Understanding on Product costing - From Engineer's point of view

A: Design for Manufacturability (DFM) is the practice of designing products so they are easy and cost-effective to manufacture. DFM lowers costs by reducing complexity, minimizing part counts, and selecting materials and processes that streamline production. Engineers applying DFM principles help avoid expensive manufacturing steps and rework, leading to predictable and lower product costs. More on DFM can be found at: https://www.nist.gov/el/advanced-manufacturing-technology-consortium/design-manufacturability

A: The Bill of Materials (BOM) is a detailed list of all components, raw materials, and subassemblies needed to manufacture a product. From an engineering standpoint, the BOM is critical because it directly impacts material costs and inventory management. Accurate BOMs allow precise cost calculation, facilitate supplier negotiations, and help identify cost-saving opportunities through part standardization or alternative materials. BOM management systems often integrate into costing tools for dynamic cost analysis.

A: Fixed costs like tooling, equipment setup, and engineering development are spread over the production volume and impact the unit cost differently depending on scale. Variable costs include raw materials and direct labor that change with production quantity. Engineers must consider how design choices influence both fixed and variable costs. For example, complex designs might increase tooling costs (fixed), but simplifying components could reduce material usage (variable), ultimately affecting the product’s overall cost structure.

A: Engineers can reduce product costs by optimizing design for manufacturability, selecting cost-effective materials, simplifying assembly processes, and eliminating unnecessary features. They often collaborate with manufacturing teams to identify bottlenecks and suggest process improvements. Techniques like Design for Six Sigma (DFSS) and Value Engineering (VE) are applied to systematically improve cost efficiency while maintaining or enhancing quality standards. For more information, see: https://asq.org/quality-resources/value-engineering

A: Engineering changes can significantly impact product costing by altering material requirements, manufacturing processes, or assembly time. Changes late in the product lifecycle often incur higher costs due to retooling, updated documentation, and possible scrap of existing inventory. Engineers must evaluate the cost implications of each change request, balancing design improvements against budget and schedule impacts. Effective change management processes help control and document these costs.

A: Engineers use several cost estimation methods including parametric modeling (using algorithms based on design parameters), analogous estimating (using data from similar past projects), and bottom-up estimating (estimating individual components and assembling the total). Advanced methods include activity-based costing (ABC) and software tools like CAD-integrated costing modules. The choice depends on project complexity, available data, and required accuracy.

A: Product costing from an engineer's perspective involves estimating the total cost to design, develop, and manufacture a product. This includes direct costs like materials and labor, as well as indirect costs such as overhead, tooling, and engineering development hours. Engineers focus on the design, process selection, and material choices that directly impact the cost structure. Accurate product costing helps balance design goals with budget constraints and manufacturing feasibility.

A: One of the biggest challenges is limited information about production volumes, supplier pricing, and process choices early in development. Estimating indirect costs such as tooling, testing, and overhead can also be complex. Design changes during development affect costing estimates, requiring frequent updates. To mitigate these, engineers use parametric costing models, historical data, and collaborate with procurement and manufacturing teams to improve cost accuracy.

A: Yes, CAD (Computer-Aided Design) and PLM (Product Lifecycle Management) software improve costing accuracy by integrating detailed product data with material specifications and manufacturing process parameters. CAD models can provide exact geometric and material data that aids in precise material quantity and weight estimation. PLM systems help track changes, manage BOMs, and integrate cost data from suppliers. This reduces manual errors and provides real-time cost updates during the design process.