Better Products At better Margins 20 to 40% Cost Price Reduction
I was so impressed with the presentation by one of our speakers at the recent user conference that I bought a copy of his book. In his presentation(and also included on our site, galorath.com) he showed how he saved millions of euros in product costs using target costing, value analysis, and viable cost estimating and SEER.
It is wonderful to see forward thinkers applying SEER to save big costs as well as to estimate costs. In his presentation he substantiated savings of 20 to 40% cost price reduction (value improvement) And he does this not be grinding contractors but by working with them to provide substantial cost savings without impinging on their margins.
His book is well worth a read. The abstract follows:
“Many companies experience price pressure as a result of the global marketplace. The advance of technology creates many opportunities adding more innovative new features. Yet these opportunities also seem to drive up costs. How to end the resulting profit squeeze? Many aim for low labor cost countries as a solution.
Our approach is: Use Target Costing and Value Analysis.
Target costing sets allowable costs, derived from the value as perceived by customers, instead of price as a result of cost. Value analysis shows the way where the value of a product is, or where to reduce the cost. One of the key success factors in this approach is Cost Engineering and Cost Estimation. Another is multi disciplinary teamwork between marketers, developers, operations and suppliers.
The structured approach and open communication help achieve astonishing results, typically in the range of 20 to 40% cost price reduction or value improvement.
This book, or better Manual, describes how to apply and implement these methods in an organization, and how to involve suppliers efficiently and effectively via so called Design-in Workshops.”
It can be purchased for 69 Euros at www.orenda.nl
Thank you for reading “Dan on Estimating”, if you would like more information about Galorath’s estimation models, please visit our contact page, call us at +1 310 414-3222 or click a button below to ask sales questions, sign up for our free library or schedule a demo.
This post was written by
Dan Galorath is the President and CEO of Galorath Incorporated and the chief architect of SEER-SEM, an algorithmic project management software application. He is a recognized expert in the fields of software estimation and sizing and the author of Software Sizing, Estimation, and Risk Management.
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