Business Processes
Information Technology

Engineering/Business Process Management

A product's cost consists of direct and indirect (aka ‘structural’ or ‘overhead’) costs. In an engineered product company, the latter cost includes sales, customer service, administration, engineering, design & analysis, quality control, testing, rework, warranty etc. For its product, the greater part of the cost comes from its indirect component. For example, in the US manufacturing sector, this cost may be 1 to 5 times its direct counterpart, depending upon the industry.

Over the last couple of decades, the manufacturing field has made significant strides in direct cost reductions due to steady improvements in productivity and quality.  The initiatives such as “Lean”, “Six-Sigma” and the like, have been very successful. In the recent years, such successes have been prompting many US businesses to bring back their production from low-cost overseas countries.  However, the organizations such as the Manufacturing Institute and the like, caution that US structural costs are 20 percent higher than that of its major competitors. Without this cost disadvantage, the United States would be a lower-cost platform for manufacturing than all of its major trading partners except China, Mexico and Taiwan.

Hence, it is quite obvious that a product cost can now be significantly reduced only by controlling its indirect component which is in turn possible mainly thru’ associated process improvements.

Furthermore, a recent 2014 book e.g. Resource Revolution1 by McKinsey researchers says, “Companies that try to stick to the “old” 2% annual improvement solution are going to be obsolete quickly. Businesses that can deliver dramatic resource-productivity improvements at scale (about 10 to 15% annually) will become the great companies of the 21st century”. They talk about the next revolution employing five distinct approaches out of which three are comprehensively addressed by AdvEnSoft. These are Waste Elimination (thru’ greater process efficiency with its EPM solutions), Optimization and Virtualization (thru’ its virtual prototyping environment based on multiphysics, statistical simulations and analytics).

In the above back drop, as touched upon above, AdvEnSoft helps companies achieve substantial indirect product cost reductions thru’ its comprehensive & holistic Engineering Process Management (EPM) approach. EPM is similar to the Business Process Management (BPM) principles but applied to workflows in engineering processes. However, typical engineering tasks are relatively more complex, do require specialized expertise and vary considerably from one company to another even in the similar space. 

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