Cost, Collaboration, and the Pathway to Zero RFQ
Wondering how to use aPriori to streamline and automate your RFQ process? Instead of several RFQ iterations which can take weeks and dramatically slow down your time to market, innovative companies like CNH are using manufacturing simulation to understand product costs before the RFQ is even generated.
This insight enables them to build a data-centric (and trust-centric) relationship with their supply chain. Even with 1,000+ aPriori users. When both parties have access to the same digital factory inputs, the need for multiple RFQs is significantly reduced, or in CNH’s case, completely eliminated altogether.
JD: I’m JD, and I am a Cost Manager for our NextGen combined for CNH Industrial.
LA: So what did you find with aPriori when you started to implement the request for proposal cost solution to help with your business needs? Was there anything surprising that you found?
JD: I think it’s more user-friendly because we are able to leverage the 3D model and then directly import it into aPriori and it provides all kind of information. So in terms of design engineer, can see the different split where the cost breakdowns are happening and also for a cost engineer, we are also able to provide the split. These are what drivers are contributing to the cost.
LA: Tell me about adoption within your organization. Was it challenging to get all stakeholders on the team on the same page with the tool?
JD: No, I think I wouldn’t say that because currently we are at 1,500 licenses, I think 890 users.
LA: So you have good adoption, is what you’re saying?
JD: Yes. We started with a small group in harvesting. Our leader was pro aPriori. And we are using it at the engineer levels and they are using for design to determine whether it’s design for manufacturability, for cost…everything is taken care at that front of the design.
LA: How has it changed your relationship with your potential suppliers?
JD: We were able to reduce hours. They were coding like nine hours or something and we were said aPriori saves two hours and we provided secondary evidence to show them that this is how it should be. And they were able to reduce hours, but it is still a gap. I think we need to work on it.
LA: It was a place where you could start a conversation.
JD: Conversation. Yes.
LA: So it wasn’t a conversation shut down moment, this is what we think your cost ought to be. But it allowed you to say, “Hey, this looks like an outlier. Let’s have a conversation about what your processes are.”
JD: Exactly. So at least in the past it was more of a “it could be.” But now we have a data point to say “these are all the cost drivers.” And because of this data, we are saving eight hours. So that’s a good thing about aPriori, I would say.
LA: Tell me about what you’re learning at the conference these past few days. What’s been most exciting to you?
JD: I think it is a good insights. I see most of them are having the same pain and it’s good to see how they are addressing the problems so that we can do the benchmarking and then see how we can improve as a company.
LA: And when you say other manufacturers are having the same pain, what is that pain that you’re talking about?
JD: Design engineers are not using the cost functionality in aPriori!
LA: What, why not?
JD: Their priorities are different, right? I’m not blaming engineers, it’s there because they are putting the pressure so they have to come up with a concept which has a performance, quality, cost, weight, and delivery date.
LA: And they have to do it quickly because they have so many things on their plate, they have to bang out so many designs. So the key for you, I suppose, is making it as seamless as possible.
LA: Making it as painless as possible for the design engineers.
JD: And also that process, once we have the design optimized, designed, and it should get to the procurement team in a more seamless way. And the next step is once we have the code from the supplier that has to pass through the cost team so that we know if everything is fine in line to the number, we are good. If there is a deviation, then we have to reconcile the difference. So I think the procurement process workflow will help us because everything related to that particular part, we can go back and look the history and see what was the feedback, what was the design feedback, what was the manufacturing feedback, what was the purchasing feedback and how was it quoted in 2020 or 2018? I think it would be a good tool.
LA: If all that info was right there in aP Workspace, then you don’t have to run around.
LA: Trying to track down the RFP email or the information from someone who’s left the company, it was maybe in their head and now they’ve left.
LA: So that sounds like it is gonna solve some problems, but I’m glad to know that it’s not only you, it’s everyone feeling the same pain point at the same time. So when you go home, what is it that you’re gonna take back to your home company and try to change immediately?
JD: I think this one, the workflow process, I think I need to talk to my management and the other one is the Zero RFQ selection process.
Adopting Zero Request For Quotation (RFQ)
LA: If there’s anyone listening who hasn’t heard about the concept of Zero RFQ, what is it?
JD: I think it’s more of partnering with current and prospective suppliers. Today, we choose the supplier who provides the lowest cost. Instead, we should identify the right supplier, strategic supplier and build their physical factory into your virtual model and then simulate accordingly and then get the confidence of the supplier and go from there.
LA: So if you have a complete model machine-to-machine of their factory, within your digital factory, then you can literally have Zero Request For Quote. The quote is just there, you just put into your model, boom, it’s there.
JD: It won’t be like four weeks, it’ll be a week, less than a week once we request a quote. That’s what I would say.
LA: Which saves a huge amount of time, but also a huge amount of money when you’re dealing with quick decisions. So you can tack from one supply chain shortage to another?
JD: Yeah, and the other thing is, we are using the right cost like from the tool and because that’s the cost we’re gonna write as a fewer, that’s the cost for our company and that’s their price. So we know we always meet the program cost. So the predictability of the cost will be certain always.
LA: Which saves you a lot of headache, if there’s no question mark.
JD: No question.
LA: If there’s no negotiations about what the cost is, you just know what the cost is, then you can go from there.