Why Understand Costs vs. Just a Price?

July, 2021

Introductions

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Trainer – Edward Pretzel, President Collaborative Supply Chains

Trainer – Alam Noori, Director of Cost Engineering

President – Collaborative Supply Chains (Metro Detroit)

Cost Management Expert – Supply Chain Cost Modeling and Benchmarking (20 years)

BS Engineering - Manufacturing, Industrial & Operations (University of Michigan, Ann Arbor)

Cost Modeling / Lean Manufacturing / VAVE

- Supervisor Supplier Cost Engineering – General Motors / Toyota

- Global Cost Engineering Manager - Lear

- Senior Global Cost Engineering Manager – TRW

- Global Director Cost Engineering – Dana

- Vice Pres. Cost Eng. - APD (Advanced Purchasing Dynamics)

- President – Collaborative Supply Chains

2000 factories cost modeled, 200,000 parts analyzed & optimized(US, Mexico, China, Korea, Thailand, Taiwan, Malaysia, W-EU, E-EU, Brazil, Canada, India)

Teacher Speaker

Edward Pretzel - Bio

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Speaking Events –We are experts with Cost Engineering and Optimization of Supply Chains

Alam Noori - BioEducational Qualification : B.E. (Mechanical), College : YCCE, Nagpur University, INDIA

Other Certification : PGDMM (IGNOU), Six Sigma - Green Belt certified

Exposure : Global Region - Australia, USA, China, Thailand, S. Africa, Mexico, Korea.

: Manufacturing Plants - 300+ Supplier locations globally

: Tool Sets – Cost Modeling, VAVE, Value Stream Mapping, Benchmark Lab

Expertise : Cost Engineering, Purchase, QA, Supplier Quality & Development

Experience : 26+ years of manufacturing industry experience (globally)

Current Profile : Director Cost Engineering at Collaborative Supply Chain (Metro Detroit)

Clients

Past Portfolio :

Harley Davidson : Global Supplier Development (5 Years)

: Key Function – Supplier Research, Identify, Assess & approve suppliers,Cost Driver Benchmark & Cost Modeling, APQP, Witness PPAP, Developand manage supplier till global launch.

Pawan & Garway Industry : Plant Manager – Forging & Machining ( 2 Year)

General Motors : Global Supplier Development/Quality (5 Years)

: Key Function – Support various launch at various global location. Supportglobal GM plant for smooth launch from quality and quantity standpoint.On site manage and develop critical supplier.

Metaldyne India : Purchase Director & Management Representative for Quality System: Key Function – Identify and develop supplier. Techno Commercial

negotiation with Suppliers. Identification and development of newsuppliers with cost saving targets. Manage supply chain. Develop andsustain plant quality system.

Hindusthan Malleables : Quality Assurance – Casting & Machining ( 4 Years)5

President – C

President, Founder Edward Pretzel

Cost Management Expert Supply Chain Cost Modeling

Locations Detroit, Michigan USA

CUSTOMERS

COST ENGINEERING RESOURCES = Mechanical, Industrial, Chemical, Electrical

2000+ factories cost modeled open book, 200,000 parts analyzed & optimized(US, Mexico, China, Korea, Thailand, Taiwan, Malaysia, W-EU, E-EU, Brazil, Canada, India)

Teach Conference Speaker on Cost Modeling in Supply Chains

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Company Background

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Cost Engineering Support

Supply Chain Management- Cost Modeling & Cost Engineering- Cost Management

- Current Production- Future Product Sourcing- Price Increase Management- Engineering Change Management

- Strategic Supplier Programs- Supplier Searches- Sourcing and RFQ- Commodity Risk Assessment (Geo Political China US)- Supplier Development

- APQP- PPAP

Engineering and Product Development- Design Optimization and Evaluation- VAVE- DFM (design for manufacturing)- Design to Cost- Engineering Change Price Management

Sales and Business Development- BOM development and Optimization- Quotation Costing Tools

Operations- Make vs Buy Analysis (with focus on cost driver and

operations benchmarking)

Our Resources- 100% degreed Engineers- Mechanical Engineers- Chemical Engineers- Electrical Engineers- Manufacturing Engineers- Industrial Engineers

Our Locations- Michigan- Florida- India- China

Industries Served- Automotive- Medium and Heavy Truck- Electric Vehicles- Autonomous Vehicles- Locomotive- Aerospace - Airport- Food- Recreational Vehicles- Military- Agriculture and Off Highway

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Cost Engineering Support for SCMStrategy – Apply Should Be Cost Models to Identify Waste & Drive Data Driven Negotiations

Goals- Identify Waste and Savings within Suppliers manufacturing processes & materials- Help buyers quickly become experts on cost drivers and cost benchmarks- Transition price based negotiations to cost based negotiations

Commodity Cost Models (all regions of the world)- Metals (stampings, forgings, castings, machining, fabrication, powdered metal, etc.)- Plastics and Rubber- Electrical (Wire Harnesses, PCBA, connectors, terminals, grommets, etc.)- Electric-Mechanical Assemblies (motors, solenoids, sensors, actuators, etc.)- US, Mexico, China, India, Korea, EU, Brazil

Costing Application- Current Production Savings- Future Product Development and Sourcing- Sales Support- Engineering Changes, Volume Changes- Price Increase Requests- Low, medium, high volumes- US, China, Mexico, W. EU, E. EU, India, S. Korea, Vietnam- Tear Downs with Forensic Cost Studies (when you do not own the designs)

Key Enablers- Provide Buyer Training and Support- We work with suppliers in a collaborative manner to identify waste- We bring in engineering resources to immediately launch the process- We bring instant credibility, WE KNOW COSTS!

COSTING TOOLS

COST BASED NEGOTIATIONS

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ROI - Real World Impact with Cost Models

Customer A- OEM, Sales of $600M- Automotive, Recreation Vehicles, Military- Incremental Savings Per Year = $1.5M - $2M- Reduced Market Pricing 10%-20%- Cost Modeling Experience = NO- Improve Ability to Win New Business, Fast Turn Around

Customer B- OEM, Sales of $60B- Agriculture, Forestry, Mining Equipment- Incremental Savings Per Year = $3-7M- Reduced Market Pricing 7-15%- Cost Modeling Experience = YES- Transition Suppliers to Open Book

Customer C- OEM, Sales $4B- Construction Equipment- Incremental Savings Per Year = $3-5M- Reduced Market Pricing 10-15%- Experience with Cost Modeling = NO

Commodity Cost Models- Wire harnesses- Fuel System- Sensors- Actuators & Solenoids- Plastics - Castings- Forgings & Machining- Metal Fabrications & Assemblies

- Wire Harnesses- Hydraulic Hoses- Metal Fabrications & Assemblies- Kitting, Assembly and Warehousing- Bearings- Coatings- Augers- Springs- Air Filtration Systems- Formed Tube Assemblies

- Metal Fabrications & Assemblies- Castings & Machining- Wire Harnesses- PCBA (printed circuit board asm.)- Hoses- Plastics

Format & Agenda

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Agenda:Class

- Introductions Ed 10 min

- Why understand the basics of costing? Ed 20 min- Basics of Costing - Alam 40 min- Break 20 min- Cost Model Types & Examples Alam 20 min- Costing Example on a Fab part, Stamping part Alam 40 min- Break 20 min- Cost Based Negotiations Ed 60 min- Testing & Certification Process Ed 10 min= 4 hours

Power points + Lecture

Online Test + Certification that will be downloaded on our new website COSTING EXPERT.COM

Certification

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20 question test = certification with levels

Why Understand Costs

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Why Understand Costs

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1. Transition from Benchmarking Price to Benchmarking Cost Drivers and Price

2. Begin to set standards for your repeat purchases

3. Standardize what seems like one off purchases but are actually repeat purchases (example is electrical building repairs)

4. Stronger Financial Performance for SCM and Magna Operations

5. Lower Cost Structures for Magna = More Profits, More Sales = Better Future

Price vs. Cost Based Negotiations

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Cost Based Negotiations

$33$36

$26

$33$36

$31

Basic Cost Formula

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Cost = Rate x Usage

• Let’s brainstorm examples

• Direct• Indirect

Direct vs. Indirect

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What is the difference between Direct and Indirect?

They look a little different but really they are the same

Direct vs. Indirect

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Does Costing Knowledge Apply to Direct and Indirect?

Format & Agenda

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Agenda:Class

- Introductions Ed 10 min

- Why understand the basics of costing? Ed 20 min- Basics of Costing - Alam 40 min- Break 20 min- Cost Model Types & Examples Alam 20 min- Costing Example on a Fab part, Stamping part Alam 40 min- Break 20 min- Cost Based Negotiations Ed 60 min- Testing & Certification Process Ed 10 min= 4 hours

Power points + Lecture

Online Test + Certification that will be downloaded on our new website COSTING EXPERT.COM