Acorn was invited to participate and present a paper at GE’s 1st Should Cost Summit—over 50 participants from GE (with others viewing around the world) + 25 outside participants including Boeing, Ford, Air Force, MIT, McKinsey and others at this invitation-only event. The goal of the summit were to bring together tool vendors, OEM’s, and consultants to explore how these entities are addressing the need to more accurately predict and control product costs.
The devil is in the details—why a given part has such a high cost—are there different ways to build the same part? Developing a should cost model is key. Software tools focus on how to understand should cost once the design if already done—very valuable for ops/purchasing. Our focus is on how to design the product with cost as a consideration from the concept phase—ie, which concept will yield the lowest cost yet still meet the objectives. Both have value in the process.
Some interesting research has been done on how cost evolves in design—60-70% of the cost of a product is determined during the conceptual design stage. And it’s more difficult to impact/lower cost the further you progress into the design. Parts count and labor/assembly are major drivers in determining cost, both of which can be considered during the concept stage, but most engineers/organizations don’t have this as part of their process.
Many companies push the entire concept of cost to their operations/manufacturing/sourcing group, who very often are not equipped with the tools or skills to address costs. “Procurement needs the domain knowledge of the process in order to accurately cost/use costing tools”—too often companies throw drawings to procurement and expect them to get the 3 quotes in a short amount of time without any assistance from engineering. The most success comes from teaming engineering and operations in the early stages of design/costing.
Designers do not have the time, tools and expertise to take designs and make them manufacturable—(contract) manufacturers possess this expertise but are dis-incentivized to expose their expertise as they want to protect their IP.
Interesting discussion over dinner with representatives from the larger companies participating around their challenges to have engineers look at cost at the conceptual stage of design—this is a big cultural shift for their organizations and takes a commitment from management that includes training, constant reinforcement and support. Ultimately, it needs to become part of the organization’s DNA, and something that is measured and rewarded. We also discussed the need for engineering schools to make manufacturability/costing a required part of the curriculum for ME’s—again, a cultural shift.
Barry is responsible for Acorn’s sales and business development activities in the eastern United States.