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Case Study: Cost Analysis
Traditional Approaches vs. CustomPartNet
A new method of web-based cost analysis that's fast, free, and accurate
Steve works in a small ten person company. For the last two years, he has been designing sheet metal battery housings for a bio-medical product designed and marketed by his company. Steve's company's main client would like them to explore the possibility of replacing the sheet metal housing with a plastic housing. Steve has a good idea about how the plastic housing will look. He has seen an example of a plastic housing being used in a competitive product. However, his boss wants to learn about the cost before deciding to switch to the plastic. He asks Steve to figure out the cost of making an injection molded plastic housing. Steve is really excited about this project.
Traditional Cost Analysis Approaches
Steve sets out to get an estimate for the injection molded battery housing, but encounters many obstacles. He tries multiple approaches recommended by his co-workers, but after each attempt, Steve still does not have an answer and grows more frustrated with the project.
- First Attempt: Steve does research on the internet and finds a molder that looks very promising. Their website says that they are extremely cost competitive and very experienced with the latest injection molding technology. They also have great customer testimonials on the web site. Steve calls the molder. The molder says that Steve should send them the engineering drawing of the part and they will provide him a quote within 48 hours. Unfortunately, Steve does not have a detailed engineering design yet. So, he cannot send them the drawing. To make matters worse, once Steve mentions that the project is exploratory and he does not have a detailed drawing, the molder looses interest. Even if Steve had the engineering drawing, his boss would never approve sending drawings of a key product to an unknown molder.
- Second Attempt: Steve contacts his college roommate John who now works at a very large company and has access to the best-in-class cost estimation software. John invites Steve to visit him and try his cost estimation software. Steve visits John's company and starts using the software. The first three questions are relatively simple and Steve has no trouble answering them. But then the questions start getting increasingly harder and becoming very specific about the molding process. Steve has no idea whether he needs insulated runners or not. All he wants to do is to run away. John suggests that Steve attend a highly informative training session by the software vendor. Steve comes back to his office and talks to the software vendor. It turns out that the software costs $24,950 and the two day training session is only available if he buys the software. Steve does not want to ask his boss to spend 25K on this software.
- Third Attempt: Another friend, Bill, suggests to Steve that he buy a book that only costs $90 and has a very detailed method for calculating cost. So, Steve orders the book online - it has great reviews. Steve cannot wait for the book to arrive. Finally, two days later the book arrives. Steve starts working through the formulas. It is a pain to use them. But, it is certainly better than nothing. Suddenly, Steve notices that the book mentions that the data is based on a survey done over 15 years ago. He is very upset. He thinks about writing an angry review but it won't help his project.
- Fourth Attempt: Steve calls his brother-in-law Greg to discuss his problem. Fortunately, Greg's company has ordered ten new plastic parts in the last three months. Greg shows those new parts to Steve. One of them turns out to be close to Steve's specifications for his part. Fortunately, Greg works in a company that is in a different enough market from Steve's company. So, Greg has no trouble in sharing the cost data with Steve. Finally, Steve has a rough estimate for his injection molded part. However, Steve would like to find out how the cost would be different if he changed the part to his exact specifications. Unfortunately, Greg cannot help him with that question.
Cost Analysis with CustomPartNet
Hearing about Steve's difficulty in acquiring an estimate, a co-worker informs Steve that he has recently heard about a website called CustomPartNet that he should investigate. Steve locates the website and finds that he can easily browse through an extensive reference part gallery for injection molded parts. He quickly identifies a housing that meets his specifications, shown below.
Steve is able to view the cost estimate for the housing and can even change the material and wall thickness of the reference part to exactly match his specifications. The system uses up-to-date market information to instantly produce an updated cost estimate.
Steve also performs several what-if scenarios to see how changing the quantity, material, and part size will affect the cost.
In addition, an extensive glossary helps him understand the specialized terminology used in the injection molding community. Steve is able to invite his brother-in-law Bill to add comments and help refine his analysis. He presents a very detailed cost analysis report to his boss and his boss decides that they should switch to the plastic part. The system also allows Steve to search for qualified molders, based on the part parameters, who can mold the part for Steve.