New Report Reveals that 73 Percent of Manufacturers Don’t Know Cost of Engineering Change Orders
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Manufacturing News, Source : The Manufacturer US
Published : 14 Jun 2007 22:11
CINCINNATI, Ohio - June 11, 2007 - Only 67 percent of build-to-order and engineer-to-order manufacturers know how much it costs to produce customized products, and 73 percent don’t know the cost of engineering change orders.
This is according to a research report released today by software maker Cincom Systems (www.cincom.com).
“Best Practices: Mass Customization and Build-to-Order Manufacturing” discusses the findings of the industry's first report - from an engineering perspective - on the state of mass customization and build-to-order practices.
“Manufacturers that cannot determine the cost of customized products take a huge risk in taking orders that may not be profitable. More importantly, without understanding the cost of selling, it is difficult to make strategic decisions regarding product mix and target customer segments,” writes Jim Wilson, Cincom Program Director and author of the report.
Increasing revenue with product customization
Despite the lack of cost information, more than half of the survey respondents believe that they have the ability to charge a 10 percent or higher premium with a product customization strategy. While 73 percent of total respondents see product customization as critical for products over $100,000, 25 percent also see them as critical for products under $1,000.
As the building of simple/high-volume products moves offshore, the U.S. manufacturing industry is left with manufacturing very highly complex products. This trend is evident in the numbers. Most engineers (63 percent) have seen requests for customized products increase in demand over the last five years, and 26 percent anticipate that the growth rate will be between 25 percent and 50 percent in the next two years.
Cincom Systems targeted the survey at senior engineering managers at 900 manufacturers of complex industrial, electrical, and transportation equipment and systems between January and February 2007.
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