Automotive - Comparative Study

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1

Cost as a Business Driver
Cost Estimating Comparative Study
The Automotive Angle

Terry Griggs and Bill Ewin
- Ford Motor Company

Cost as a Business Driver – ACostE EMC Learning Event
Terry Griggs – Ford Motor Company

2
Content



Introduction and Overview



Estimating Methodology



Tools and Databases



Component Costing

Cost as a Business Driver – ACostE EMC Learning Event
Terry Griggs – Ford Motor Company

3
Introduction and Overview

Cost as a Business Driver – ACostE EMC Learning Event
Terry Griggs – Ford Motor Company

4
Introduction and Overview
Ford

JLR

• UK

• UK

• Germany

Aston Martin

• Spain

• UK

• North America

Volvo

• Mexico

• Sweden

• Australia
• South Africa
• India
Cost as a Business Driver – ACostE EMC Learning Event
Terry Griggs – Ford Motor Company

5
Introduction and Overview

Manufacturing

Engineering

Purchasing

Finance
PD-Finance
TVM-Finance

Cost
Estimating

Cost as a Business Driver – ACostE EMC Learning Event
Terry Griggs – Ford Motor Company

6
Introduction and Overview

Roles and Responsibilities
The Cost Estimator develops estimates of piece cost
and tooling cost for both present and forward model
components purchased by Ford from suppliers.

Cost as a Business Driver – ACostE EMC Learning Event
Terry Griggs – Ford Motor Company

7
Introduction and Overview

Roles and Responsibilities
• Strategy Costing

• Establish Gap to Benchmark

• Target Setting and
Agreements

• Supplier Negotiations

• Change Control

• Competitive Teardown
Analysis

• Launch Team

• Cost Requests

Cost as a Business Driver – ACostE EMC Learning Event
Terry Griggs – Ford Motor Company

8
Estimating Methodologies

Activity Based Costing


In estimating the cost of a part the estimator defines the
individual manufacturing processes used to produce the part

Each process step is defined in terms of the
machine employed
• Each machine in the process has been studied
with respect to the amount of burden it creates
and the total burden of the product is the sum of
all the individual machine burdens


Cost as a Business Driver – ACostE EMC Learning Event
Terry Griggs – Ford Motor Company

9
Estimating Methodologies

Activity Based Costing
• There are two major elements contained within
burdens:- Labour
- Assets
• Ford Cost Estimating uses a ‘Combined Labour’ cost
within an estimate. This is to recover the cost of direct
labour, indirect labour and fringe costs

• Asset costs comprise of the owned machines,
buildings and facilities required for manufacturing
Cost as a Business Driver – ACostE EMC Learning Event
Terry Griggs – Ford Motor Company

10
Estimating Methodologies

Zero-Based Estimates (ZBE)
ZBE is a Target cost for the supplier to
achieve through the evaluation of existing
cost structures and improvements in
manufacturing operations.

Cost as a Business Driver – ACostE EMC Learning Event
Terry Griggs – Ford Motor Company

11
Estimating Methodologies

Zero-Based Estimates (ZBE)
• Actual production location
• Best and most efficient process to manufacture the part using
optimum machine type and size
• Fully lean production facility with maximum possible utilisation,
no WIP and minimum scrap
• Ex-works conditions
• Ford defined Labour and Machine rates and Ford General
Mark-Ups
• Labour and machine rates are based on researched data and
represent average conditions
• Mark-Ups derived from global studies into automotive supplier
accounts
Cost as a Business Driver – ACostE EMC Learning Event
Terry Griggs – Ford Motor Company

12
Tools and Databases

Systems & Data Bases
• CAPE (Computer Aided Parts Estimating)
• GRIMM (Global Rate Information - Material &
Machines)
• and ...
Experience

Cost as a Business Driver – ACostE EMC Learning Event
Terry Griggs – Ford Motor Company

13
Tools and Databases

CAPE
Computer Aided Parts Estimating (CAPE) is an
advanced knowledge based system designed to
evaluate best processes and optimal costs for the
manufacture of externally purchased parts worldwide.

Cost as a Business Driver – ACostE EMC Learning Event
Terry Griggs – Ford Motor Company

14
Tools and Databases

CAPE Expert Modules










Metal Stamping
Plastic Injection Moulding
Rubber Moulding
Pressure Die Casting
Tube Manipulation
Welding
Assembly
Wiring
Clean Sheet

Cost as a Business Driver – ACostE EMC Learning Event
Terry Griggs – Ford Motor Company

15
Tools and Databases

CAPE Assumptions










Assumes raw materials are purchased at high volumes, net of rebates
and incentives
Direct labour is graded appropriately to match the skill level required for
individual cost elements performed
Capital equipment is chosen to exactly satisfy part requirements without
exceeding them
Capital is funded directly from the supplier company profits and not from
a commercial bank loan
Cycle times use state-of-the-art technology
100% equipment up-time except for normal maintenance
Zero excess capacity
Scrap costs are not cumulative
Floor space is fully capacitised

Cost as a Business Driver – ACostE EMC Learning Event
Terry Griggs – Ford Motor Company

16
Tools and Databases

GRIMM Database
Global Rates Information Machines and Materials
(GRIMM) the global DB2 mainframe system used to store
material prices, labour rates and burden values.

Cost as a Business Driver – ACostE EMC Learning Event
Terry Griggs – Ford Motor Company

17
Tools and Databases

GRIMM Database







Direct and Indirect Labour and Fringe Benefits
Multiple Industry Types and Skill Levels
Over 1300 different machines and supporting
data
Nearly 3000 Materials
Over 7000 Standard Bought Out Parts
… for all supported countries

Cost as a Business Driver – ACostE EMC Learning Event
Terry Griggs – Ford Motor Company

18
Tools and Databases

GRIMM Database
Britain
Germany
Spain
France
Portugal
Italy
North America
Mexico
Maquiladoras
China
Cost as a Business Driver – ACostE EMC Learning Event
Terry Griggs – Ford Motor Company

Czech Republic
Poland
Hungary
Turkey
Slovakia
Slovenia
Romania
India
Sweden
Australia

Korea
South Africa

19

Introduction and
Overview

Utilities
Direct Labour
Labour
Indirect Labour
Fringe
Standard Parts

Estimated
Piece Price

End Item
Scrap

Manuf.
Cost

Material

Depreciation
Interest

Profit

Floorspace
Burden

Machine
Overheads
Indirect
Materials
Insurance
Utilities

Cost as a Business Driver – ACostE EMC Learning Event
Terry Griggs – Ford Motor Company

Holidays, Sickness,
Bonuses

Raw Material

SG&A

ED&T

Plant Supervision,
Plant Eng
Quality Control,
Health Dept,
Security, Canteen etc.

Clean & Special
Handling
Machine Maintenance
Tool Maintenance

20
Component Costing
1. How an Estimator
Creates Manufacturing
Detail

2. GRIMM Applies Cost
to Manuf. Detail

Raw Materials: Usage

ABS Resin:

$1.90/Kg

Purchased Parts: Usage

Fastener:

$.03/ea

Operation 1: Mold




Labor minutes (number of
direct laborers, cavities, &
cycle time)
Machine minutes (cavities &
cycle time)

Operation 2: Assembly




3. Calculate Manuf.
Cost Subtotals:
+ Raw Materials
+ Purchased Parts
+ Labor & Burden

500 Ton Inj. Molding Press: $0.89/min.
Direct Labor

$0.17

Depreciation: $0.15

Indirect Labor

0.13

Utilities:

0.04

Fringe

0.15

Floor Space:

0.03

MRO Labor

0.08

Other Burden: 0.14

Total Labor

$0.53

Total Burden: $0.36

Assembly:

4. Apply Markups
to Manuf. Cost:

$0.42/min.

+ Purch. Parts

Depreciation: $0.08

+ Scrap

Labor minutes (number of
direct laborers, cavities, &
cycle time)

Direct Labor
Indirect Labor

0.13

Utilities:

0.01

+ SG&A =

Machine minutes (cavities &
cycle time)

Fringe

0.06

Floor Space:

0.01

MRO Labor

0.04

Other Burden: 0.09

+ Profit

Total Labor

$0.23

Total Burden: $0.19

$0.00

Cost as a Business Driver – ACostE EMC Learning Event
Terry Griggs – Ford Motor Company

Total
Estimate

21
Component Costing

Cost as a Business Driver – ACostE EMC Learning Event
Terry Griggs – Ford Motor Company

22
Component Costing

Cost as a Business Driver – ACostE EMC Learning Event
Terry Griggs – Ford Motor Company

23
Component Costing
Focus C-Max
Wire Material

1,7 Km

Tape / Tube Material

329 m

Connectors

317

Terminals

1680

Seals

440

Eyelets

42

Fuses / Relays

32

Clips / Retainer

220

Cost as a Business Driver – ACostE EMC Learning Event
Terry Griggs – Ford Motor Company

24
Component Costing
1
Yearly Update

Continuous Update

2

Terminal &
Connector
Price

Machine
Data

Benchmarking
Data (e.g.
Materials, Clips,
Tape, Tube, etc)

Wiring
Loom Data
(Supplier/
Ford)

GRIMM

EDGS/C3P Wiring
Loom Data

Non Standard Parts

3

Update 1-3 days

Overnight Update

CAPE Wiring Estimating
Data

Final Wiring
Estimate
(local
condition)

Cost as a Business Driver – ACostE EMC Learning Event
Terry Griggs – Ford Motor Company

Wiring Loom
Data
(Supplier)

Manual
Estimating
Modification

25
Component Costing

Global Rates
Machines and
Materials Database
Includes all machine,
materials and
standard
components (i.e.
Connectors,
Terminals) including
cost information

Cost as a Business Driver – ACostE EMC Learning Event
Terry Griggs – Ford Motor Company

26
Component Costing

EDGS / C3P Data
imported
All components and
materials are captured in
the import file for
downloading to CAPE

Cost as a Business Driver – ACostE EMC Learning Event
Terry Griggs – Ford Motor Company

AA
CC
CC
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CC
CC
CC
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DD
DD
DD
DD
DD
DD
EE

3M5T-14K733-JF
M ##
1 A/RSM3G-4603A2 A/RSKM3-G9513-A
3 A/RSKM3-G9513-A
4 A/RS95G-G14K02-4AA
5 A/RSM3G-4616A6613598AG-14A199-AA
7238098AG-14A199-GA
14 69098AG-14A199-EA
15 92098AG-14A199-KA
16 105* RE-SIN R-IBBON
17 13M5T-14A076-AB
18 13M5T-14A142-AB
19 13M5T-14A076-BB
20 13M5T-14A034-AB
21 33M5T-14474-GAA
22 143M5T-14474-GBA
134 13M5T-14489-TAA
183 101L3T-14A094-FA
184 21L3T-14A094-GA
185 13M5T-14A067-BB
4-EC2GY-RD 0,5 WK 1345 -4-PB9GY-VT 0,5 WK 2180 -15S-RD15DGN-OG 2,5 WK 960 -49S-LG11ABU-OG 0,75 WK 1520 -49S-LG18ABU
0,75 WK 480 -50-BB16_AGY-BK 1,5 WK 2130 -CRCR DATE 03/01/24
EE00-E-1

TapeTape (9mmx25m)
TapePaper tape
TapePaper tape
TapeTape
TapeTape
TubeID5 Conv tube 130°C
TubeID12.9 Conv tube 130°C
TubeID10.1 Conv tube 130°C
TubeID16.8 Conv tube 130°C
Other80X45 RIBBON/OUT
OtherUpper Cover
OtherLower Cover
OtherCover Midi Fuses
OtherABS Fuseholder
TerminalTerminal f 2.8
Terminal2.8 cbt 0.75-1.00 SN
ConnectorCF 1Pos NWP LSK 8.0
OtherFuse Mini 10A RD
OtherFuse Mini 15A BU
ConnectorBJB Frame (high assem
------1449615 -000-

27
Component Costing
Upload of Cape Estimate
with Grimm and EDGS /
C3P data
Manual Update of:
- Missing components
- Circuit twisting
- Wire single seal assembly
- Splicing & Terminal
insulation
- Terminal Insertion
- Taping & Tubing
- etc.
Cost as a Business Driver – ACostE EMC Learning Event
Terry Griggs – Ford Motor Company

28
Component Costing

Cost as a Business Driver – ACostE EMC Learning Event
Terry Griggs – Ford Motor Company

29
Component Costing

Cost as a Business Driver – ACostE EMC Learning Event
Terry Griggs – Ford Motor Company

30
Component Costing
Application of Mark-Ups
• Scrap
• SG&A
• Profit
• ED&T

Cost as a Business Driver – ACostE EMC Learning Event
Terry Griggs – Ford Motor Company

31
Component Costing
Focus C-Max Cost Breakdown
Material Cost:

€ 232.52

Labor Cost:
Machine Cost:

€ 53.55
€ 20.35

Scrap:
SG&A:
Profit:
R&D:

€ 3.85
€ 35.96
€ 25.93
€ 12.95

Total Estimate

€ 385.11

Labor Minutes:

594.39 min

Cost as a Business Driver – ACostE EMC Learning Event
Terry Griggs – Ford Motor Company

32
Content



Introduction and Overview



Estimating Methodology



Tools and Databases



Component Costing

Cost as a Business Driver – ACostE EMC Learning Event
Terry Griggs – Ford Motor Company

33
Questions

Questions ?

Cost as a Business Driver – ACostE EMC Learning Event
Terry Griggs – Ford Motor Company

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