Should-Cost Analysis Techniques

Introduction:

In this should-cost analysis course, participants will enhance their ability to develop accurate manufacturing cost models and set precise cost targets. This expertise is crucial for optimizing the costing process, facilitating supplier negotiations, and addressing design and time-to-market challenges.

The course provides a comprehensive overview of should-cost analysis, including methods for accurate cost targeting of purchased items. These benchmarks are vital for successful supplier discussions, innovative design development, and effective time management.

Objectives:

By the end of this should-cost analysis course, participants will be able to:

• Group components more effectively.
• Support supplier negotiations with quantitative data and manufacturing insights.
• Estimate procurement costs for new designs before the RFQ process.
• Understand and analyze supplier cost structures.
• Facilitate early-stage design discussions between engineers and suppliers.
• Negotiate costs and collaborate with suppliers without impacting margins.
• Make objective comparisons between technical solutions.
• Verify supplier cost quotations.
• Estimate costs proactively and apply cost reduction techniques.
• Utilize cost budgets, plans, and forecasts effectively.
• Evaluate project performance.

Training Methodology:

• Case Studies
• Workshops
• Group Discussions
• Simulations
• Role Playing

Course Outline:

Unit 1: What Is Should Cost?

• Introduction to Should-Cost Analysis
• Accountability in Should-Cost Analysis
• Should-Cost Model

Unit 2: Should Cost versus Will Cost

• Conflict between Strategic Sourcing and Should-Cost Analysis
• Indeterminacy of Should Cost Targets
• Should Cost Management

Unit 3: Cost Reduction Focused on Spend Analysis

• Determining Scope
• Data Gathering
• Conducting Should-Cost Analysis
• Reviewing Initial Outliers
• Creating an Action Plan
• Managing Cost Outliers
• Assessing Savings

Unit 4: Should-Cost Negotiation and Utilization

• Negotiation Narratives
• Importance of Fact-Based Manufacturing Cost Modeling Software
• Cost Drivers Graphs
• Breakdown of Cost Factors and Process Steps
• Elapsed Time per Process
• Breakeven Volume and Production Cost

Unit 5: Working with Suppliers to Lower Product Cost

• Objectives of Should-Cost Negotiations
• Targeting Cost Reductions with Rationale

Unit 6: Quality Should-Cost Modeling Software

• Essence of Should-Cost Modeling Software
• SoC for Manufacturing Cost Modeling Software
• Time Compression in Construction Cost Modeling

Unit 7: Beyond Should Cost: Manufacturing Cost Modeling for Product Development

• Affordable Manufacturing Cost Modeling Tools for Design Phases
• Digital Manufacturing Simulation Based on 3D CAD Models
• Identifying Cost Alternatives During Design
• Considering Production Environment and Supplier Specifications