Cincom Systems of Australia releases research report
Cincom Systems of Australia , a software maker has released a research report. The research report states that only 67% of build-to-order and engineer-to-order manufacturers know how much it costs to produce customised products, and 73% do not know the cost of engineering change orders.
"Customised products are an integral part of the product portfolio for pump and valve manufacturing companies," says Mark Stevens of the eLogic Group, a management consulting firm.
"Yet most use cost methods that are better equipped for standard products because they do not have a clear understanding of their cost structure."
The common practice is to use a standard mark up from the cost of materials. But Mark Stevens questions this method, as it may not fully account for the additional engineering and manufacturing time required.
"Companies need to analyse and streamline their business process so that customised products are nearly as easy to handle as the standard products," says Mark Stevens, eLogic Group.
"Sales configuration application and workflow management are key elements of this process improvement."
Increasing revenue with product customisation despite the lack of cost information, more than half of the survey respondents believe that they have the ability to charge a 10% or higher premium with a product customisation strategy.
While 73% of total respondents see product customisation as critical for products over $100,000, 25% also see them as critical for products under $1,000.
As the building of simple/high-volume products moves offshore, the U.S. manufacturing industry is left with manufacturing highly complex products. This trend is evident in the numbers.
Most engineers (63%) have seen requests for customised products increase in demand over the last five years and 26% anticipate that the growth rate will be between 25% and 50% in the next two years.
Cincom Systems' research report, "Best Practices: Mass customisation and build-to-order manufacturing," discusses from an engineering perspective – on the state of mass customisation and build-to-order practices.
Cincom Systems of Australia targeted the survey at senior engineering managers at 900 manufacturers of complex industrial, electrical, and transportation equipment and systems
13-Mar-2008