Expert Manufacturing Advice tailored for step-by-step implementation in the workplace. Small Manufacturers, Machine Shops and CAD Engineers improve and thrive with our hands-on help. Costing Design Ideas Inc. Suppliers and Manufacturing Processes Essential Product Development for Engineers

Costing Design Ideas Inc. Suppliers and Manufacturing Processes

Essential Product Development for Engineers

Costing Design Ideas at Your Firm

Get into the habit of costing designs early. Practice estimating the cost of manufactured components. If you have an internal buyer, tap into and spread their knowledge. If not, use regular suppliers to rapidly obtain quotes to assist this. Take notice of the cost of bought-out parts.  Getting familiar with prices should enable you to estimate the costs of assemblies and design options.

Related considerations include economies of scale and component unit costs. That is, the more parts produced, the lower the unit cost. So therefore consider the cost of a component if it were to be produced in different quantities. Using common parts on a number of your products could make this a possibility.

Also, do you feel you can estimate the time taken to manufacture a part? How many processes are there? Costs are associated with all these manufacturing methods. Again, use buyers, suppliers and quotations to raise your knowledge.

What about your business costs? As well as costs of components, are you familiar with the cost of your labour? What about overheads and profit margins? Make it your business to fully understand the cost of your products when you provide quotes to customers. How is the quote made up? What portion is labour, materials, overheads etc?

A deeper understanding of product costing at this level should equip you to provide crucial additional financial information alongside any technical design options you present. The ability to estimate the total product cost and break it down into its parts, gives greater credibility to any product design option.

For any product design project (new or redesign) consider establishing a running cost list, where the cost of components are itemised once they have been designed. A basic spreadsheet is sufficient. Estimates may do, or alternatively quickly obtain quotes from suppliers both for 1-offs and for the target quantifies you plan to produce.

A practical consideration may be to cost individual parts in assembly groups once they’ve been designed. This way the cost estimate of the product can be compiled part-by-part and assembly-by-assembly. 

Ultimately, you may only be able to obtain some of the cost information at this stage. But an estimate is far better than no idea at all.  

Costing design ideas, parts and assemblies in the CAD environment 

Costing Design Ideas

Costs: Suppliers and Manufacturing Processes

As mentioned above, suppliers have a role to play in costings during product development. Involve tried and tested suppliers early during your product development process. Their expert knowledge and familiarity with quotations, means they are in a great position to assist you identify and reduce costs early on. They understand what features and components are most costly. As such, they can often suggest cheaper alternatives which may fulfil the same function or purpose.

Suppliers also better understanding the cost, lead-time and the supply chain for secondary and tertiary manufacturing processes. This also applies to tooling and consumables. Furthermore, design for manufacture and assembly advice can often be provided by suppliers. Tap into this knowledge and access their expertise, both technically and financially.

Additionally, when planning how the new product will be manufactured, attempt to cost all of the manufacturing processes involved, as best you can. Again, suppliers can assist. If the sales price is made up of cost price and margin, understanding manufacturing costs provides you with a basis to examine and set how much you intend to sell the product for, and how much profit you require per unit sold.

Finally, outside the scope of product costing, have you reviewed and compared the costs of your utilities and other services lately? There are expert companies who can do this for you. What’s more, this can be completed conveniently, without disruption, and importantly, can deliver significant savings.

Costing Design Ideas

Job Costing Considerations and Examples

Next... Big Benefits ‘Designers’ can add to the Product Development Process

Back to Product Development Essentials 

When was the last time your business developed a NEW product? ...Or is 'Product Development' too far removed from your core Production Engineering activities?

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