In yesterday’s post, we re-introduced you to aPriori, the masters of Enterprise Product Costing that have been working their cost reduction magic for a full decade, taking out mountains of cost before the first part is produced! We noted that, even though it’s been over half a decade, the masters of costing have stayed the course and are still focussed 100% on taking cost out during the design and production phases, where up to 80% of the cost of a product is locked in. They do this through complex process models, built on CAD geometry, that they embed in sophisticated VPEs (Virtual Production Environments) which are populated with accurate cost data for each material, machine, and overhead factor that contributes to the total production cost.

Today we want to highlight the major improvements made in the last five years.

Significantly More Production Process Models!

When SI first reviewed aPriori, their out-of-the-box capabilities were limited to metal-based parts only, and there were only a few dozen process models. Now they can handle virtually any metal and plastics component you can think of and support over two hundred production process models out of the box. In addition, they recently signed some very big name electronics manufacturers and are adding electronics process models to their repertoire, and a few of these will likely be available out-of-the-box this year.

Significantly More Virtual Production Environments!

Now that they have close to 100 customers across the Americas and Europe, that produce their components across the Americas, Europe, Asia, and even Africa, they have up-to-date cost models and accurate VPEs for every major geography out-of-the-box. An engineer, or buyer, can get a rough idea of production cost for any supported production process in any geography before even engaging with a supplier, who can, of course, provide even more accurate cost data specific to their factory.

Support for Every Standard CAD File Format and Just About Every CAD System

The more customers you get, the more CAD systems and file formats you have to work with. At this point in their evolution, aPriori now supports every standard CAD file format and every major CAD system currently in use in the manufacturing sector.

Improved UI

It looks better, responds faster, and integrates the best of CAD and OLAP. The main screen has three sections: the component view, the cost model, and the process model. Each displays the high-level information, but in each the user can drill down as deep as she desires.

Full Excel Export Capability

Not only can the user copy and customize process models and VPEs, update / override any cost, and save any scenario – but they can also export the full scenario and underlying cost model to excel for analysis, review, and distribution.

Powerful Comparison Reports

The user can compare multiple process models, and associated costs, for a part side-by-side, and, if desired, export the full comparison report to Excel.

Roll-Ups and Automatic Process Model Generation and Solution

A user can create a component-based production should-cost model that rolls-up the production should-cost model for each part and the system will automatically cost the full component using the individual part geometries and identified (or default) production processes and, if desired, the lowest cost production process for the entire component.

The improvements save their customers millions every year. For example, the construction equipment manufacturer that saved over 500K annually just on frame and door production also saves over 200K annually on cage rear pivot production. The manufacturer thought that machined casting w/x-Ray was the best way to produce the part, but the aPriori solution was able to determine that a two-step process that first burned the part farm from plate and then machined holed the cavities could reduce the cost from 16.56 to 10.05 on 22K cage pivots per year.

And it’s not just construction equipment manufacturers that save. Thermo King, which produces temperature and climate control products for the transportation industry, analyzed 5.679M in annual spend across 294 sheet metal parts and quickly identified a potential savings of 900K (16%) and realized 400K of this in just 12 days! And a a 6.5B manufacturer of commercial trucks that analyzed 7.7M Euro in spend across 86 sheet metal parts was quickly able to identify that 17 of the 86 parts were “outliers” (and nowhere near expected costs) and through additional analysis was able to identify better production methods that led to a confirmed savings of 1.6M Euro (21%).

It definitely helps to know your expected production costs aPriori!

When we last covered aPriori in 2007 and 2008 in aPriori and The Sourcing Maniacs 2008 Vendor Tour Part III, they were very focussed on Enterprise Cost Management (ECM) and taking cost out of the design phase. Fast-forward six years later, and nothing has changed, except, of course, the depth, breadth, and usability of their platform — which has grown in leaps and bounds.

Unlike traditional sourcing applications, including advanced spend analysis and decision optimization, that are limited to component cost-based should-cost models, aPriori can also factor in design and production factors to model the full production cycle of the part you are buying (if it’s metal, plastic, or, in some cases, electronics-based) and give you a true understanding of what the part should cost to make. The reality is that the cost of a part is dependent not only on its design, but on the production process employed. As noted in our first post, 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. Since the aPriori application instantly and directly interfaces with your CAD program and interrogates the solid model to extract the geometric cost drivers, the aPriori application can 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 factory set-up selected, and the exact routing and machines used. This is because the aPriori application currently supports over 200 out-of-the-box process models in over 12 major process groups (including, but not limited to, Bar & Tube Fabrication, Casting, Forging, Machining, Plastic Moulding, Powder Metal, Roto & Blow Moulding, Sheet Metal Sheet Plastic, Stock Machining and Rapid Prototyping.

In addition, because the application supports the creation of complete VPEs (Virtual Production Environments) that encapsulate the production processes, a customer can fully model the production and overhead costs associated with each production process supported by a factory in question, including local labour, power, maintenance, and other overhead costs to create a fully accurate should-cost production model, which can be compared to alternate production processes in the factory and other factories modeled with an appropriate VPE. This allows for the true identification of the lowest cost because, as the Sourcing Maniacs documented in their vendor tour post, the COGS is a combination of raw material costs, labor costs, production overhead costs, and margin and these costs not only vary by locale and production process, but in their interaction. For example, just because you identify three ways to make a part and each requires three steps, this doesn’t mean that each process is going to be roughly equal in cost. Not only do different processes require different amounts of manpower or energy (for energy-intensive equipment like lasers, etc.), but reordering the steps can change the manpower or energy required in subsequent steps.

Let’s take, for example, the production of the main Frame sides and door for a piece of heavy machinery construction equipment. An aPriori customer was cutting the entire frame using a laser process. While this seemed efficient, as only one piece of machinery was required, cutting the entire frame and door using a laser cost them 75.54 per frame and door combination, and they required over 14,000 of these combinations a year. That’s over a million dollars on just one part! If, however, as discovered by aPriori who analyzed the geometry and ran it through every possible production process that was available to the manufacturer, they switched to a two-stage production process that involved an initial laser cutting of the frame and door followed by an NC Punch process to punch out the internal cavities, the time required to produce a single frame and door combination decreased by 14 minutes and the cost decreased by 56% to 33.29 (as laser cutting is expensive compared to NC punch).

So what’s new with aPriori? Come back for Part II.