Product costs and sales prices consist of many different factors and can be structured in many ways. Often, sales, finance, engineering and procurement each approach pricing and costing in a completly different way within the organisation. 𝐓𝐨𝐩-𝐃𝐨𝐰𝐧 𝐯𝐬. 𝐁𝐨𝐭𝐭𝐨𝐦-𝐔𝐩 𝐚𝐧𝐚𝐥𝐲𝐬𝐢𝐬 𝐩𝐫𝐨𝐯𝐢𝐝𝐞𝐬 𝐜𝐥𝐚𝐫𝐢𝐭𝐲 and will get everyone on the same page again.𝐁𝐨𝐭𝐭𝐨𝐦-𝐔𝐩 shows the current cost status. It's calculated from the cost of materials, manufacturing, labour and overheads based on the product design𝐓𝐨𝐩-𝐃𝐨𝐰𝐧 dictates the maximum a product should cost based on the market, pricing strategy and the cost of sales.Depending on your market, organisation & strategy, either Top-Down or Bottom-Up is leading and will determine the other. However, the essence is simple: 𝘬𝘦𝘦𝘱 𝘵𝘩𝘦 𝘉𝘰𝘵𝘵𝘰𝘮-𝘜𝘱 𝘤𝘰𝘴𝘵𝘴 𝘭𝘰𝘸𝘦𝘳 𝘵𝘩𝘢𝘯 𝘺𝘰𝘶𝘳 𝘛𝘰𝘱-𝘋𝘰𝘸𝘯 for a healty business!
CNC machining is often the easiest, go-to manufacturing technique when designing mechanical parts. However, as production scales up, the extended cycle times and high scrap rates associated with CNC machining can become challenging. If you're currently machining parts from solid blocks of metal, here are some alternative manufacturing processes to consider:
Engineers have the power to change industries for the better, but optimizing design processes and minimizing expenses are vital. Let's explore common mistakes in engineering design that lead to high product costs. 💡💰
Exciting times lie ahead for cost engineering as we witness a transformation fueled by digital innovation, sustainability, and integrated cost management. Let's dive into some trends shaping the future!
Design to Cost is a development process focused on product creation within a fixed budget. Besides having clear targets a team should work to, it's also a mindset the engineers & designers involved must have.
Developing in technological challenges and tight timelines, neglecting cost of manufacturing can be tempting. Making trade-offs between innovation & cost often feels like a true balancing act, and prioritizing cost effectiveness & design for manufacturing always is a challenge.
The results of the Teardown workshop are in. Your team has come up with many innovative ideas, all written down on post-its: Some are easily implemented, others will take a lot of effort. some are very creative, other very obvious. Many are feasible, some are not. But where do you go from here? How do make sure no information gets lost. And how do you make the right decisions? This blog on stage 3 takes you from analyzing raw ideas to decisions on implementation.
Excel is an amazing tool due to its flexibility and computing power. No wonder many cost engineers use it for calculating product & manufacturing costs. However, this flexibility also has a dark side. Detailed cost estimation sheets can quickly get sloppy and maintaining them often is a time consuming task. Here, dedicated estimation software can help. But when is switching to more advanced tools beneficial for you? And how does it add value to your business?
Cost effective production starts with optimized procurement strategies. As Raw materials and purchased parts often take a major part of the total cost, advanced supplier (re)negotiation often is one of the quickest ways of reducing your total cost. Detailed product cost analysis provides a framework to assess different quotations, and lifts supplier negotiation to a scientific level.
When all preparation has been done and the cause, goals and targets for the project have been defined, it is time to start generating ideas. Often, this is done during a Teardown Workshop. During these sessions in a multi-disciplinary team, participants physically (dis)assemble the product and question every part of it. Most people often only see the product from drawings and spreadsheets, but their creativity usually is visual-minded. This physical, hands-on experience provides a unique opportunity to take a step back and have a fresh look. You'll be surprised how many new insights are gained!
As obvious as it might seem, at the beginning of a VE project it is very important to clearly define why you've started in the first place. To improve performance of your product & company of course, but what's it you are aiming for exactly? Is it reducing costs? Increasing Value? Or both: increasing your margins either way? Is it your current product you'd want to improve, or does a innovative next-generation product have your preference? These are all very important questions that need to be answered in the first stage of a Value Engineering Project.
Did you know Manuformance also offers a broad range of Product Costing software? With our modular approach with separate modules for calculation of Die Casting, Injection Molding, CNC Machining and many other custom modules, we always have suitable tooling for you! Learn More about our software solutions or Contact us now for a demo!