ZBECost Optimization Overview.pptVIP

Cost Optimization OverviewZero Based Estimates (ZBE) Zero Based Estimates Zero based estimate Absolute piece price estimate developed using best-in-class manufacturing processes – does not necessarily use same process as supplier Composed of total manufacturing cost plus bottom line mark-ups Cost Estimate Diagram Mark-Ups  Commodity specific mark-ups were published by Ford Purchasing in 2004 and are reflected in ZBEs End item scrap: A good part that becomes damaged before use by the customer – max value is 0.7% SGA: Costs directly related to sale of the product (i.e. HR, Sales, Purchasing, IT, etc.) Profit: Return for investment risk Purchased parts: Mark-up percentages are lower due to less risk Zero Based / Adjusted Estimates * * * 3/31/2006 ZBE #30 CAPE (Computer Aided Parts Estimating) Ford Motor Company’s global cost estimating system Designed to evaluate best processes and optimal costs Access limited to Cost Analysts QWEST (Quick Web Estimating Software Tool) Tool for cost analysts and other departments Able to get quick estimates using a set of cost drivers Best-in-class tooling models Cost Optimization Tools What is a ZBE? Material Labor Burden Mfg Adjustments Mark-Ups Raw Material Purchased Parts Direct Labor Indirect Labor Fringe Benefits TOTAL LABOR TOTAL MFG COST Mfg Overhead In-Process Scrap TOTAL ESTIMATED PIECE COST SGA Profit Purchased Parts End Item Scrap Value Add