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Gaining Value From Your aPriori Product Cost Management Deployment

David Gay March 1, 2018

You’ve just purchased new software. You made it through the sales process and you are excited about all of the features and capabilities the software has to offer. But today, as it is installed, you don’t know where to start. Wouldn’t it be nice if you had someone there to help you set up, teach you how to best utilize the software for your company, and educate you on how to track the value so that you can report the ROI to upper management?

Common software deployments typically follow three distinct phases:

  • Phase 1: Define – The goal of this phase is to define and determine requirements such as the data needed, planning for the onside workshops, and the software installation.
  • Phase 2: Configure and Calibrate – What refinements need to be made to the software to meet your business needs?
  • Phase 3: Value tracking – Quantifiable metrics to tracking the ROI.

Your aPriori deployment also follows these three phases, however we have modified our deployment approach to expedite your time to value and achieving your ROI.

HOW CAN YOU GAIN VALUE EARLIER IN YOUR DEPLOYMENT?

By working with you to show you how to use and to be successful with the baseline product, our goal is to assist you in gaining immediate value in your aPriori deployment. We set you up to use our reporting software so that you can report back to your management team your progress in achieving your return on investment.

Accelerated Time to Value

At aPriori, we have a unique way of looking at how we deploy our software. Instead of waiting until after the first two phases of deployment are completed to start tracking value, aPriori’s deployments begin to implement programs that add value during the configuration phase.  As part of this strategy, we define and track value milestones beginning very early in the configuration phase.  The primary objective is to deliver value on your investment as soon as possible.

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During your aPriori deployment, we will discuss with you the particular value milestones that will benefit your use case and which milestones will help you to attain the best and fastest value from your deployment.

Below are two examples along with use case metrics we may recommend you track. Not every deployment will follow the same value milestones, but the examples below will give you an idea of how you could gain value early in the deployment.

Use Case #1: Sourcing

Sourcing Value Milestone 1

During the very early stages of rollout, using the baseline virtual production environments, we run outlier identification, i.e. mass vs price.

This allows you to determine your biggest outliers – so you can then renegotiate pricing on those components. During the sales process, we may have completed an outlier identification with you. Once the deployment begins, we repeat that process so you can accumulate even more value early on in the deployment.

Sourcing Value Milestone 2

The second value milestone we could discuss in a sourcing deployment involves inputting your customer materials and rates. By inputting your materials and rates, you can start to look at your aPriori price vs. your quoted PO cost. You can then renegotiate outliers and track actual savings from negotiation.

Sourcing Value Milestone 3

At value milestone 3, you start to use a fully configured Virtual Production Environment (VPE). During this value milestone, we are assessing proactive negotiation through all applicable commodities we have configured for in the deployment.

Sourcing Use Case Metrics:

  1. The first important metric to understand in every deployment is the “usage” metric. What is the percentage of software licenses purchased that are being used?
  2. The premier value metric for the sourcing use case is actual savings from should cost negotiations.

As you can see in the image below, we have value tracking reports that illustrate both these metrics. These are reports which we will help you develop and leverage throughout the deployment.

Use Case #2: Design Engineering

Design Engineering Value Milestone 1

There are two ways in the first value milestone in Design Engineering to gain value from using the baseline product:

  • Option one is running Design to Cost checks on current designs within the aPriori software. By looking at manufacturing issues within your design, you can then redesign your CAD models to eliminate the issues.
  • The second option is to consider directional costing of design changes. As you are making design changes, you can use the baseline product to see the impact of your change. Pay attention to the directional cost as you make your design changes. Have these changes made a positive impact or a negative impact?

Design Engineering Value Milestone 2

Design engineering value milestone 2 is for a fully configured VPE. During this milestone, we will determine the true cost impact of the design changes. Here, we specify the potential savings by making the design change. At this stage, we will also work together to identify those potential savings (also known as “cost avoidance”) and document them in our value tracking system.

Design Engineering Use Case Metrics

We recommend that every design engineering use case tracks two metrics:

  1. Usage: What is the percentage of software licenses purchased that are being used?
  2. Value metric: The focus of this metric is on cost avoidance during the early phases of design. In the graph below, notice the target cost in red, as well as the final aPriori cost in blue, and then the known cost in black.  These reports are leveraged frequently during the early stages of design to understand if the changes you are making have put you over target cost at any point.  This prevents design features that could escalate cost from being designed into the product in the first place.

 

 

During the Sales Process, Ask Your Vendor About Their Software Deployment Phases

If you are about to embark on a software installation of any kind, be sure to ask vendors about their software deployment phases and specifically, how they will set you up to track your value. If they don’t know how to answer the question, then they likely do not offer any. If they answer that they follow the three typical phases in a serial fashion, that’s a good start. However, if they offer a model that includes driving value in the early stages of configuration and calibration, that could be even better.  For more secrets to a successful implementation of product cost management software, we recommend you check out our new eBook below.


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