Nov 222013

Hello Product Cost Management World!

We have been off the air for a little while, but we are coming back on with a bang. It’s finally here, the long awaited 2013 Hiller Associates and CIMdata report: Product Cost Management in Discrete Manufacturing

That’s right, this week Hiller Associates, partnering with CIMdata (a leading analyst firm in the area of Product Lifecycle Management), released the most extensive research to date on Product Cost Management.

We surveyed respondents from many industries and drew upon decades of our own experience in the field to provide a comprehensive report that discusses the state of product cost today and how well companies are doing at meeting cost targets. This report defines each of the Product Cost Management techniques and puts them in perspective. It discusses the priority of cost as a product attribute versus time-to-market, quality, performance, and other product attributes. It also discusses how extensively cost targets are set in industry today, what percent of products meet cost targets, what product cost management techniques companies are using, and what software tools can help.Hiller Associates 2013 Product Cost Management Research

If you work on  product cost or in an adjacent field, the report will be useful to you or a colleague in your company.  You can find the press release at the link here:

Do you have burning questions about Product Cost Management?  This report has the answers:

  • Hiller_Associates_2013_Product_Cost_Management_Research_ReportHow well are companies doing versus cost targets?
  • What is the priority of cost versus quality and timing?
  • How are companies setting cost targets?
  • What is holding firms back from profit?
  • What tools and techniques are solving the problem?
  • …and is the DARPA study a hoax!?

CLICK HERE to get the report, and feel free to contact us with questions!




  2 Responses to “Hiller Associates & CIMdata Publish Most Extensive Research to Date on Product Cost Management”

  1. Moderator reposting from Linked-in group here:

    Massimo Pica, President at PMO4NoProfit, SAYS:

    Eric A.,
    My warmest congratulations! Your report has almost monopolyzed the Google entry on “Product Cost Management in Manufacturing”!!! This, then, really sounds as an original contribution…Thanks a lot!
    By the way…What is your experience/perception of the effects of Learning Curves and Economies of Scale in Manufacturing Cost Management?

    • Massimo,

      Thank you for the praise, I hope that many people and companies get value from the report.

      “Learning” curves are obviously a manufacturing-centric cost management technique. I know what they are and agree that they are real. However, I would not say that they are not my primary focus. My understanding is that learning curves are most impactful in lower volume manufacturing (e.g. aerospace and defense). In high volume, such as automotive, you get to the asymptotic (flat) part of the curve quickly.

      Economies of scale, I see a bit differently. There are two types in my mind. The first is simply the linear amortization of indirect overheads as you spread capital over larger volumes. The second is when you actually can more to a different process at high volumes that is less expensive in a direct overhead, labor, and material.

      Both learning curves and economies of scale are real and should certainly be pursued. However, I always preach more prevention than cure. I liken it to an old fashioned (analog) radio tuner. Learning curves and to a lesser extent, economies of scale are like the fine tuning knob that are useful once the main tuning knob gets close. In other words, product cost management in procurement, process planning, and especially design are more the main tuning knobs that really move the needle.

      1. PCM in Engineering (fast and rough knob that really moves the needle)
      2. PCM in Sourcing and Process Planning (somewhat finer tuning)
      3. PCM through learning curves and economies of scale. (optimization –> micro tuning)

      What do you think, Massimo?


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