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Cost as a Business Driver – ACostE EMC Learning EventTerry Griggs – Ford Motor Company
Cost as a Business Driver
Cost Estimating Comparative Study
The Automotive Angle
Terry Griggs and Bill Ewin
- Ford Motor Company
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Cost as a Business Driver – ACostE EMC Learning EventTerry Griggs – Ford Motor Company
Content
• Introduction and verview
• Estimating Methodology
• Tools and !ata"ases
• Component Costing
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Cost as a Business Driver – ACostE EMC Learning EventTerry Griggs – Ford Motor Company
Introduction and verview
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Cost as a Business Driver – ACostE EMC Learning EventTerry Griggs – Ford Motor Company
Introduction and verview
Ford• #$
• Germany
• Spain• %orth America
• Me&ico
• Australia
• South A'rica
• India
()*• #$
Aston Martin
• #$
+olvo
• Sweden
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Cost as a Business Driver – ACostE EMC Learning EventTerry Griggs – Ford Motor Company
Introduction and verview
Manufacturing Engineering Purcasing
Finance
PD!Finance
T"M!Finance
CostEstimating
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Cost as a Business Driver – ACostE EMC Learning EventTerry Griggs – Ford Motor Company
Introduction and verview
The Cost Estimator develops estimates o' piece costand tooling cost 'or "oth present and 'orward modelcomponents purchased "y Ford 'rom suppliers,
*oles and *esponsi"ilities*oles and *esponsi"ilities
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Cost as a Business Driver – ACostE EMC Learning EventTerry Griggs – Ford Motor Company
Introduction and verview
• Strategy Costing
• Target Setting andAgreements
• Change Control
• )aunch Team
• Esta"lish Gap to Benchmar
• Supplier %egotiations• Competitive Teardown Analysis
• Cost *e.uests
*oles and *esponsi"ilities*oles and *esponsi"ilities
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Cost as a Business Driver – ACostE EMC Learning EventTerry Griggs – Ford Motor Company
Estimating Methodologies
Activity Based Costing• In estimating the cost o' a part the estimator de'ines the
individual manu'acturing processes used to produce the part
• Each process step is de'ined in terms o' the machine employed
• Each machine in the process has "een studied
with respect to the amount o' "urden it creates and the total "urden o' the product is the sum o'all the individual machine "urdens
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Cost as a Business Driver – ACostE EMC Learning EventTerry Griggs – Ford Motor Company
Estimating Methodologies
• There are two ma/or elements contained within"urdens0-
- )a"our
- Assets
Activity Based Costing
• Ford Cost Estimating uses a 1Com"ined )a"our2 costwithin an estimate, This is to recover the cost o' directla"our3 indirect la"our and 'ringe costs
• Asset costs comprise o' the owned machines3"uildings and 'acilities re.uired 'or manu'acturing
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Cost as a Business Driver – ACostE EMC Learning EventTerry Griggs – Ford Motor Company
Estimating Methodologies
4ero-Based Estimates 5ZBE 6
4BE is a Target cost 'or the supplier to
achieve through the evaluation o' e&istingcost structures and improvements inmanu'acturing operations,
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Cost as a Business Driver – ACostE EMC Learning EventTerry Griggs – Ford Motor Company
Estimating Methodologies
4ero-Based Estimates (ZBE)
• Actual production location
• Best and most e''icient process to manu'acture the part using optimum machine type and si7e
• Fully lean production 'acility with ma&imum possi"le utilisation3 no 8I9 and minimum scrap
• E&-wors conditions
• Ford de'ined )a"our and Machine rates and Ford GeneralMar-#ps
• )a"our and machine rates are "ased on researched data andrepresent average conditions
• Mar-#ps derived 'rom glo"al studies into automotive supplier accounts
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Cost as a Business Driver – ACostE EMC Learning EventTerry Griggs – Ford Motor Company
Tools and !ata"ases
• CA9E 5Computer Aided 9arts Estimating6
• G*IMM 5Glo"al *ate In'ormation - Material : Machines6
• and ,,,
Systems : !ata BasesSystems : !ata Bases
E&perience
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Cost as a Business Driver – ACostE EMC Learning EventTerry Griggs – Ford Motor Company
Tools and !ata"ases
Computer Aided 9arts Estimating 5CA9E6 is anadvanced nowledge "ased system designed to
evaluate "est processes and optimal costs 'or themanu'acture o' e&ternally purchased parts worldwide,
CA9E
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Cost as a Business Driver – ACostE EMC Learning EventTerry Griggs – Ford Motor Company
Tools and !ata"ases
• Metal Stamping• 9lastic In/ection Moulding• *u""er Moulding
• 9ressure !ie Casting• Tu"e Manipulation• 8elding• Assem"ly
• 8iring• Clean Sheet
CA9E E&pert Modules
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Cost as a Business Driver – ACostE EMC Learning EventTerry Griggs – Ford Motor Company
Tools and !ata"ases
• Assumes raw materials are purchased at high volumes3 net o' re"atesand incentives
• !irect la"our is graded appropriately to match the sill level re.uired 'orindividual cost elements per'ormed
• Capital e.uipment is chosen to e&actly satis'y part re.uirements without
e&ceeding them• Capital is 'unded directly 'rom the supplier company pro'its and not 'rom
a commercial "an loan
• Cycle times use state-o'-the-art technology• ;
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Cost as a Business Driver – ACostE EMC Learning EventTerry Griggs – Ford Motor Company
Tools and !ata"ases
G*IMM !ata"ase
Glo"al *ates In'ormation Machines and Materials5G*IMM6 the glo"al !B> main'rame system used to storematerial prices3 la"our rates and "urden values,
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Cost as a Business Driver – ACostE EMC Learning EventTerry Griggs – Ford Motor Company
Tools and !ata"ases
G*IMM !ata"ase
• !irect and Indirect )a"our and Fringe Bene'its• Multiple Industry Types and Sill )evels
• ver ;?
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Cost as a Business Driver – ACostE EMC Learning EventTerry Griggs – Ford Motor Company
Tools and !ata"ases
BritainBritain
GermanyGermany
SpainSpain
FranceFrance9ortugal9ortugal
ItalyItaly
%orth America%orth AmericaMe&icoMe&ico
Ma.uiladorasMa.uiladoras
ChinaChina
C7ech *epu"licC7ech *epu"lic
9oland9oland
ungaryungary
TureyTureySlovaiaSlovaia
SloveniaSlovenia
*omania*omania
India $oreaIndia $orea
Sweden South A'ricaSweden South A'rica
AustraliaAustralia
G*IMM !ata"ase
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Cost as a Business Driver – ACostE EMC Learning EventTerry Griggs – Ford Motor Company
Estimated9iece 9rice
End ItemScrap
SG:A
9ro'it
E!:T
Manu',Cost
Material
Standard 9arts
*aw Material
!epreciation
9lant Supervision3 9lant Eng
uality Control3ealth !ept3
Security3 Canteen etc,
Clean : Specialandling
Machine Maintenance
Tool Maintenance
Interest
Floorspace
IndirectMaterials
Insurance
#tilities
)a"our
!irect )a"our
Indirect )a"our
Fringe
#tilities
olidays3 Sicness3Bonuses
Burden Machine
verheads
Introduction andverview
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Cost as a Business Driver – ACostE EMC Learning EventTerry Griggs – Ford Motor Company
*aw Materials0 Usage
9urchased 9arts0 Usage
peration ;0 Mold
• Labor minutes (number ofdirect laborers, cavities, &cycle time)
• Machine minutes (cavities &cycle time)
peration >0 Assem"ly
• Labor minutes (number ofdirect laborers, cavities, &cycle time)
• Machine minutes (cavities &cycle time)
;, ow an EstimatorCreates Manu'acturing!etail
ABS *esin0 D;,
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Cost as a Business Driver – ACostE EMC Learning EventTerry Griggs – Ford Motor Company
Component Costing
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Cost as a Business Driver – ACostE EMC Learning EventTerry Griggs – Ford Motor Company
Component Costing
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Cost as a Business Driver – ACostE EMC Learning EventTerry Griggs – Ford Motor Company
Component Costing
Focus C-Ma&
8ire Material ;3@ $m
Tape Tu"e Material ?> m
Connectors ?;@Terminals ;LH<
Seals <
Eyelets >Fuses *elays ?>
Clips *etainer >><
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Cost as a Business Driver – ACostE EMC Learning EventTerry Griggs – Ford Motor Company
Component Costing
G#$MM EDG%&C'P (iring
Loom Data
Macine
Data
Benchmarking
Data (e.g.Materials, Clips, Tape, Tube, etc)
Termina) *
Connector
Price(iring Loom
Data
+%upp)ier,
(iringLoom Data
+%upp)ier&
Ford,
CAPE (iring Estimating
Data
-on %tandard Parts
Manua)
Estimating
Modification
Fina) (iring
Estimate
+)oca)condition,
.ear)y /pdate
Continuous /pdate
0vernigt /pdate /pdate 1!' days
1 2
'
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Cost as a Business Driver – ACostE EMC Learning EventTerry Griggs – Ford Motor Company
Component Costing
Glo"al *atesMachines andMaterials !ata"ase
$nc)udes a)) macine3materia)s and
standard
components +i4e4
Connectors3
Termina)s, inc)udingcost information
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Cost as a Business Driver – ACostE EMC Learning EventTerry Griggs – Ford Motor Company
Component Costing
E!GS C?9 !ataimported
A)) components and
materia)s are captured inte import fi)e for
do5n)oading to CAPE
AA 'M6T!1789''!:F M ;;
CC 1 A%M'G!761'!A TapePaper tapeCC ' A%8M'!G>61'!A TapePaper tape
CC 7 A%>6G!G178=2!7AA TapeTape
CC 6 A%M'G!7@AG!17A1>>!EA Tue$D1=41 Conv tue 1'=C
CC 16 >2=>@AG!17A1>>!8A Tue$D1CC 1@ 1'M6T!17A172!AB 0terLo5er Cover
CC 1> 1'M6T!17A=9
CC 2= 1'M6T!17A='7!AB 0terAB% Fuseo)der
CC 21 ''M6T!17797!GAA Termina)Termina) f 24@
CC 22 17'M6T!17797!GBA Termina)24@ ct =496!14== %-
CC 1'7 1'M6T!177@>!TAA ConnectorCF 1Pos -(P L%8 @4=
CC 1@' 1=1L'T!17A=>7!FA 0terFuse Mini 1=A #D
CC 1@7 21L'T!17A=>7!GA 0terFuse Mini 16A B/
CC 1@6 1'M6T!17A=
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Cost as a Business Driver – ACostE EMC Learning Event
Terry Griggs – Ford Motor Company
Component Costing
#pload o' Cape Estimatewith Grimm and E!GS C?9 data
Manua) /pdate of
! Missing components! Circuit t5isting
! (ire sing)e sea) assem)y
! %p)icing * Termina)
insu)ation! Termina) $nsertion
! Taping * Tuing
! etc4
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Cost as a Business Driver – ACostE EMC Learning Event
Terry Griggs – Ford Motor Company
Component Costing
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Cost as a Business Driver – ACostE EMC Learning Event
Terry Griggs – Ford Motor Company
Component Costing
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Cost as a Business Driver – ACostE EMC Learning Event
Terry Griggs – Ford Motor Company
Component Costing
Application o' Mar-#ps
• Scrap
• SG:A
• 9ro'it
• E!:T
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Cost as a Business Driver – ACostE EMC Learning Event
Terry Griggs – Ford Motor Company
Component Costing
Focus C-Ma& Cost BreadownMateria) CostF 2'2462
Laor CostF 6'466
Macine CostF 2=4'6
%crapF '4@6
%G*AF '64><
ProfitF 264>'
#*DF 124>6
Total Estimate M ?HG,;;
Laor MinutesF 6>74'> min
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Cost as a Business Driver – ACostE EMC Learning Event
Terry Griggs – Ford Motor Company
Content
• Introduction and verview
• Estimating Methodology
• Tools and !ata"ases
• Component Costing
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Cost as a Business Driver – ACostE EMC Learning Event
T G i F d M t C
uestions
uestions N