PLM and Enterprise View of Product Cost

PLM and Enterprise View of Product Cost

Yesterday, I touched a topic of connection between CAD and PLM. The discussion started by Peter Schroer of Aras and my post, generated a very interesting opinions exchange related to the importance of balanced management of information about a product. It made me think about Product Cost. Cost is one of the most important topics in manufacturing organization, in my view. The ability to manage and control cost becomes absolutely crucial in a modern manufacturing organization. So, I decided to raise few questions and thoughts with hope to have you commenting, discussing and sharing your experience.

Product Cost in manufacturing organization

The calculation of cost is easy if you have numbers. However, in most of the cases, elements of cost formation are scattered between different people in the organization. It creates a high level of complexity. The multiple dependencies make the task of cost calculation next to impossible. Organization is spending significant resources to get cost under control.

System Integration and Cost Drivers

To integrate systems influencing cost formation, can be one of the possible ways to bring cost under control. However, integration of systems is not an easy task. It is either very complicated or very costly or both. The problem of enterprises is that they are taking system integration as a “process task”. This is a very natural way to see “a process oriented view” of systems.PLM systems today are trying to design processes that will integrate cost information inside of PLM database. I also call it “push view”. We are pushing processes between systems. However, formation of product cost is not related to processes.

Enterprise View of Cost

The idea of enterprise view of cost is different from a process-oriented synchronization of information between systems. In fact, we can reduce a complexity of cost formation by stopping pushing information between systems. Instead of, we can think about each system expose relevant cost formation criteria. Now, think about big Excel aggregating various cost parameters. The potential of such an enterprise view of cost can be very interesting.

What is my conclusion? The ability to provide cost is absolutely important. The hidden problem is scattered information about cost structure in an organization. To form “enterprise view” can be an interesting problem to solve. PLM is pretending to make it happen. I don’t think we can see a massive deployment of product cost solution from PLM vendors. The key problem to resolve is a complexity of multiple factors influencing cost – design, supply, manufacturing. Just my thoughts…

Best, Oleg


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