Should Cost Process Automation: Cutting Costs and Boosting Efficiency

Executive Summary

In this post, we will discuss how manufacturers can leverage should cost process automation technology to analyze manufacturability (DFM), product cost and carbon emissions for hundreds, even thousands, of components with minimal human interaction.  This approach is infinitely superior to traditional costing methods that utilize spreadsheet, homegrown technology or most off the shelf technologies that do not leverage the digital thread, connecting a digital twin 3D CAD model to a digital factory.  Companies that adopt advanced process automation technologies see benefits in speed to cost and the volume of components that can be cost-optimized.  This all leads to improved profit margins for your business.

Today, we will discuss how two of aPriori’s should cost process automation technologies: Bulk Costing and Matrix Costing can help you achieve profit margin expansion.  We will also discuss how aP Analytics, aPriori’s business intelligence tool, uses the output of the bulk costing tool to help end users interpret trends and identify cost outliers that could represent millions of dollars of margin improvement. These should cost process automation technologies allow product teams to streamline workflows and quickly explore potential solutions to real-world scenarios like the impact of tariffs, nearshoring, new machinery in a factory, changes in suppliers, changes in production volume, material type, and much, much more –again, with minimal human interaction.

Eliminate Repetitive Tasks to Get More Work Done with Less Resources

Product cost analysis was once done entirely manually – often with just an Excel spreadsheet. But, with the rise of should cost process automation, your product development team members can streamline workflows and cost hundreds of components in a single batch. Just point aPriori at a folder that contains a group of 3D CAD components or a complex product assembly, input some basic information about the manufacturing process, then hit “Go,” and the system will start working to calculate the optimal manufacturing process with the lowest possible cost.  This “set it and forget it” capability has the potential to dramatically improve productivity and reduce Cost of Goods Sold by 2-4%.

How Does Design Process Automation Work?

Bulk Costing is an optional component of the Manufacturing Insights Platform.  To use the bulk costing tool, procurement managers, sourcing professionals or product designers/engineers need access to (A) digital twin 3D CAD design files and (B) a digital factory to run the simulation.

After the bulk cost tool has generated its cost estimates, teams can then use aP Analytics software to discover outliers in parts where cost reduction is possible. They can even see the entire cost breakdown of a component by clicking on its outlier data. Some of the insights provided by this view include:

• Labor costs
• Material costs
• Direct overhead costs
• Indirect costs

Please read A Guide to Manufacturing Cost Estimation to learn more about how Bulk Costing and the aPriori Manufacturing Insights platform works.

Who Can Get the Most Value from Should Cost Automation?

Automated bulk costing and analytics are designed for product development professionals seeking efficiency and impactful results:

• Procurement / Strategic Sourcing Managers: Abandon obsolete spreadsheets and ERP data for costing product designs.  Bulk costing enables strategic sourcing managers to uncover cost-reduction opportunities directly from the 3D digital twin CAD models your product designers generate.
• Cost / Value Engineering: Cost and Value Engineers are typically overwhelmed by the volume of new part designs moving through the pipeline.  Use bulk costing to quickly analyze product designs for a quick, detailed cost breakdown.
• Product Engineers: For an early view of product cost during the design phase, designers and engineers can use bulk costing to analyze numerous components within larger assemblies for cost and carbon optimization.

With bulk costing and analytics, you can streamline workflows by simultaneously generating manufacturability, cost and carbon analyses for multiple components, identifying outliers and comparing costs by region, volume, process type, and more. Let’s examine the benefits for each user group in more detail.

What is the Value of Should Cost Process Automation for Strategic Sourcing?

Today’s strategic sourcing teams do not have the time or manpower to assess or optimize the cost of thousands of new part designs created by the product design teams. This challenge is compounded if your sourcing team still uses manual, time-consuming spreadsheets to produce estimates prone to human error. Sourcing teams not evolving and leveraging the digital twin and process automation to accomplish more with fewer people are simply leaving money on the table.

Now, product teams can use aPriori’s bulk costing and analysis automation solutions to eliminate repetitive tasks and produce quick and accurate cost estimates, and compare the calculated cost to what they are paying their supplier (or the cost to manufacture products in-house). The system then highlights the outliers where you are paying more than the system thinks you should be paying.  This saves your team countless hours.  Instead of combing through parts piece-by-piece, looking for cost savings, aPriori bulk costing and analysis allows you to set up a simulation program and hit “go.”  aPriori will then rapidly evaluate every part with no human interaction.

What Benefits Would a Cost / Value Engineer Gain?

Cost or Value Engineers often have far more work than they can manage.  It is not uncommon to see a ratio of 10 product designers/engineers to every cost or value engineer.  With this type of imbalance, most companies only cost-optimize a fraction of the new parts they design.  By leveraging bulk costing, these teams can automate various processes, such as cost analysis and reporting, freeing their time to focus on strategic initiatives.  Here are a few more benefits they can expect:

• Enhanced accuracy in cost estimation: aPriori’s software enables more accurate cost estimations by leveraging advanced cost models and real-time data, which helps identify greater cost-saving opportunities.
• Increased profitability: By streamlining workflows and providing actionable cost-reduction guidance, aPriori’s automation solutions contribute to increased profitability.
• Early identification of cost drivers: The software allows for early detection of cost drivers, enabling proactive cost optimization and reducing the need for costly late-stage design changes.

Why Would Product Designers Want to Use Should Cost Process Automation?

Product designers have a tough job.  They are the company’s lifeblood and are under constant pressure to deliver innovative new products to market under increasingly shorter timeframes.  Historically, designers never had to worry about product cost.  The primary goal was to complete a high-quality design on time and let someone downstream worry about product cost.  However, in today’s highly competitive world, the most advanced companies are looking for ways to optimize profitability DURING the design phase where cost is effectively “baked” into the product.

With bulk costing, product designers can streamline workflows and quickly generate a detailed cost estimate for each component in a complex assembly to ensure they are on target for the cost set by the General Manager or the Product Management team.  For the product team, time is of the essence.  Being able to “design to cost” saves them from time-consuming rework at the end of the lifecycle when someone discovers a manufacturability issue, or the cost engineering team flags the design as “over target cost.”

What is Matrix Costing, and How Does It Simulate Different Manufacturing Scenarios?

The matrix costing capability is another key component of the bulk costing module. Matrix costing workflows can be launched to estimate the cost of one component or product using multiple production inputs.

At its core, matrix costing allows cost teams to easily and quickly simulate different manufacturing scenarios in a single workflow. Below are three production inputs that the cost engineer must set to run a simulation with matrix costing:

1. Users can simulate the production of their parts in different areas of the world. Matrix costing considers all the changes to regional economic variables such as labor rates and other real-world factors.
2. Annual volumes. Users can specify the minimum number of products they would like to produce each year.
3. Batch sizes. Users have the option of splitting product batches in two ways: annually and quarterly.

Matrix costing automatically evaluates the cost team’s different production combinations to produce detailed cost reports. Cost analysts can use these reports to compare each simulation and determine which scenario has the lowest fully burdened cost.

The sourcing team can leverage these insights to determine the most cost-effective regions for sourcing a component. They can also discover which global regions, based on supplier capacity and speed, are optimal for expanding their supply base.

What Value Does the aP Analytics Module Provide?

aP Analytics is a business intelligence tool that helps product development team members with strategic decision making. It includes web-based reporting, dashboards, and more. It delivers insights that are meaningful to strategic sourcing managers, project leads, engineers, and sourcing professionals.

Here are some of the key features of aP Analytics:

• Web-based reporting: This makes it easy to access and share reports.
• Dashboards: These provide a quick and easy way to get an overview of key metrics.
• Drill-down capabilities: This allows users to drill down into the data for more detailed information.
• Customizable reports: Users can create custom reports to meet their specific needs.
• Integration with other systems: aP Analytics can be integrated with other systems, such as ERP and PLM, to provide a comprehensive view of product costs.

Using aP Analytics to analyze output from bulk costing yields numerous benefits for your product team, including:

• Improved decision-making: aP Analytics provides product development teams with the data they need to make informed decisions about product costs.
• Increased efficiency: aP Analytics can help product development teams to work more efficiently by automating tasks such as reporting and analysis.
• Reduced costs: aP Analytics can help product development teams to reduce costs by identifying areas where they can save money.
• Improved collaboration: aP Analytics can help product development teams to collaborate more effectively by providing a common platform for sharing data and insights.

Overall, aP Analytics is a powerful tool that can help product development teams to improve their decision-making, increase their efficiency, reduce their costs, and improve their collaboration.

Example Use Case

aPriori customer Thomson Aero Seating used bulk costing and analytics to cost and analyze their 80 most expensive components.  The system quickly cost all 80 parts and identified 50 that represented a 30% variation between the calculated cost and what they were paying their supplier.

Thompson requoted these 50 parts and realized significant savings with minimal effort.  In one instance, Thompson was paying 348 British pounds for a component.  aPriori calculated the cost should be 112 British pounds.  Thompson realized a 68% savings simply by asking their supplier to requote the part.

Engineering manager Oran McBriarty commented, “This was such an easy win for our company.”

Watch this short video clip of Oran reviewing the remarkable results of this project in his own words.

Conclusion

Bulk and matrix costing have transformed the should costing process by automating and streamlining workflows related to the assessment of the manufacturability, cost, and carbon emissions of new 3D CAD designs. Strategic sourcing managers, cost engineers, value engineers, and even product designers can all use these should cost process automation tools to accomplish more work in less time with fewer resources to uncover margin expansion opportunities. The ability to implement should cost process automation methodologies drives the potential of the entire product team to dramatically improve your profit margins.