CAD, PLM and Product Cost

Cost is important. Period. About 70% of product cost is defined during the design phase. So, to have PLM helping you to predict a product cost and drive it down can be a very important feature and benefit of spending the time to implement your PLM software and set up right processes. However, to get an enterprise view of cost is not a simple task in manufacturing companies. Last year, I wrote – PLM and Enterprise View of Product Cost. Since then, I had few very interesting conversations about a product cost related issues.

Who is working on this?

I wanted to find recent examples of tools (CAD, PDM, PLM) dealing with cost calculations. I found few examples and references of PLM vendors doing “costing work”. Agile, Dassault, Siemens did some work. However, I didn’t find visible public references related to the cost integrations into their product suites. I know two vendors – aPriori and Akoya, focusing on cost issues. I thought, PTC InSight is planning to provide a solution for cost visibility. However, for the moment, more focuses on environmental problems.  The following two videos present slightly different aspects of cost calculation.

SolidWorks World 2011 Demo Preview (thanks deelip.com for capturing this video during SolidWorks World 2011) presents future SolidWorks cost calculation capabilities. The important element of this implementation is the level of integration of costing functions into the design environment.

[youtube=http://www.youtube.com/watch?v=96kmZ_LGr9Q]

Obviously, SolidWorks’ focus is on part manufacturing-design aspects. SolidWorks solution is not up to solving enterprise cost scenarios.

Then another example comes from aPriory video. aPriory is a company developing Product Cost Management software. Watch the following video to get a glimpse of understanding how stuff works.

[youtube=http://www.youtube.com/watch?v=NTack1f21MA]

This video made me think again about integration with various tools and information related to the cost. This example is more focusing on multiple aspects of product cost and not limited to “design environment” only.

Cost: Important, but NOT transparent

I can hear two voices related to the cost. One – cost is (obviously) important. The ability to control cost is absolute. The enterprise software (in general) and PLM specifically needs to solve the problem of cost analysis and visibility. Second voice says, cost is not transparent in an organization. The transparency of cost is not obvious and there are multiple interests a company to make cost transparent. Part of them is coming from work with suppliers, part of them is coming from manufacturing.

PLM Software Fails, Excel Wins

I can hear “Design for Cost” more and more often. At the same time, I don’t see products in this space demonstrating strong functionality and capabilities to solve costing problems. When talking with customers, I’ve heard about the complexity of the costing problem and inflexibility of solution. Most of the solutions, I’ve seen relies on our “PLM buddy” – Microsoft Excel to solve any problems.

What is my conclusion? I think, costing is another place where MS Excel has huge market dominance. Software vendors slowly, but started to understand the importance of vertical cost integration. The solution in this space is not obvious and requires significant effort in data integration. So far, I’ve seen little activity in this space. Just my thoughts…

Best, Oleg