Should cost, could cost and the quote — a story of design engineering
“Chains of habit are too light to be felt until they are too heavy to be broken. “ — Warren Buffett
What “should” something cost to manufacture? Word of advice to contract manufacturers: Your customers already know how to cost using tools and have weaponized them against you already.
The truth is out there. Communication links the globe with tools connecting people to information more quickly than ever. aPriori, Hexagon, 3C, Prolim, Price, Prism, CCS, Harddollar, Monitor, ITI, and the list goes on. So what do these tools do?
“aPriori is a product cost application that allows manufacturing, engineering, and sourcing professionals to generate real-time cost estimates early and throughout a product’s lifecycle. Evaluate design tradeoffs and quantify the cost of incremental features during NPI and VAVE projects. The core value of these tools is for designers to understand the expenses early enough to save downstream pricing from Supply Chain that forces a costly design change.”
What’s less understood is how these tools create market transparency and value for everyone. It comes down to data analysis. These tools use customer input, vendor surveys, market research, and internal customer data to enrich the datasets. Information drives every detail design. Technologies like these provide a complete breakdown of part cost information, such as material, labor, overhead, tooling investments, manufacturing process, etc. Tools are empowering your teams to understand manufacturing details and the impact costs from the start.
“Should Cost” can be established as a dependable guideline for a well-tuned company. A ground truth if you will. Data gathering and vendor input should be a standard business process integrated into the companies culture. Disciplined use prevents costly and foolish mistakes within design teams. Costly redesigns later in the process can be accounted for as design options. Design teams often have new, younger, and less experienced members that can’t leverage prior lessons learned. In effect, recreating mistakes of the past or leaving out key details that cost 10X downstream.
Coupled with DFMA ( Design for manufacture and assembly), teams can catch errors in design concepts early. How much does a radius vs. a 90 bend in a specific location cost? Are all drill and screw clearances designed for automated / manual tool access? Tolerance vs. production time. Dimension datums and nominal part dimensions. Cone or bottom holes. Is the design using standard tool and radius or stiffness models? The list is long.
Example:
For plastic injection molding, the following principles would apply:
- Constant wall thickness, consistent and quick part cooling
- Appropriate draft
- Texture — need texture depth on textured sidewalls
- Ribs = 60 percent of the nominal wall, as a rule of thumb
- Transitions
- Wall thickness not too small — this increases injection pressure
- No undercuts or features that require side action — all features “in line of pull/mold opening.”
These examples help design control costs through early visibility. So, why do so many supply chain organizations fight to keep these tools out of use or tightly controlled? That’s complicated. But it boils down the economics of rebates and price controls that substantially alter profitability later in the process. Sadly, the theory incorrect when cost overruns and part changes wipe out the original quotes and bids. More importantly, the supply chain does not interact with vendors and suppliers and does not understand when what they ask is wrong from the very start — bad data out, bad data in.
In contract manufacturing, it has become an enormous barrier to success. The supply chain managers are so concerned with controlling markup, costs, and rebates, they struggle to manage the engineering team and work to exclude them from price management. It’s not ideal for new design engineering to discuss prices outside the company. But it’s foolish not to engage them within vendor discussions.
Forcing secondary part choices for price alone is a killer. Long after design, these “options” cause terrible downstream consequences. How do supply chain departments justify this? Excuses.
Allow me to list what is likely just the tip of the excuse iceberg used to scrap tool adoption.
- Design costs don’t reflect market costs, or previous deals, and can’t be input into a system
- Pricing is complex. Tightly controlled markup models are structured to obscure the real costs and should not be exposed through a tool
- Rebates are not disclosed to anyone outside of supply chain and executive management to prevent leaks, so don’t put it in a tool
- Commodity parts fluctuate so much that no system can track them throughout a design
- Components should have low-cost alternatives, and Supply Chain does not have time to discuss them with Engineering when making the final contracts
- Parts are parts if the vendor agrees to the information provided
It’s just more of the same and a resistance to change. Instead of embracing these tools and creating a safe place for engineering to compete in the market, the supply chain tries to lock out the tools and knowledge in a vain attempt to drive hidden profit.
Companies need to change the process and drive design from the Should Cost model. Any good supply chain should control vendors and pricing. Engineering is a powerful tool to accomplish that. Funnel information to the organization through proper channels and eventually include them in the final presentation.
Not knowing what a thing should cost is a fatal flaw most supply chain organizations, miss. These forces create a critical failure in product design and pricing that almost always turns out to ruin customer engagement over the long term. What does a design failure cost down the line? Check out this slide show for more valuable data: Impact of Simple Design Errors on Product Costs
