How to Leverage aPriori to Improve Sourcing and Production Planning
When you’re nearly done with your NPI process and your product is almost completely designed, you have a collection of new parts that you have never made or bought before. With new parts come with a litany of questions and trade-off analyses that you’ll need to make before starting on production. These decisions can be complex and add time to your already short go to market timeline. That’s where aPriori’s Virtual Production Environment (VPE) can help. Here are four ways to leverage aPriori’s sourcing and production planning tools.
1. Compare Design and Manufacturing Alternatives in Minutes
There’s more than one way to produce a new component and while cost-efficiencies drive much of production, there’s a critical and often time-consumptive analysis required to understand the various manufacturing trade-offs. aPriori can intake your geometric information from your CAD models automatically and with just a few additional pieces of information like batch sizes and annual volume into your Virtual Production Environment (VPE) and list all of the possible ways to make your component in your factory using your equipment.
This exhaustive list of alternative manufacturing options is an important part of your design process. Any number of reasons can lead to changes in a machine’s capacity for production. Having alternatives and their corresponding cost impacts at hand from the start can minimize risks associated with ECOs or machining issues.
2. Capacity Planning Through Digital Factories
Let’s say you have decided that you’re going to make a particular part that you never made before or that you are going to make parts in your factory that will exceed the capacity that you have on your current machines. Simply add that machine and its capabilities to your virtual production environment (VPE) or select a machine from the library that aPriori has and add it to your VPE. Then run your collection of new components through aPriori to calculate the cycle time that it takes to make each component and the total machine hours that you would need on that machine to make that collection of parts.
Once you have the total machine hours, you can adjust that based on your own factory realities, like the availability based on maintenance schedules and how many shifts you run. This should help you get an idea of what kind of investment you need to make in your factory to add that collection of parts to your production. Empowered with this knowledge, you can make more informed decisions.
3. New Machine Purchase ROI
The buy vs source decision is complex but with aPriori’s VPE, you can make a more informed decision that not only will benefit your company’s bottom line in the long run but help you to justify your decision’s ROI and improve your ability to maximize machine capacities and subsequent output.
Through the complex algorithms that leverage elements of machine installation and maintenance, you can account for more than just the one-time purchase of the machine but have an estimate for installation, calibration, training, and upkeep from which you can more accurately calculate your payback period. This added insight into your purchase will enable you to make crucial buying decisions in a matter of minutes as opposed to days.
4. Make Cost-Effective Decisions
This is where aPriori becomes very helpful. Initially you can cost the part in aPriori and get an estimated cost to make that part in your factory. Then, using a VPE that represents your supply chain, you cost the part again and get an estimate of what it will cost to purchase that part.
If the difference is small, you may not even consider moving it from your factory. If the difference is significant, possibly because your supply chain has equipment better suited to making that part, then your decision becomes more complex and the additional data afforded to you by aPriori’s tools will come in handy.
aPriori allows you to run different scenarios with an adjusted overhead rate to remove any costs that will not go away even if you outsource the part and then re-cost the part using that adjusted overhead rate for a more apples to apples bottom line economic impact to your factory or to your company. This will give you a fuller picture of whether it is actually cheaper to make that part or to buy it. You may still have to evaluate the trade-off of having control over your ability to create the component versus relying on a supplier which adds a level of uncertainty to your supply chain but that evaluation becomes less volatile with more accurate information.
Better Information Enables Better Decisions
The decision whether to make or buy a component is never as simple as determining cheaper. There are many factors to consider even before addressing the financial issues. Once those financial questions come into play, it’s all about having better information to make better decisions and aPriori can certainly help you with that. See how long-time customer, Caterpillar, is using aPriori for new product introduction programs here.
Download our whitepaper, Are You Overpaying for Your Outsourced Parts?, to learn more about how sourcing professionals can leverage aPriori to make better decisions.
Are You Overpaying for Your Outsourced Parts?
Download our whitepaper to learn more.Download Whitepaper