Blog | | by Julia

Cost intransparency of sheet metal parts

The production of sheet metal parts is an essential part of many industrial processes. However, seemingly simple sheet metal products often conceal a complex set of costs that are not always obvious. The world of costing is therefore often a challenge, especially when it comes to accounting for hidden costs in the part itself and throughout the value creation process.

In the following, we discuss common problems of cost intransparency and their impact on companies in the sheet metal processing industry, as well as possible solutions.

Material purchasing and fluctuations

A significant part of the cost intransparency of sheet metal parts results from fluctuations in material prices. Design and manufacturing companies are often confronted with unpredictable price fluctuations for raw materials, which makes accurate costing difficult. The lack of transparent pricing structures on the part of suppliers can lead to financial uncertainty and have a significant impact on the overall cost of the project.

Possible solution: Implementing long-term agreements with suppliers and using technology to monitor material prices in real time can help to better control costs and make them more transparent.

Product development

70% of the total cost of a product is already determined in the development phase. An inaccurate estimation of costs and a lack of standardization in materials, manufacturing processes and other parameters can lead to budget overruns. In addition, a lack of communication between the various departments (development, production & purchasing) results in misunderstandings and incorrect assumptions.

Possible solution: By using automated cost calculations, designers can identify potential cost drivers as early as the product development process. The individual cost factors, such as material, scrap and manufacturing processes (laser cutting, sheet metal bending and welding), are thus revealed and adjustments for cost optimization can be made right at the start of the sheet metal process chain. Parts can be manufactured up to 20-30% more cost-efficiently through design optimization. The choice of material and production method also influence the overall costs of the part.

Hidden production costs

The production of sheet metal parts often involves hidden costs that are not immediately apparent. These include, for example, costs for special tools, set-up times and quality controls. If these factors are not carefully considered, they can significantly increase the overall costs.

Possible solution: A detailed analysis of production processes, the identification of efficiency improvements and investment in modern production technologies can help to minimize hidden production costs.

Discrepancies between departments

If different departments within a company do not have clear information on the cost of sheet metal parts, this can affect the efficiency of processes. Decisions may not be made on the basis of complete information. The resulting need for coordination between departments, including purchasing, production, controlling and quality control, can lead to increased administrative effort and inefficient processes.

Possible solution: To overcome these challenges, improved communication between departments, the implementation of transparent cost analyses and the use of technologies for shared data management are important. For example, the introduction of a calculation tool that can be used across departments can provide a comprehensive view of the cost factors of sheet metal parts.

Logistics and transportation

The lack of cost transparency often extends to the logistics and transportation of sheet metal parts. Unclear shipping costs, customs duties and delivery times can have a significant impact on the overall costs of a project and lead to unpleasant surprises.

Possible solution: Working with reliable logistics partners who offer clear cost structures can help to improve transparency in the area of transportation and logistics.

 

Conclusion

The lack of cost transparency in sheet metal parts is a challenge that many companies face. To be successful, it is crucial to identify and understand these cost sources and take effective measures to improve transparency. By working with trusted suppliers, investing in modern technology and closely analyzing production processes, companies can help minimize hidden costs and remain competitive in the long term. Thus, the introduction of a cross-departmental calculation tool for sheet metal parts is more than just an investment in software. It is a strategic step towards greater cost transparency, efficiency and collaboration across all areas of the business. By taking advantage of this tool, companies can not only minimize the hidden costs of sheet metal fabrication projects, but also optimize their entire value chain.

To take the first step towards cost transparency, this blog post might be interesting for you. Click here to learn more.

Written by

Julia Kleindienst

Marketing & Sales Specialist

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