When OEMs are trying to reduce costs and maximize profits... estimating is not a matter of "prescience"... it requires manufacturing knowledge.

For original equipment manufacturers (OEMs) to attain, maintain and excel profitable growth, "cost reduction" needs to be at the forefront of the minds of more engineers -- as opposed to guesstimating or leaving it to rest on some sort of assumption.

Design engineers, for example, focused and well-knowledged on designing parts, need estimating tools or cost estimators, by their side, to help influence their selection of lower-cost part features.

"At the end of the day, its about sales and profits -- it doesn’t matter how great the design… if no one will purchase an overpriced product!"

Determining the cost of modifying part features and how they change the total cost early in the design phase shouldn't be left in the hands of any kind of "guessing" game or "prediction" strategy. Engineers simply need information, most likely through a program that includes and maintains manufacturing data, one that also reveals whether a proposed feature increases the cost, has a neutral impact, or lowers the overall cost of the part.

"Often times, design engineers exhibit creative design intelligence, only to find out later the design exceeded the budget. When undetected…time elapses and great expense may occur."

If information is provided early enough in the design phase, it could improve procurement decisions, shorten production start-up times, and reduce or prevent lost profits from last minute or ongoing, costly redesigns. When caught up in an ever-circling "redesign loop", excess labor may greatly increase part costs, and the delays for "product-to-market" will likely exasperate sales and management.

Using cost estimating software can dramatically affect the outcome during this process.

Estimating the cost of part features, quickly and accurately, is critical for the success of any manufacturer. Not just for those who make parts, but for OEMs who procure them, as well. Estimating software can provide quick guidance and help engineers who design parts, remain focused on what they do best. There is a wide array of both short-term and long-term benefits, especially when using a system specifically configured for their manufacturing needs.

A problem faced by many OEMs occurs when management ignores the necessary commitment to engage and follow through using an estimating system - early on. Identifying ways to reduce part costs can be determined anywhere throughout the product development life-cycle, however, waiting until the procurement phase, in some cases, may be too late for measurable savings.

Estimating software that includes templates, cost models and security features can help guide more users. Even designers who are not manufacturing engineers can get quick answers. These software features open the door for more people, not just estimators, to achieve more consistent long-term results between estimates and among users.

Spreadsheets, on the other hand, may be recognized as a powerful next step from manual methods, but their limitations eventually has a tendency to impede upon its long-term performance. For instance, file maintenance, associated with spreadsheets, can have a negative return-on-investment (ROI) as the system grows and files become separated. Updating data in the estimates and quotations become tedious and error-prone.

A more consistent ROI can be attained by using a full-featured estimating system that includes manufacturing knowledge. Explore the following article and compare the benefits of using an estimating program designed for manufacturers who make or buy parts -- as opposed to when estimating with a Spreadsheet.