73% of manufacturers don’t know cost of product change
1 min read
A full third of ‘build-to-order’ and ‘engineer-to-order’ manufacturers don’t know how much it costs to produce customised products – and 73% don’t know the cost of engineering change orders.
Those are the figures from a report (Best Practices: Mass Customization and Build-to-Order Manufacturing) released yesterday by software developer Cincom Systems, which specialises in the field.
“Manufacturers that cannot determine the cost of customised products take a huge risk in taking orders that may not be profitable,” comments Jim Wilson, Cincom programme director and author of the report. “More importantly, without understanding the cost of selling, it is difficult to make strategic decisions regarding product mix and target customer segments.”
Despite the lack of cost information, more than half Cincom’s survey respondents believe that they have the ability to charge a 10% or higher premium with a product customisation strategy.
Interestingly, while 73% of respondents see product customisation as critical for products sold at more than $100,000, 25% also see them as critical for products under $1,000. Why? Because, as building simple and high-volume products moves offshore, western manufacturing industry is left with the more complex products – and that trend is set to continue.
Fully 63% have seen requests for customised products increase in demand over the last five years, and 26% anticipate that the growth rate will be between 25% and 50% in the next two years.
