New Research Reveals Opportunities and Challenges for Companies Taking Strategic Approach to Product Cost Management

aPriori, a provider of enterprise product cost management software solutions, today announced results of independent, third-party research highlighting the opportunities and challenges manufacturers face in their product cost management efforts.

Conducted by TechValidate, an independent research organization, the study collected quantitative and qualitative data from 267 aPriori users in engineering, sourcing, manufacturing and cost engineering roles from manufacturing organizations around the world. The research focused on the companies’ approaches to product cost management, key obstacles to improvement, the impact of aPriori’s solution on their product cost management efforts and the different manufacturing processes targeted with it.

Manufacturers face some common and difficult challenges when it comes to improving their product cost management effectiveness according to the TechValidate survey, but most are gaining significant advantage and ROI from their efforts. This is being seen primarily in three areas: reduced costs for both new and existing products; improved collaboration and negotiation with their suppliers using more detailed product cost information; and the ability to estimate product costs much faster and evaluate more design alternatives in development.

Specific findings from the research include:

Gaps in knowledge and skills of internal teams, and time pressures from existing work overload are the two biggest challenges organizations face as they try to improve their product cost management effectiveness.

• 55% of the respondents cited the skill gap while 44% reported already being overloaded with too many other responsibilities to take on new work related to product cost management.
• The product cost management skill/knowledge gap is even more pronounced in automotive/ transportation manufacturers where 67% of respondents indicated it was a key challenge.

(Source: TechValidate. TVID: FA1-1A0-F1C)

Manufacturers are typically deploying aPriori’s enterprise product cost management platform to address three key business challenges:

• To meet target costs on new product initiatives (66%)
• To reduce the cost of current products – value engineering (65%)
• To improve fact-based negotiation with their suppliers (56%)

(Source: TechValidate TVID: E2B-01C-B50)

Manufacturers are using aPriori for product cost management across a number of different manufacturing processes:

• Stamped Sheet Metal (63%) and Machining (61%) were the most common.
• Casting (Sand, Die and Permanent Mold – 49%), Mechanical Assembly (48%) and Assembly Welding (47%) were also popular applications along with Bar & Tube Fabrication and Injection Molding (both 41%) close behind.

(Source: TechValidate TVID: F55-F31-28B)

Users of aPriori report a significant improvement in their overall product cost management effectiveness after at least one year of use.

• Before deploying aPriori, 70% of respondents reported their organization being at least “effective” in product cost management; only 12% were “very” or “extremely effective.” (Source: TechValidate TVID: 00A-0F3-729)
• After deploying aPriori for at least one year, 83% of respondents reported their organization being at least “effective;” with 32% “very” or “extremely effective.” (Source: TechValidate TVID: 54B-57C-054)

Manufacturers cite three primary benefits most often from their aPriori deployments:

• More detailed insights gained on cost drivers (55%)
• Reduced time to generate cost estimates (55%)
• The ability to evaluate more design alternatives in development (46%)
• Other benefits mentioned frequently include creating a stronger product cost management culture (27%), reducing overall product costs (25%) and achieving target cost goals on new product initiatives (22%).

(Source: TechValidate TVID: 075-692-5ED)

aPriori users report very significant ROI from their efforts:

• 27% of respondents estimate their total potential cost savings identified or realized by using aPriori to be over $2M to date. (Source: TechValidate TVID: 4E4-576-9B7)
• 63% report savings of $500K or more. (Source: TechValidate TVID: C39-C8C-794)

Manufacturers are generating product cost estimates as much as 10X faster with aPriori:

• 23% of surveyed customers are generating product cost estimates at least 10x faster.
• 44% at least 5x faster
• 78% at least 3x faster

(Source: TechValidate TVID: 569-329-8F0)

"The TechValidate data highlights the tremendous opportunity that is possible when manufacturers take a strategic approach to product cost management,” said Rick Burke, vice president of marketing at aPriori. “Whether it’s to meet target costs on new product initiatives, reduce the cost of current products, or improve negotiation with their suppliers, aPriori users are making significant progress in their efforts and seeing huge ROI as a result. Our mission at aPriori is to help our customers create great products faster by empowering them to do more with every dollar they spend designing and manufacturing their products. The results of this independent research clearly demonstrate that our customers are realizing a strong ROI from their investment in aPriori, and improving their overall cost culture by leveraging the knowledge and experience of our Professional Services team as part of their strategic deployment program.”

Survey Respondents

Survey respondents represented a wide variety of manufacturing industries – generally indicative of aPriori’s customer base as a whole - with a concentration in industrial machinery/equipment, automotive/transportation, consumer products, and electronics/high tech.

Respondents also reflected a range of experience with the aPriori platform:

• 40% had used the platform for less than one year.
• 60% had used the platform for more than one year (41% 1 – 3 yrs.; 19% 3+ yrs.).

(Source: TechValidate TVID: 327-44B-3DA)

Sample Survey Respondent Comments

“aPriori provides a detailed cost estimate that can be used internally to highlight cost drivers and lower the cost of our product and helps us with negotiation with external sources.”

Manager, Manufacturing, Large Enterprise Aerospace & Defense Company
(Source: TechValidate TVID: A0D-B07-433)

“I use aPriori to evaluate different designs so that I submit the most cost effective solution to the Value Analysis group. It is a very helpful tool to get quick numbers for comparing multiple designs and allows me to make better decisions based on those numbers.”

Mechanical Design Engineer, Medium-Size Enterprise Automotive & Transport Company
(Source: TechValidate TVID: B52-CC9-10C)

“aPriori is really user-friendly and easy to use. It helps us successfully negotiate lower cost price with suppliers and it helps improve Design for Manufacture/Design for Assembly.”

Design Engineer, S&P 500 Industrial Manufacturing Company
(Source: TechValidate TVID: DEF-BE1-233)

“After using the program for a year, I have been extremely impressed with the accuracy for pricing, both foreign and domestic, and with the speed aPriori can produce results. It has really helped me to optimize designs before sending them out for quotes.”

Product Development Engineer, Large Enterprise Automotive & Transport Company
(Source: TechValidate TVID: F6C-6F0-780)

“aPriori is a very powerful cost modeling/estimating tool that is transparent, fast and allows adaptability in the routing process based on real world manufacturing. The customer support has been awesome as we pioneer the User Guided Costing space for Non-CAD predictive cost modeling scenarios. Our New Product Introduction teams, procurement, and engineering are all excited, causing more collaboration between cost modeling and our process partners.”

Senior Cost Analyst, Large Enterprise Consumer Products Company
(Source: TechValidate TVID: D9E-F8A-E17)

About aPriori

aPriori generates hard-dollar product cost savings for discrete manufacturing and product innovation companies. Using aPriori’s real-time product cost assessments, employees in engineering, sourcing and manufacturing make more-informed decisions that drive costs out of products pre- and post-production. With aPriori, manufacturers launch products at cost targets, maximize savings in re-work projects and avoid overpaying for sourced parts. To learn more about aPriori and its product cost management solutions and services, visit www.apriori.com or call 1.978.371.2006. To see an overview demonstration of aPriori, click here.

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