We transform you into a Costing Expert

Our Mission is to bring product costing to the world. We develop our costing tools to be easy to use. You do not need to be a manufacturing expert.

WHO WE ARE

We are head quartered out of the United States but have locations and cost engineering resources in United States, Europe, China and India. Our cost models were originally born out of the automotive industry but now serve multiple industries and anyone who needs to know what a manufactured product or service should cost. Cost modeling can be applied to any product or service including food, janitorial services and prototype services. Typical cost models are applied to plastic and rubber parts, metallic parts, electronic and electrical parts and assemblies.

We are staffed 100% with degreed engineers who are manufacturing and costing experts from around the globe. We have mechanical, chemical, electrical, industrial & operations and manufacturing engineers. We have followed our customer’s supply chains around the world and are experts at knowing what products should cost for all the major regions of the world including United States, Canada, Mexico, Brazil, China, India, Thailand, Taiwan, S. Korea, Vietnam, Eastern Europe & Western Europe.

Our cost model tools are based on over 2500 actual factory cost models that we have developed together with those factory management teams. The cost models are based on verified and audited material costs, overhead costs (from the expenses portion of the P&L), and equipment and plant floor operations.

We are experts at the following:

  • Equipment Selection and Size
  • Development of Plant Floor Equipment Cycle Times and Efficiencies
  • Development of Equipment Setup times
  • Development Factory Burden Rate and Other Overhead Rates
  • Development of Labor Rates and # of Operators
  • Development of Material Costing
  • Development of SG&A And Profit % (selling general and administrative)

Our Cost Models

Our cost models are data driven fact based cost models that are derived from over 2500 open book cost models developed for real factories from around the world.
Our cost models are highly engineered to make it easy for you the user. Behind the scenes we use engineered costing algorithms to properly apply cost drivers for raw materials with overheads, fully fringed labor rates, machine specific factory burden rates, cycle times with efficiencies, set up times, equipment type and size selection, healthy and appropriate SGA&P % (selling general, administration and profit).

  • GLOBAL MANUFACTURING COSTING –

    Our cost models are set up to be able to cost for the major regions of the world including United States, Mexico, Western Europe, Eastern Europe, China, India and Brazil. Each region has a different material rates, labor rates, factory overhead rates and plant floor operations.


  • RAW MATERIAL COSTS –

    Our raw material costing calculates the total material usage including common waste items such as gross material usage vs actual part net weight and process scrap. In addition we apply recently updated $/kg rates and also include the inbound freight to get the raw materials to the factory.



  • LABOR RATES AND COSTS –

    Our labor rates are specific for the region of the world and are comprehensive including wages, government taxes, vacation & holiday pay, healthcare, other benefits, # of operators, breaks and lunches and other process inefficiencies.





  • FACTORY BURDEN RATES AND COSTS

    Our factory burden rates are specific to the manufacturing equipment and size and for the region of the world. The factory burden rates are comprehensive including depreciation, utilities, indirect labor (maintenance, quality, material movement, shipping & receiving), salaried management (production supervision, quality manager, plant management, etc.), building rent, repairs and maintenance (building & equipment), software, warehousing, quality lab, property taxes.


  • CYCLE TIMES AND EFFICIENCIES –

    Our cycle times are engineered to include time for loading and unloading of parts, manufacturing equipment size & speed, downtime, operator breaks and lunches, with efficiency ranging from 25% to 85% depending on the volume impact and process type.




  • PRIMARY EQUIPMENT SELECTION AND SIZE –

    Our engineered algorithms automatically calculate the proper type and size of the equipment. In addition we also engineer the algorithms to predict the proper cycle times, set up times, efficiencies and # of operators to run the equipment. As an example, as the part gets bigger it will require a larger manufacturing machine and likely longer cycle times. As the equipment sizes increase so do the factory overhead rates ($/hr).



  • SECONDARY MANUFACTURING PROCESSES –

    We also make available cost models for commonly used secondary manufacturing processes such as Heat Treat, Deburring & Grinding, Plating & Coating, Welding, Engraving & Part Marking, etc. These cost models also include the same highly engineered algorithms for easy costing as the primary manufacturing cost models.


  • SET UP COSTS –

    Most processes require a set up cost to prepare the equipment to produce a given part. Our cost models automatically calculate the fixed set up costs. Set Up costs are calculated based using the formula = (Set Up Time in hours) x (labor $/hr + burden $/hr) and are spread across the production lot run. As the lot run size increases, then the set up cost will be reduced as the cost is amortized across more parts.


  • SG&A and PROFIT –

    SGA & Profit (selling general and administration) & Profit costs are generally in the range of 15-35% of sell price depending on the industry and the volumes. These costs generally include the following: Sales and Marketing, Accounting and Finance, Executives, Legal, Engineering and Product Development and Profit. As the volume goes up, generally the SGA % and Profit % goes down.

  • FREIGHT –

    Freight cost are calculated for transporting products for local and international scenarios (Domestic and Exports) and include Road, Sea and Air freight. Our freight calculations have the option to include all the various INCO terms (international commercial terms) such as FOB (freight on board) and Ex- works. In addition our freight costs include options for customs, duties, tariffs and other administration costs.


  • PACKAGING –

    – Our packaging costs have options to include both packaging materials and the processing costs to apply the packaging to the parts. Examples of packaging materials include pallets, boxes, bags, shrink wrap, strapping, etc.


  • PRODUCTION LOT RUN SIZE –

    A production lot run size is the # of parts that are produced within a single production run. A production run is generally scheduled on a monthly basis but can range from quarterly (every 3 months) to annual (every 12 months). Production lot runs generally determine the volume impact to costs.


  • VOLUME IMPACT –

    Volume can impact costing especially when volumes get very low. Fixed cost amortizations are particularly impacted by volumes. For example, set up costs on a production line is considered a fixed cost and must be spread (or amortized) across the production lot run size. As the lot run size increases, then the fixed set up costs can be spread over more volume and reduces the per piece cost. Lower volumes also generally lower the efficiency of the operations. In addition, manufacturers expect higher profit margins with lower volumes. Our costing algorithms take into account all of these factors to deliver costing and pricing that reflects the volume impact.

  • KEY ASSUMPTIONS & OVERRIDES –

    We have built in engineered algorithms to make the process of costing automatic and easy for the average user. If the user has specific information and he or she would like to change a cost driver, they have that option in this part of the costing tool. An example of this would be changing the cycle time from an engineered predicted time of 33 seconds to the user’s information of 45 seconds. The resultant costing would then increase per the increase in cycle time from 33 to 45 seconds.





  • ITEMS NOT INCLUDED IN OUR COSTING –

    – Our manufacturing costs generally assumes a contract manufacturing scenario where the manufacturer is not responsible for the product development and are generally producing from a provided drawing. Other Items not included in product costing include the following: amortized capital tooling, amortized engineering and development as these items are typically paid for separately. In addition we do not include costs for distributor and other middlemen overheads and excessive profits.

CONSULTING SERVICES
Powered by Collaborative Supply Chains
(Contact Email info@collaborativesupplychains.com)

Collaborative Supply Chains company is dedicated to providing cost engineering and related consulting services to supply chain management, product development & engineering, sales & quoting and factory operations. Our customers have included Lear, Adient, John Deere, Roush, CAT, Doosan, Bobcat, Flextronics, Sensata, Delphi, Aptiv, McDonalds, Tate & Lyle, JBT, Filtran, Magna, Gates and Dayco.

COST MODEL APPLICATION TO PARTS AND ASSEMBLIES

  • We can provide should be product costing for any part or assembly.
  • We prefer drawings and CAD (computer aided drawings) but they are not necessary.
  • We can cost any scenario including parts from images, pictures, representative parts, competitor’s parts and even napkin drawings.
COST MODEL DEVELOPMENT (custom to your parts, specifications, supply chains)

  • We can develop, test and help you launch your own cost model.
  • First we understand your requirements, then we can build a prototype cost model, have you test it, we make any changes and then help you launch it.
  • We then can support you with training and any future updates to the costing tool.
COST MODEL APPLICATION FOR PRODUCT DESIGN AND ENGINEERING

  • Cost Engineering and Negotiations Certification Training
  • Design Evaluation and Optimization
  • DFM (design for manufacturing)
  • DTC (design to cost)
  • VAVE (value analysis value engineering)
  • Benchmarking Competitors Products with Tear Down and Costing Analysis
SALES AND QUOTING SUPPORT

  • Develop a standardized and fast quoting process
OPERATIONS SUPPORT

  • Benchmark Internal Operations
  • Make vs Buy analysis, benchmarking and decision making process
CONNECT WITH SUPPLIERS WHO CAN MEET OUR COST MODEL TARGET COSTS

  • We can provide assistance in finding suppliers who can meet our cost model targets
COST MODEL APPLICATION FOR SUPPLY CHAIN MANAGEMENT / PURCHASING

-Cost Engineering and Cost Modeling can proactively help with identifying waste and savings:

  • Cost Models Developed and Customized to your products, specifications and supply chains
  • Current production savings identification
  • Future product cost and price target setting
  • Price increase request management and offset
  • Engineering Change Cost Creep Management
  • VAVE (value assessment value engineering)
  • Global Regional Cost Benchmarking (to determine the best region of the world to procure from)

- Strategic Supplier Programs and Implementation of Cost Models within Your Supply Chains
- Cost Engineering and Negotiations Certification Training
- Advanced Purchasing Support & Supplier Searches
- Supplier visits and audits

TARGET USERS OF COST MODELING

 

SUPPLY CHAIN / PURCHASING COST SAVINGS IDENTIFICATION –Supply chain buyers and management desire the ability to understand what their products should cost. Strong purchasing organizations use cost modeling to proactively identify waste and cost savings opportunities and work with their suppliers for implementation. Our cost modeling processes can help build a pipeline of saving opportunities for negotiations, re-sourcing and VAVE (value analysis value engineering). We transform purchasing staff from reactive to proactive by making them into costing experts. Buyers and purchasing managers often use this information to help them identify high prices and waste within their supply chains. Buyers also want to know what countries the most efficient to source from.

ENGINEERING & PRODUCT DESIGN OPTIMIZATION - Design engineers need to know what their designs cost to manufacture. The typical solution is the process of an RFQ that can take weeks and is dependent on the suppliers to provide accurate and competitive costs and prices. Cost Modeling is a much more efficient and data driven process that can provide detailed costing feedback in minutes. Cost Modeling can also quickly cost design changes and design options. Product designers often use our costing software to compare design alternatives to help identify the most cost efficient designs. This is often referred to as DFM (design for manufacturing) and DTC (design to cost).


MAKE VS BUY - Our cost models can be applied to understand competitive manufacturing costs and prices. This can be benchmarked vs your internal operations to understand what is the more efficient option and to identify improvement opportunities.


Industries Served

Our Engineers have been costing parts since the 1990s for various industries including the following:

 

Our Mission

– Our mission is to bring trusted product costing to the world, make it easy and make it affordable to everyone. Costing knowledge enables better management and strong financial results.