COLLABORATING WITH SUPPLIERS

Transcription

1 Unrestricted Siemens AG 2013 All rights reserved. Smarter decisions, better products.

2 Information Analytics Expertise SEPTEMBER 2014 COLLABORATING WITH SUPPLIERS Where "Should Cost" Fits in the Equation Katie Tamblin, Director, Supply Chain Solutions, IHS IHS

3 ABOUT IHS IHS INDUSTRIES AEROSPACE & DEFENSE CHEMICAL FINANCE TECHNOLOGY 100+ years experience delivering unrivaled news, insight and intelligence on defense and security equipment, markets, industries and risk Over 200 leading industry authorities creating integrated views and analysis across more than 300 chemical markets and 2,000 processes for 95 industries Research on 200+ countries and territories with harmonized indicators from IHS analysts and economists World s largest electronics component database with more than 350 million parts AUTOMOTIVE The world s largest team of automotive analysts with hundreds of experts located in 15 key markets around the world covering the entire automotive value chain ENERGY Extensive Oil & Gas well information on 5.5+ million wells worldwide dating back as far as 1860 MARITIME World s largest maritime database with an information gathering heritage of 250+ years with comprehensive information on all vessels 100 GT and over 2014 IHS 3

4 Recognized by World-Class Leaders 2014 IHS

5 Understanding Should-Cost Fastener Manufacturing: Prices versus Costs What raw materials drive your suppliers costs? Is the price your supplier quoted fair and sustainable? How can I use should-cost estimations to my advantage? 2014 IHS 5

6 Current pricing environment is mostly favorable to buyers Buyers Neutral Category Buying Strategy Notes Sellers Chemicals Plastics Steel Nonferrous Metals Precious Metals Equipment Buy As Needed Wait Buy Now Buy As Needed Buy As Needed Buy Now Energy savings yet to filter down More attractive next quarter Chinese prices nearing bottom Certain metals are attractive Recently settled labor disputes should help guide prices lower Prices remain low 2014 IHS 6

7 North American Steel Current pricing generally favors buyers but conditions are shifting Buying Environment Next Quarter (2014Q4) Next Year (2015) Prices look attractive for now Worse Worse Hot-rolled sheet, dollars/short ton Rebar, dollars/short ton Demand +Demand is growing at solid, albeit unspectacular, rates. Vehicle sales and construction activity have both rebounded sharply following a slow start to the year Supply - Supply remains ample across product categories +Trade cases continue to cast a shadow over the industry, with a final review on oil country tubular goods (OCTG) expected sometime in the next two months Prices Prices for plate and special quality bar remain unattractive, while sheet and pipe prices favor buyers. Supply disruptions next year will drive prices for most products higher 2014 IHS 7

8 IHS Forecast Accuracy: U.S. Steel Price One-Year Forecast - from 1995 to 2013 Spot Price for Coiled Plate ($/ton) 1200 Average Error ($/ton) Average Absolute Error ($/ton) Accuracy Rating 91% Actual Forecast 2014 IHS 8

9 Summary Consistent, transparent strategies for supplier collaboration Best practice to understand should-cost Most efficient way is to outsource forecasting to ensure consistency, accuracy, and visibility Forecasts can be incorporated into toolsets in order to accurately assess and plan for product lifecycle management 2014 IHS 9

10 Contact us Americas: IHS.CARE ( ); Europe, Middle East, and Africa: +44.(0) ; Thank you! Asia and the Pacific Rim: ; 2014 IHS. No portion of this report may be reproduced, reused, or otherwise distributed in any form without prior written consent, with the exception of any internal client distribution as may be permitted in the license agreement between client and IHS. Content reproduced or redistributed with IHS permission must display IHS legal notices and attributions of authorship. The information contained herein is from sources considered reliable but its accuracy and completeness are not warranted, nor are the opinions and analyses which are based upon it, and to the extent permitted by law, IHS shall not be liable for any errors or omissions or any loss, damage or expense incurred by reliance on information or any statement contained herein. For more information, please contact IHS at IHS CARE (from North American locations), or +44 (0) (from outside North America). All products, company names or other marks appearing in this publication are the trademarks and property of IHS or their respective owners. V

11 Rohit Tangri, VP, Teamcenter Product Management, Marketing & Business Development, Collaborating with Suppliers - Where Should Cost Fits in the Equation

12 Key challenges High competition and cost pressure Short product lifecycles, complex product structures Manufacturers need high degree of cost transparency Quick availability of reliable cost estimates Spreadsheet errors have been going on for years with impacts in BILLIONS... IT HAS BEEN estimated that 88% of spreadsheets have some sort of error in them. (Source: CNBC; F1F9) Frequent product and process innovations

13 Teamcenter Product Cost Management Typical situation The imperative for should-cost Transformation to an integrated solution Situation/Complication Many disconnected spreadsheets Poor integration to other systems No infrastructure for sharing data and costing knowledge No standardized costing methods and inconsistent data Cost figures neither repeatable nor comparable Inefficient costing processes and low transparency No systematic tracking and optimization of product costs Database Solution Platform to manage cost knowledge and consistent data Fact-based and cost-driver-transparent calculations on cost methods and models Cross-functional collaboration & communication with an integrated solution

14 Methodology of flexible bottom-up costing Flexible costing based on bill of material & bill of processes Methodology Overhead calculation Bottom-up costing Cost Modeling Bill of Material (BOM) Bill of Processes (BOP) Material parameters Process parameters Overheads Output Cost roll-up Processes / Products Assemblies / BOM / Parts Cost compositions Reports Geometry/ Volume Materials Tolerance/PMI Bill of Material (BOM) Predictive VE Should cost Overhead (General, Sales & Administration, R&D ), Program Volumes, Program Life, Target Costs, Logistics and Profit Material Overhead Costs Raw Material Raw Parts Material Overhead Costs Residual Mfg. Overhead Costs Manufacturing Step 1 Tool Set-up Machines Labor Process Manufacturing Parameters Residual Mfg. Overhead Costs Manufacturing Step n Tool Set-up Machines Labor Process Manufacturing Parameters

15 Focus on predictive & should costing Product definition Concept development Product & process engineering Ramp up Serial production After market Profitability calculation Pre & target costing Design-to-cost Serial & Post costing Purchase price analysis Open book accounting SOP EOP EOS Teamcenter Product Cost Management In-house parts / assemblies External supplier parts ERP system: Only costing of products after SOP based on real production data and real supplier prices Interfaces/ Data PLM ERP BI - BOM - Material - Geometry - - Cost rates - Material prices - BOM, work plan - - Product Portfolio Mgmt. - Management Reports -

16 Comprehensive cross-functional solution Key application fields Controlling/ Finance Controlling/ Finance Purchasing/ Cost Engineering Cost Engineering Sales / Program-Mgmt. Pre & Target Costing Profitability Calculation Purchase Price Analysis/Should-Cost Designto-Cost/Should-Cost Open Book Accounting Standardized Methodology - Consistent Data Management - Transparency - Efficient Processes/Interfaces Achievable Cost Targets Adequate Return on Investment Best-Cost-based Purchase Prices Cost-adequate Product Designs Profitable Sales Prices

17 Meeting the high demands of purchasing should-cost analysis Situation / Complication High demand for accurate and detailed cost calculations particularly for high-volume parts (e.g. Automotive, Machinery, Hightech, etc.) Purchased components often make up over 50 % of production costs Knowledge of price structure, cost drivers and external manufacturing processes is increasingly important Increasing amount of complex manufacturing processes Solution Transparent and accurate should costing based on integrated knowledge database, cost models and cycle time calculators Simulation of price effects based on modified raw material prices, changed manufacturing parameters or processes, global factor costs, etc. Negotiation based on facts (processes and parameters)

18 Simulation capabilities Simulation of commercial and technical what-if scenarios Where to manufacture? Make or Buy Mfg. plant (e.g. green vs. brown field) Best Cost Country Sourcing What if commercial factors vary? Production volumes Prices of raw materials & purchased parts Cost and overhead rates (e.g. labor) Exchange rates Depreciation standards for investments What if technical parameters change? Product/design variants Manufacturing technology Materials Process parameters (e.g. utilization, scrap rate) Cost impact? Down? Up?

19 Bottom-up purchase price analysis Analysis Validation Realization 1 Benchmark calculation 2 Process validation 3 Benchmarking of alternatives 4 Final discussion 5 Realization of potential $ Bottom-up cost calculation Benchmarks/ best-practice processes Analysis of cost structure/drivers Validation process / cost data Research and expert discussions Adjustment of 1st Price Calculation RFP to Alternative Suppliers Comparison of Cost-break-down Comparison of Process Parameters Preparation Supplier-side Process Evaluation Cost Structure Negotiation Implementation of Agreed Measures Project follow-up / Controlling Contractual Agreement First offer Initial price judgement Validated target price Market conform cost parameters Negotiated cost structure Final price achieved Should Cost with Teamcenter Product Costing

20 Integrated costing process for products and tools Comprehensive project overview Unified platform for product and tool costing Full system integration, no (manual) interface No redundant data in different systems Automatic roll-up or amortization of tool cost across product BOM and project Total impact of changes is immediately visible up to the project level

21 Should Costing within Teamcenter

22 Valuable data content for reliable should cost estimates Production Sites Global labor rates & other factor costs for all relevant countries & regions Knowledge Domain Processes Pre-configured reference processes for numerous manufacturing technologies material is selected from the master data.

23 Manufacturing steps The cycle time for this manufacturing step is calculated depending on the machine and the used material.

24 Reports The calculation presents the results for this part. Comparing 2 calculation variants and showing the impact of changing cost factors such as production site, manufacturing technologies etc.

25 Executive Summary 1 Meet high demand for accurate and detailed cost estimates for industries with a high production volume 2 Leverage product cost optimization by combining controlling with cost engineering capabilities in a single, easy to use tool 3 Realize reliable should cost estimates by using valuable reference data with flexible cost models (e.g. for purchase price analysis) 4 Optimize product costs in order to maximize margins, profits and return on investment (ROI) 5 Based on one unified platform, fully integrated product and tool costing to ensure consistent data and a seamless process

26 Further information For more information please visit