The Cost of Lead Time

"It seems like customers expect products delivered quicker than ever."

Expectations

It is first worth finding out why customers are expecting faster delivery.  Is your competitor offering better lead times?  Are they increasing their price to accommodate, or have they improved their supply chain or efficiency?  Maybe your sales team is influencing expectations.  This can be fine, but not if it makes the salesperson the sale (commission) but costs you stress and reduces the company profit margin (not uncommon).

 

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Secrets of Product Cost Estimation (Prior to Design)! Part 2

Part 2 – Bits and Pieces, and Why 

Bits and pieces

The last portion of the cost can be attributed to medium-ish parts, and the mundane; fasteners, assembly, labeling, packaging, etc.  While this category represents about 20% of the cost of a product, it is also about 80% of the quantity (# of parts) of the product.  The lesson here is don’t waste your time trying to count or estimate it all line by line; estimate in bulk as much as possible.

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Secrets of Product Cost Estimation (Prior to Design)! Part 1

Part 1 - The Big Piece of the Pie

A challenge that companies both new and old face is getting a handle on product cost when you would like to know it most - before you put forth the effort to design and produce it.  It sounds crazy, to estimate how much something will cost before you even design it, but it’s not difficult.  Here's How.

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