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“How can I create a budget for this project?” That’s a question that manufacturing companies have been asking themselves for a long time – especially when they’re developing something brand new.

Perhaps just as importantly, how can this budget be developed and shared in a collaborative process with stakeholders and contributors potentially located across the country and around the world?

Prices of raw materials commodities are continuing to rise in this economy. Most of you have probably seen in the news how the price of gold is at an all-time high. What you may not have seen is that the prices of other raw material commodities such as palladium and titanium have also recently surged. These price spikes in raw materials have caused manufacturers to consider alternative materials for their production process, as well as smaller, more rapid delivery cycles to minimize costs and risk. However, these cost and risk mitigation actions are themselves inherently risky without the right tools and processes in place.
One example of how these risks are manifested relates to raw material procurement. The desire to consider alternative raw materials for production implies a multi-sourcing approach. The reason for this is that sourcing from multiple suppliers will more likely ensure that the range or alternate materials will be available when required to satisfy customer demand. And also it’s less likely that a single source could supply all the potential alternate materials needed. With this multi-source option, all the complexities inherent in managing delivery chains, such as monitoring due dates, managing change orders, monitoring vendor quality standards, to name just a few, are now multiplied.
Another inherent added complexity is the product design and development process. Potentially using multiple substitute materials for a product implies all the design and development work to ensure that these alternate materials function properly and within agreed specifications for the product performance. And, as the author points out, regulatory requirements can add even more complications to the process.
Managing all this additional complexity would be impossible unless the manufacturer has the right technology strategy in place for their PLM and ERP software.
Do you have the right tools to manage the implications for raw material procurement and product design in this rapidly changing environment? Talk to eLogic, we can help…

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