Increase profitability by taking control of procurement costs

By Robert_Hidajat

When procuring a part, it is important for procurement officers to understand the supplier’s costs, their material costs, manufacturing costs, machine rates, labor and burden costs, etc. This wealth ofinformation provides a foundation for procurement officers to judge if the price quoted by the supplier is realistic, improving their negotiating position and allowing them to take control of procurement costs.

Teamcenter Product Cost Management

Unfortunately, obtaining these information is not easy, the efforts required to gather these information varies from one industry to another. In automotive, mechanical engineering or aerospace for example, it is especially difficult because a large portion of the purchasing budget applies to complex systems and assemblies. Another factor affecting costs is the lack of viable supplier choices, because only a few suppliers are able to produce such complex parts.

Traditional methods for cost analysis are based on stale and anecdotal after-the-fact data. Teamcenter Product Cost Management allows you leverage the same product lifecycle management (PLM) system you use to manage product development to predict and control product costs using data such as geometry, materials selection, part volumes, assembly and product definition. Teamcenter also provides a common database for critical information such as labor rates and material costs so that they can be updated once with the most recent data and reflected across multiple cost models.

Teamcenter Product Cost Management efficiently and accurately calculates costs and prices of purchased components from various material groups by performing process-based “shadow calculation” and bottom-up validation of purchase prices. With Teamcenter Product Cost Management you can easily calculate target prices for project purchasing, perform price verification for series purchasing, compare costs across multiple production sites to determine the best-cost country to source from, and perform make-or-buy analyses.

By having more accurate cost models and knowing the cost composition of a product, its materials, manufacturing and overhead costs, you can take control of the procurement negotiation to arrive at the desired product costs and increase your profitability.

Visit our Teamcenter Product Cost Management page to learn more.

Emilia MaierA guest post by Emilia Maier, Teamcenter Product Marketing.

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This article first appeared on the Siemens Digital Industries Software blog at