It is important to organically build your business but it also must be profitable. To do this companies need to examine their costs in their entirety up front when deciding whether or not to proceed into production with a new product.
To this end, it is helpful to have an algorithm or template that assists the salesperson or engineer when completing a bid proposal.
A Cost Analysis helps determine all of the actual costs, especially when a minimum order quantity is used. It does this by including all of the Engineering and development costs, as well as the cost of additional expenses such as tooling.
Next, it builds the ‘field operation costs’ by taking into consideration the direct and indirect costs associated with the manufacture of a product. It is important to note that the tool requires the use of a ‘current’ quotation when providing raw material costs.
Below is a portion of Product Cost Analysis.
Manufacturing and Supply Chain Services
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