Product Cost Management Software

What is product cost management software?

Product cost management software helps manufacturing companies accurately estimate and optimize the costs of producing new and existing products. By enhancing cost efficiency across the entire product life cycle, this software helps manufacturers streamline their product development operations and improve time-to-market (TTM) outcomes.

With access to real-time cost data, companies can make informed decisions that maximize profitability, resulting in a more efficient approach to product cost management. This software also facilitates better cross-functional collaboration by providing one centralized location to manage valuable and actionable manufacturing cost information.

What are the benefits of product cost management software?

Product cost estimation software can offer significant benefits to manufacturers who replace their traditional cost engineering tools such as Excel spreadsheets. These advantages include:

• Scalability: Product cost analysis and management software, such as aPriori, is designed to handle large and complex datasets efficiently and is highly scalable. This means that as manufacturers expand and product design complexity increases, the software can remain effective without causing bottlenecks or TTM delays.
• Automation: Some product cost management software automates the costing process, reducing the likelihood of errors associated with manual cost calculations. This automation saves valuable time for engineers and analysts, enabling them to focus on more strategic tasks instead of laborious data entry and verification activities.
• Precision and Accuracy: Product cost management tools provide real-time and precise cost insights based on physics-based, geometric characteristics of a 3D CAD model. These software solutions often come with configurable digital factories that utilize real-world data to estimate total manufacturing costs by region. This allows product teams to assess the cost of alternative materials, labor rates, and manufacturing overhead, giving them the ability to make informed decisions about production costs.
• Enhanced Collaboration: Actionable product cost data can be used seamlessly with powerful collaboration and task management tools such as aP Workspace. The tool enables cross-functional teams to manage scenario tasks, assign responsibilities, tag colleagues, and more. This leads to increased transparency and alignment among key stakeholders in cost engineering, design, procurement, project management, and sourcing.
• Integration Enterprise Applications: Tools can integrate with existing applications and systems, including CAD, ERP, and PLM, to provide estimates. This integration enables teams to make data-driven decisions quickly by drawing from enterprise metrics and insights.

How is product cost management software used throughout the product life cycle?

In today’s dynamic manufacturing landscape, internal departments are leveraging product cost management tools in various ways:

• Cost and value engineers leverage the software to benchmark and accurately estimate manufacturing costs based on detailed parts and process information. By having access to granular cost structure insights, they can identify cost drivers and take advantage of additional cost-saving opportunities. Further, they can perform scenario analyses to track the impact of various materials and production operations on product cost.
• Design and product engineers utilize cost management software to optimize their designs for cost in the initial stages of product development. This approach enables them to achieve cost efficiency while ensuring product quality and functionality. By utilizing the software, designers can obtain better results and minimize the risk of exceeding their organization’s predetermined target costs.
• Sourcing and procurement professionals can use the software to collaborate with suppliers, enabling them to share should cost estimates, engage in price negotiations, and achieve expense reductions. Additionally, they can perform a “make vs. buy” analysis to determine the cost of producing a component in-house versus sourcing it from suppliers. Moreover, sourcing teams can assess supplier risks and identify procurement options to mitigate supply chain disruptions.
• Manufacturing engineers can maximize production efficiency while minimizing costs by evaluating process expenses, cycle times, material utilization rates, and more. They can also use product cost management software to determine the manufacturability of a product and provide detailed feedback to the design team for necessary iterations.
• Project and product managers can rely on a product cost management solution to monitor and track the expenses associated with a specific project. This enables them to mitigate cost-related risks, such as cost overruns, and prioritize projects with the greatest potential for savings.

What other capabilities does product cost management software have?

Product cost management tools are becoming increasingly sophisticated and automated. Today, some automated software integrates design for manufacturability (DFM) guidelines, considers material choices’ cost and sustainability, and conducts scenario analysis. These capabilities, coupled with enhanced supplier collaboration, enable manufacturers to identify the most cost-effective and sustainable options simultaneously.

What are the different approaches to product cost management software?

There are three primary approaches to product cost management software: manual and process-model-driven analysis, statistical or index-based spend analytics, and automated 3D CAD evaluation. These approaches are explained below:

• Manual Process Modeling Analysis: These tools provide both manual flexibility and the efficiency of a process-model-driven approach for custom accounting and cost management. They allow for tailored handling of cost models, ensuring quick and precise spend analysis. Further, the tools are primarily aimed at cost accountants, financial controllers, specialized cost engineers, and industry professionals with expertise in product manufacturing.
• Statistical Cost Optimization: This approach relies on extensive historical data to identify cost outliers in spend. This statistical analysis approach is also referred to as an index-based approach.
• Automated 3D CAD-Driven Evaluation: Product design and cost engineers use automated product cost management software to produce precise real-time expense calculations. Cost estimates are based on the geometry of the 3D CAD model for accurate analysis of parts or assemblies. These automated solutions allow forward-thinking costing teams to analyze multiple products for cost-effectiveness in batches quickly.