Last week, in his Spend Management Goes Upstream series, Jason presented the basics of the aPriori Philosophy. About the same time, I was lucky enough to meet with them in their Concord, MA headquarters when I was in the Boston area.
I must say that I am very impressed with aPriori‘s solution and definitely convinced that their solution is unique. The reality is that if you’re a best-in-class company that has already implemented technology to support the full strategic sourcing cycle, including spend analysis, decision optimization, and compliance (in addition to the old standards of e-RFX and e-Auction), then your only chance for significant cost savings is to attack the design phase – where the majority of your costs are baked in!
This is precisely where the aPriori solution comes into play. If you’re buying direct materials from a contract manufacturer, now you have a solution for understanding precisely what you should be paying based upon precisely computable geometric (physical) cost drivers and related non-geometric (part-related) costs. The reality is that current market value for a part is not always anywhere close to what you should be paying. For example, a sales representative from a new supplier is not incentivized to give you the best deal, he’s incentivized to get the best deal he can for his company. A supplier that’s always made a certain part a certain way might not realize that new technology or materials would allow them to make that part significantly cheaper if they used a different process. In this case, this is primarily due to a lack of insight.
This lack of insight is precisely what aPriori’s tool was designed to address. The application instantly and directly interfaces with your CAD program and interrogates the solid model to construct the geometric cost drivers that aPriori uses to automatically determine all the process routings that can be used to make the part, compute the costs associated with each step based upon standard machine, material, and labor costs, and compute the total cost of each part on a per unit basis by factoring non-geometric cost-drivers such as production volumes, the selected supplier or internal factory selected, and the exact routing and machines used.
This application allows design and manufacturing engineers to understand the cost of a part before they finalize a specification, evaluate different options, and make the best price-performance decision. But this is not the coolest feature. The coolest feature is that the application is based on factories built on mechanistic process models that allow you to configure the application to understand any physical part or factory/supplier you want to analyze and produce an accurate costing model. Once you produce the mechanistic process model, the solution then applies its built in computational geometric algorithms to determine the most cost-effective construction methodology guaranteed to produce the exact part you need.
The aPriori solution is truly a significant advancement in cost-based design technology. As such, not only will I be blogging about it again in the future, but I’ve also invited aPriori to submit a few guest posts detailing some of the advancements in their platform, complementing their forthcoming posts on Spend Matters, and how these advancements will help your organization save a significant amount of money without sacrificing quality or unnecessarily stressing your supplier relations.