Smart Selling

Manufacturing Cost Estimating Is Key to Manufacturing Success

Manufacturing cost estimating opens the door to advanced manufacturing.

For years and years, the process of manufacturing was typified by assembly lines turning out endless quantities of identical products built with standardized parts. Mass production and high volume with minimal variation were the keys to building the low-cost, acceptable quality products that we all enjoyed. It was revolutionary, and it did deliver a better quality of life for consumers and workers alike.

However, this did not stop some from wanting or needing things beyond the standardized model. And, in many cases, people were willing to pay a premium for those things. So, while most of us were happily gyrating with our hula hoops, at least one guy was wanting a hula square and was reaching for his wallet to pay to have one made.

Manufacturers have always realized that there was great opportunity in the one-off, non-standard manufacturing arena. But, the financial risks associated with getting the cost numbers wrong were great, and the consequences could be devastating.

But, as manufacturing techniques improved, the more tempting it became to accept the non-standard order.

Flying Blind without Manufacturing Cost Estimating

The problem was, the people who were making the decisions about taking or rejecting customized orders were frequently the ones who were least qualified to make that call. Sales, of course, has a vested interest in “getting the deal,” but once the deal is in-house, it becomes someone else’s problem to make it happen.

The reason for this is simple. Sales had little ability to see the challenges from the perspective of manufacturing cost estimating.

Want a different color? Change the paint. Need it wider? Make it wider. Need it for use in Australia? Wire it for 220 volts. To us, these may seem like trivial differences. But if you ask any factory paint shop how long and how much effort it takes to change colors, you will see that things aren’t as painless as imagined.

Specials or non-standard orders can be great business, but they can also make you bleed.

Manufacturing Cost Estimating Gives You the Numbers You Need

Manufacturing cost estimating takes the mystery out of figuring out the cost associated with making things. Before you make a promise, know the cost, then quote the price. That’s how manufacturing cost estimating works.

Your customer loves your indoor widget product, but they need to take it outside and use it in the field. How much would a ruggedized version of your widget cost? Your engineers review the request; a bit of waterproofing here and a little temperature insulation there, and pretty soon you have the outdoor widget!

The costs for the added insulation and waterproofing are calculated as well as the cost of adding that to the production process, and finally you have a price for your modified one-off product.

That cost will drive your price. Then it’s up to you to decide if the profit is worth the effort, and it’s up to your customer to decide if the value is aligned with the price.

Manufacturing Cost Estimating and Advanced Manufacturing

Today, contract manufacturing, manufacturing as a service and other manufacturing models are enabled by enhanced manufacturing cost estimating capabilities.

Short runs, one-off products and mass customization are all dependent upon the ability to accurately, quickly and reliably calculate costs associated with jobs and in turn, to confidently quote prices to customers for those products.

Advanced manufacturing techniques such as additive or 3D printing facilitate the ability to economically make singular products at a price that is affordable.

More and more “assembly lines” are production lines that feature mixed products and mixed-mode manufacturing processes. This flexibility to build two or three or 20 different models of automobile on the same line at the same time has delivered enormous value to consumers.

Manufacturing cost estimating brings the back office into the front-office action and ensures that your specials are profitable and fairly priced.

Related Posts

Share