Cost for Manufacturing
Cost for Manufacturing
Optimising the Production Process in a changing environment
The Challenge
Even the best products must still represent value for money or they will not sell. Understanding the price the market will pay and how this compares with the cost to manufacture allows the business to understand profitability of the product from job #1. Analysing the cost through the ramp up stage, during peak volumes, and also through decline to spares, will make sure that margins are protected throughout the lifecycle. Whether it's a brand new product or a product that has already launched, we can help ensure the production process is optimised.
The Solution
The Design of the Manufacturing Process can start during the design cycle if time permits, as discussed in the Cost for Design section. If the market analysis work is complete then the target unit cost may have already been calculated, giving the Manufacturing Engineers something to aim for. Even if this data is not available the same steps can be followed, and the process can also be applied to existing parts if required :-
1) Material Selection and Condition of Supply
The material a product is made of often drives a large portion of the cost and generally determines a lot of the cost drivers relating the final manufacturing process. Whilst the function of the part will inevitably also have a part to play in the material selection, the condition of supply assumptions (i.e. bar, casting, forging etc.) will also drive the manufacturing cost. In an ever more global market place some of these norms are now being challenged. Parts that were historically cast and machined in the west may now be sourced cheaper in low cost regions directly from bar, especially if the volumes are low. Cost analysis of these scenarios can identify the business case for each, and even determine where during a ramp-up it is economic to change if required. This can also apply to the production ramp down phase and aftermarket demand at the end of the product lifecycle.
3) Manufacturing Process
Whether it's fitting a new productto existing equipment or starting with a blank sheet of paper, our Process Cost Models will show you exactly what the manufacturing cost of your part will be. We can develop an incremental plan to suit volume ramp up, and help phase investment to avoid under utilisation in the early stages.
Our Cost models work well alongside other process improvement tools on existing processes such as Value Stream Mapping and other Lean tools. They go much deeper than just cycle time reduction, and can deliver more quantifiable cash savings.
4) Machine Selection
The equipment used to produce the finished part inevitably has an impact on the cost. This is driven by the volume of parts to be produced, and also the complexity of the design (as mentioned above). Over investment in machinery can be surprisingly common, resulting in inflated manufacturing cost rates. Also, changes in product mix on shared equipment can change the economies of established processes, making an a previously robust make v. buy decision more uncertain. Again, robust cost modelling can identify and avoid a lot of these issues, making a positive impact on the business case.
5) Region Selection
In the ever more global environment we live in there can be a lot of pressure on manufacturures to off-shore their production to perceived low cost regions. Experience shows us that this is not always the magic bullet originally thought, and depending on the volume of products and the complexity of the design can deliver very poor benefits. Reviewing the entire supply chain assumptions as part of the cost model can help clarify this issue. As mentioned above there can be instances where region selection and manufacturing process can feed back into the core design, so understanding this 'total cost of acquisition' concept can be invaluable.
