What it actually costs to manufacture.
We design the production process and cost it down to the last component: unit cost at volume, investment in tooling and line, operating cost and break-even point. This is the phase where it becomes clear whether the project has margin, and it is far better to find out here.
Process sized and sustainableThe real cost turns up with the first run.
Almost every project reaches production with a unit cost estimated below the real one. The gap is rarely in raw material, which is the one thing that gets calculated properly: it sits in scrap, in changeovers, in the cycle time the supplier promised and the line does not deliver, in secondary packaging and in logistics.
When that gap appears with the run already launched, the options are all bad: raise the price in a market that has fixed its expectation, absorb the margin, or redesign a product that already has tooling. Calculating it beforehand costs one phase and allows the part to be redesigned while redesigning is still cheap.
What gets costed.
- Production process
- Process design sized for capacity and cost against the demand established in phase 02, with sustainability criteria applied to materials and consumption.
- Unit cost at volume
- Full bill of costs per volume scenario: raw material, scrap, direct labour, cycle time, packaging and logistics.
- CAPEX and OPEX
- Investment in tooling, moulds, line and installation, and the associated operating cost, with depreciation charged back to the unit.
- Break-even point
- The volume at which the project covers its structure, and the sensitivity of the result to changes in price, raw-material cost and volume.
What closes the phase.
- Operating account
- A complete model per scenario, with the cost structure broken down and the assumptions parameterised so you can rerun it yourself.
- Bill of costs
- Unit cost by component and by operation, with the range between the conservative and the favourable scenario.
- Location analysis
- A comparison between manufacturing in-house, subcontracting or licensing the project to a third party, with the effect of each route on investment and margin.
- Decision record
- Continue to phase 04, redesign to bring cost down, or stop the project for lack of margin.
Before you commission tooling.
It makes sense once demand is sized and the decision is how and where to manufacture. It also applies when a product already in the catalogue has lost margin and the question is where it is going: most of the time the problem is not where the organisation believes it is.
Drawings or a technical specification of the product, supplier quotations if you have them, and the target volume coming out of phase 02.
The boundary of this phase.
It does not replace your company's cost accounting or a firm quotation from a supplier. It produces the cost model you negotiate those quotations with and decide the manufacturing route on; the contract with the manufacturer is closed in phase 04.
Tell us where the project stands.
A thirty-minute conversation is enough to establish which phase your development enters at and what it would take to close it. We sign the non-disclosure agreement before you describe anything.