Professional tools are advancing at a breakneck pace. It may be hard to keep up with all the new tools out there, but some of them are especially worthy of attention. Product cost management software is one of the things that your company should be sure to utilize.
There are numerous reasons for this. Keeping track of costs has always been extremely complicated. Companies’ having to do this manually on spreadsheets was time-consuming, laborious, and extremely error-prone. In the sections below, we will explain in detail the benefits that this software provides, and the specific components that it includes.
What is product cost management software?
We should start by defining what exactly product cost management software is. Product cost management software is software that uses cost modeling estimates to help manufacturers create more economically viable products. The primary purpose of this software is to assist manufacturers in increasing their profitability through lower production costs.
Product cost management vendors use these models to estimate costs, manage bills of materials (BOMs), producing reports, and analyzing different types of cost-reduction scenarios through the use of 3D CAD models.
What functions does product cost management software and product lifecycle manufacturing software fulfill?
The first thing that most business leaders will want to know is what exactly can be done with this software. Let’s take a look at specific functions that it can fulfill.
- The ability to compare design options. Comparing designs is something that you can do anyway, of course, but PCM software allows you to make precise calculations of cost-effectiveness and sale feasibility at a granular level and compare minute design changes with a high degree of accuracy.
- The ability to conduct cost simulation scenarios according to many different parameters. This includes manufacturing technologies, materials, suppliers, and even different markets.
- Different types of value analysis. Products can have value in different ways. Some can have particular value for specific demographics, others can be valuable in comparison to similar products. With PCM software, you can conduct whatever analyses you need for your specific sales goals and come up with precise, accurate information.
- Procurement assistance. PCM tools can assist procurement departments in determining the exact amounts that they need to order for parts and necessary components. While people themselves can conduct inventory assessments with reasonable proficiency, it can be very time consuming and there is always a possibility of human error.
- Collaboration assistance. Running a successful business means effectively creating links between both functions and suppliers. PCM software can assist with creating these collaborative links to make communication and supply chains more effective.
- Cost-volume-profit analysis. To optimize cost expenditure and assist in strategic cost management, you need to get accurate cost-volume-profit numbers. This measures how changes in fixed and variable costs will impact your company’s profit levels. CVP analyses can tell you how many units you need to sell to break even or maximize your profit margin.
Like any software, different programs will have different degrees of sophistication with regard to these capabilities, so it will be worth your while to familiarize yourself with all of them. For example, Openbom is one of the best on the market.
Benefits of PCM software
The benefits of PCM software are too numerous to mention in one article, but we will provide a summary of some of the biggest ones. They include:
- Cost control. As the name suggests, you can do a great achieve cost reduction if you have more accurate numbers to deal with. With PCM software, you can adjust various aspect of your product line creation to keep costs under control and maximize profit.
- Resource optimization. You might not be utilizing your resources as effectively as possible, and minor adjustments in strategy could make a major change for you. PCM software will put the numbers right up in front of you and show you where you might need to cut costs or redistribute your resources for maximum efficiency.
- Increased scalability. You want your business to grow over time, of course, and it can be difficult to project future costs in procurement and the manufacturing process when your operation is still small. With PCM software, you can conduct cost engineering by putting in projected numbers of products, parts, or other aspects of your operation and come out with accurate estimates for actual costs in the future.
- Improved customer engagement. When you have your product costs under control, it frees you to focus on more important matters such as customer engagement. And with PCM software, you get a better sense of what exactly your costs are and you can relay this information to customers, giving them greater satisfaction that they are paying the right cost for the products they get.
- Greater profit margins. Naturally, when you have all your numbers lined up and a clear idea of what you need to accomplish your sales goals, you will have a much greater chance of achieving them. With PCM software, you can plan and execute your sales strategies with confidence, knowing there is a clear path to achieving your goals.
For all these reasons, the PCM market is booming, and it shows no signs of slowing down. In fact, the market is set to surpass 350 million USD by 2031, which is nearly a 10% annual growth. Businesses that want to get ahead are all getting on board.
Well worth the investment
If you are in the business of manufacturing products, it pays to invest in product cost management software. With it, you can get a much better sense of all the costs involved in production, what types of adjustments you need to make to optimize the processes and resources involved, and ultimately maximize your profit. Make the move today so that you can start to watch your sales grow fast.
Frequently asked questions:
- Does product cost management software apply to businesses of different sizes?
Yes. You can get software to suit everything from small businesses to enterprise resource planning level programs.
- I have an unusual product line. Will the software be able to make sense of my product?
As long as you have the numbers to fill into the system, the software can make analyses of any type of products.
- Can the software be used by multiple users at once?
Yes. If you purchase the right version of the software, it can be used by unlimited numbers of people in different locations simultaneously.
- Can I upgrade the version I purchase, depending on changing needs?
There are different versions available for different purposes. You can upgrade as you need.
