Cost Engineering – A holistic approach on production costs
One of the core issues of Cost Engineering is the ability to achieve a market-oriented cost target with the best possible customer benefits in a competitive environment. Both in the product development process as well as in the Cost Optimization phase of an ongoing series, Cost Engineering is a comprehensive navigation aid used to influence product costs in a value-oriented manner during the entire product life cycle.
It takes into account long-term operating cost factors such as production costs, Life Cycle Costing (LCC) and Total Cost of Ownership.
A tailor-made, effective Cost Engineering uses many different methods and techniques from the areas of Cost Analysis, Benchmarking, Controlling, Target Costing and Operation Management. This approach makes costs active, consistent and comprehensive. POLARIXPARTNER supports you with a structured, scalable and proven approach. As your trusted partner, we create cost forecasts, plan product costs at a component level, and conduct Design-to-Cost and Design-for-Manufacturing Analysis. Also, classic Cost Controlling in product development, as well as in continuous product and process optimization throughout the entire product life cycle, are part of our consulting services.
In Target Costing, development resources are applied purposefully by specifying target costs while subsequent correction loops are prevented.
Cost engineering with a clear goal
POLARIXPARTNER supports you with effective Value and Cost Management, identifies cost potentials in the product life cycle and supports you in determining target costs.
Technological and social trends are driving innovations in the manufacturing industry. Target Cost Management, including Value Analysis, Target Costing and design-to-cost, is crucial to remaining competitive.
Strategic Cost Management ensures the competitiveness of the company. Active Cost Management is geared to the future and is therefore active in the early phases of product development.
Cost Engineering creates transparency about the manufacturing costs already in the product development process. The target costs can be viewed holistically and are thus effectively included in the Value and Cost Calculation.
Reference projects for effective cost engineering
Establishment and development of value and cost management at a German premium OEM.
The customer focused primarily on innovation and a model offensive. Cost management was only triggered by purchasing, and it was focused on supplier competition. Management has identified the need for cost reduction in all phases of product development.
POLARIXPARTNER had the task of creating value and cost management within a year. The project team comprised around 40 people - five to eight experts were involved.
- Development of a target vision for future cost management that covers internal / external interfaces, organization, processes, tools & systems, and knowledge management
- Setup & improvement of standards & processes for the realization of the target vision
- 25 pilot projects for concept testing with customers
- Active coaching of customer employees as part of the pilot projects & adapted training sessions to improve cost-management basics, technical knowledge and implementation skills
Cost analysis and implementation of cost savings of a slat transmission for a passenger aircraft of a Tier 1 aviation supplier.
The supplier had a strong production increase. However, some manufacturing steps are not compatible with mass production. The actual costs are higher than the target sales price. In addition, the customer increased the pressure to reduce costs because of the increase in the purchase quantity.
POLARIXPARTNER was commissioned with a 3-month analysis of the current situation. After 15 months, cost savings should be implemented. More than 50 employees from cross-functional teams including development, purchasing, cost engineering, controlling and production were involved.
- Cost analysis of all parts and assembly
- Workshops to identify cost saving opportunities (internally and with suppliers)
- Evaluation of ideas in the team
- Manufacturing analysis for in-house and supplier production in order to identify further potential
- Production tests with new tools and processes to save on manufacturing costs
- Negotiations with suppliers in order to unleash potential
- 50 % Cost saving potential
- 30 % of the potential already implemented after 6 months
- Further measures to exploit the full potential over 9 months
Implementation of effective value and cost management for a new bus generation.
The goal of the project was to achieve cost savings of 20%, whereby the functionality should be increased (comfort, driving assistance, weight reduction, engine power, lighting). The total cost of ownership (TCO) should be improved by longer maintenance intervals, lower fuel consumption etc., always in compliance with public standards (for example, EURO 6).
POLARIXPARTNER executed the project over a period of three years, working hand in hand with more than 150 employees from the areas of R & D, Purchasing, CE, Controlling and Production.
- Implementation of cross-functional project team organization, effective processes and assessment methods
- Distribution of the vehicle in development packages, target costing derivation at module level
- Conjoint analysis of market requirements
- Monitoring and evaluation of the development concept, analysis of alternative concepts in the SE project
- Setup of cost analysis and training cost analysis, supplier negotiation and nomination, value and cost responsibility in the process
- SE team culture, detailed evaluation & cost transparency
- Cost savings of > 20% with additional functionalities
Benchmarking & Life Cycle Costing for a new smart metering generation of a major German energy supplier.
The main questions were: What is the cost structure of the devices? What is the profit margin and is there room for negotiation? Product cost solutions from various competitors were evaluated and a best-of-best solution was sought.
Development of a best-of-best solution: functional costs, lifetime, life-cycle costing, rollout and installation strategy for private households.
- Reverse engineering
- Teardown analysis of three different devices
- Cost comparison at functional level
- Potential Breakdown in Commercial, Technical and Process / SCM (Supply Chain Management)
- Modularization and standardization
- Cost trends (volume, chip integration)
- Reduction of error costs
- Best-of-best solution
- Optimized total cost of ownership for system costs & rollout
- Technology Roadmap
With POLARIXPARTNER Insights, we offer you independent evaluations of trends and developments. In our Insights, we cover the latest topics and trends and share our point of view. For example, would you like to know where the future of your industry is going, and how to make the most out of upcoming market opportunities? We provide you with forward-looking white papers, publications and studies! Whether it's the automotive, aerospace, medical technology or pharmaceutical industry, mechanical engineering or plant construction – we have the inside knowledge to help you with your strategic development.