are probably overpaying for a lot of them. Get some quick wins and build momentum from there. Then you can start to shift left and look for opportunities in redesign, value engineering and further back in concept design work.”