U.S. patent application number 11/376928 was filed with the patent office on 2007-09-20 for systems and methods for forecasting demand for a subcomponent.
This patent application is currently assigned to Lucent Technologies Inc.. Invention is credited to Bassel H. Daoud, Christopher K. Wiese.
Application Number | 20070219661 11/376928 |
Document ID | / |
Family ID | 38518950 |
Filed Date | 2007-09-20 |
United States Patent
Application |
20070219661 |
Kind Code |
A1 |
Daoud; Bassel H. ; et
al. |
September 20, 2007 |
SYSTEMS AND METHODS FOR FORECASTING DEMAND FOR A SUBCOMPONENT
Abstract
Techniques for determining how to translate forecast sales data
of at least one configuration of assembled product into a forecast
schedule of subcomponents composing the assembled product is
described. To this end, forecast sales data of at least one
configuration of assembled product is received. Usage factors of a
plurality of subcomponents composing the assembled product are also
received. Each usage factor corresponds to the at least one
configuration of assembled product. The forecast schedule of
subcomponents composing the assembled product is then composed by
applying the usage factors of the plurality of subcomponents to the
forecast sales data of at least one configuration of assembled
product wherein the forecast schedule includes demand for the
subcomponents over time.
Inventors: |
Daoud; Bassel H.;
(Parsippany, NJ) ; Wiese; Christopher K.; (Long
Valley, NJ) |
Correspondence
Address: |
PRIEST & GOLDSTEIN, PLLC
5015 SOUTHPARK DR
SUITE 230
DURHAM
NC
27713
US
|
Assignee: |
Lucent Technologies Inc.
Murray Hill
NJ
|
Family ID: |
38518950 |
Appl. No.: |
11/376928 |
Filed: |
March 16, 2006 |
Current U.S.
Class: |
700/107 |
Current CPC
Class: |
G06Q 30/0202 20130101;
G06Q 10/06 20130101; G06Q 10/04 20130101 |
Class at
Publication: |
700/107 ;
705/008 |
International
Class: |
G06F 19/00 20060101
G06F019/00 |
Claims
1. A computer implemented method for translating forecast sales
data of at least one configuration of an assembled product into a
forecast schedule for replacing a subcomponents utilized in the
assembled product, the method comprising: receiving forecast sales
data of at least one configuration of the assembled product;
receiving a usage factors of subcomponents utilized in the at least
one configuration of the assembled product wherein the
configuration of the assembled product comprises a configuration of
subcomponents; receiving a general availability date of a
replacement subcomponent indicating the date that the replacement
subcomponent is ready for assembly into the at least one
configuration of the assembled product; and composing a forecast
schedule for replacing the subcomponents utilized in the at least
one configuration of the assembled product by applying the usage
factor of the subcomponents and the general availability date of
the replacement subcomponent to the forecast sales data of the at
least one configuration of the assembled product, wherein the
forecast schedule includes demand for the subcomponents over time
and assembled product cost savings in using the replacement
subcomponent.
2. The computer implemented method of claim 1 wherein the step of
receiving forecast sales data of at least one configuration of the
assembled product is received continuously and wherein the forecast
schedule over time is correspondingly updated.
3. The computer implemented method of claim 1 further comprising:
adding a new configuration of the assembled product; and adding
additional usage factors for a plurality of subcomponents composing
the configurations of the assembled product, the additional usage
factors corresponding to the new configuration of the assembled
product, said forecast schedule over time automatically updated in
response to the newly added configuration.
4. The computer implemented method of claim 3 further comprising:
deleting one of the at least one configuration of the assembled
product, said forecast schedule over time automatically updated in
response to the deleted configuration.
5. The computer implemented method of claim 1 wherein the received
forecast sales data includes orders for the at least one
configuration of the assembled product resulting from a won
contract.
6. The computer implemented method of claim 1 wherein the received
forecast sales data includes orders for the at least one
configuration of the assembled product resulting from a lost
contract.
7. The computer implemented method of claim 1 wherein the at least
one configuration of the assembled product comprises two or more
configurations of the assembled product.
8. A computer readable medium whose contents cause a computer to
translate forecast sales data of at least one configuration of an
assembled product into a forecast schedule for replacing a
subcomponents utilized in the assembled product, by performing the
steps of: receiving forecast sales data of at least one
configuration of the assembled product; receiving a usage factor of
a subcomponents utilized in the at least one configuration of the
assembled product wherein the configuration of the assembled
product comprises a configuration of subcomponents; receiving a
general availability date of a replacement subcomponent indicating
the date that the replacement subcomponent is ready for assembly
into the at least one configuration of the assembled product; and
composing a forecast schedule for replacing the subcomponents
utilized in the at least one configuration of the assembled product
by applying the usage factors of the subcomponent and the general
availability date of the replacement subcomponent to the forecast
sales data of the at least one configuration of the assembled
product, wherein the forecast schedule includes demand for the
respective subcomponents over time and assembled product cost
savings in using the replacement subcomponent.
9. The computer readable medium of claim 8 wherein the step of
receiving forecast sales data of at least one configuration of the
assembled product is received continuously and wherein the forecast
schedule over time is correspondingly updated.
10. The computer readable medium of claim 8 further comprising:
adding a new configuration of the assembled product; and adding
additional usage factors for a plurality of subcomponents composing
the configurations of the assembled product, the additional usage
factors corresponding to the new configuration of the assembled
product, said forecast schedule over time automatically updated in
response to the newly added configuration.
11. The computer readable medium of claim 10 further comprising:
deleting one of the at least one configuration of the assembled
product, said forecast schedule over time automatically updated in
response to the deleted configuration.
12. The computer readable medium of claim 8 wherein the received
forecast sales data includes orders for at least one configuration
of the assembled product resulting from a won contract.
13. The computer readable medium of claim 8 wherein the received
forecast sales data includes orders for at least one configuration
of the assembled product resulting from a lost contract.
14. The computer readable medium of claim 8 wherein the at least
one configuration of the assembled product comprises two or more
configurations of the assembled product.
15. A system for translating forecast sales data of at least one
configuration of an assembled product into a forecast schedule for
replacing a subcomponents utilized in the assembled product, the
system comprising: means for receiving forecast sales data of at
least one configuration of the assembled product; means for a
receiving usage factor of a subcomponents utilized in the at least
one configuration of the assembled product wherein the
configuration of the assembled product comprises a configuration of
subcomponents; receiving a general availability date of a
replacement subcomponent indicating the date that the replacement
subcomponent is ready for assembly into the at least one
configuration of the assembled product; and means for composing a
forecast schedule for replacing the subcomponent utilized in the at
least one configuration of the assembled product by applying the
usage factor of the subcomponents and the general availability date
of the replacement subcomponent to the forecast sales data of the
at least one configuration of the assembled product, wherein the
forecast schedule includes demand for the subcomponent over time
and assembled product cost savings in using the replacement
subcomponent.
16. The system of claim 15 wherein the means for receiving forecast
sales data of at least one configuration of the assembled product
operates to receive continuously causing the forecast schedule over
time to be correspondingly updated.
17. The system of claim 15 further comprising: means for adding a
new configuration of the assembled product; and means for adding
additional usage factors for a plurality of subcomponents composing
the configurations of the assembled product, the additional usage
factors corresponding to the new configuration of the assembled
product, said forecast schedule over time being automatically
updated in response to the newly added configuration.
18. The system of claim 17 further comprising: means for deleting
one of the at least one configuration of the assembled product,
said forecast schedule over time being automatically updated in
response to the deleted configuration.
19. The system of claim 15 wherein the received forecast sales data
includes orders for the at least one configuration of the assembled
product resulting from a won contract.
20. The system of claim 15 wherein the received forecast sales data
includes orders for the at least one configuration of the assembled
product resulting from a lost contract.
Description
FIELD OF THE INVENTION
[0001] The present invention relates generally to improvements in
the field of project management, and, in particular, to systems and
methods for forecasting demand at a subcomponent level across at
least one configuration of an assembled product.
BACKGROUND OF THE INVENTION
[0002] Typically, the price at which an assembled product can be
sold drops rather quickly over the life time of the product. An
assembled product such as a telecommunication base station may
comprise many subcomponents. Furthermore, the telecommunication
base station may be sold in various configurations to meet customer
scaling requirements. Each configuration may include a different
quantitative mix of subcomponents. To be competitive in today's
global economy and maintain a consistent profit, a business
enterprise, which builds and sells the assembled product, needs to
manage the costs of these subcomponents.
[0003] Many times these subcomponents can be replaced by cheaper
subcomponent's due to technology advances, manufacturing
efficiency, and the like. Integrating new subcomponents into an
assembled product can prove costly depending on the new
subcomponents complexity. For example, a new subcomponent may
require additional software for it to operate in the assembled
product, a new wiring plan to electrically connect the new
subcomponent to the assembly, a new packaging plan for the
assembled product, and the like.
[0004] Since operating budgets of the business enterprise are
limited, how does the business enterprise decide which
subcomponents should be replaced? Out of the subcomponents chosen
to be replace, what goals should be used to determine a reasonable
price reduction target? Without any goals, how can allocating
development resources between projects defined by each new
subcomponent be justified? When would be the best time to introduce
an assembled product with one or more new subcomponents to minimize
stranded inventory and maximize savings? How does a business
enterprise measure the effectiveness of introducing the assembled
product with one or more new subcomponents? Conventionally,
management teams of the business enterprise introduce an assembled
product on an adhoc basis without being able to answer these and
other related questions, resulting in wasting time on replacing
subcomponents which do not affect the bottom line, increased
development costs, and shrinking profits, if any at all, remain
after introducing the new subcomponents.
SUMMARY OF THE INVENTION
[0005] Among its several aspects, the present invention recognizes
and addresses the need for computer implemented methods and
computer readable medium for translating forecast sales data of at
least one configuration of assembled product into a forecast
schedule of subcomponents composing the assembled product. To this
end, forecast sales data of at least one configuration of assembled
product is received. Usage factors of a plurality of subcomponents
composing the assembled product are also received. Each usage
factor corresponds to the at least one configuration of assembled
product. The forecast schedule of subcomponents composing the
assembled product is then composed by applying the usage factors of
the plurality of subcomponents to the forecast sales data of at
least one configuration of assembled product wherein the forecast
schedule includes demand for the subcomponents over time.
[0006] A more complete understanding of the present invention, as
well as further features and advantages of the invention, will be
apparent from the detailed description, the accompanying drawings,
and the claims.
BRIEF DESCRIPTION OF THE DRAWINGS
[0007] FIG. 1 shows an illustrative system employing a cost
reduction project management system in accordance with the present
invention.
[0008] FIG. 2 shows exemplary software components of and
interfacing to the cost reduction project management software 130
of FIG. 1 in accordance with the present invention.
[0009] FIGS. 3A and 3B (collectively FIG. 3) show a flow chart of
an overall method for managing cost reduction projects in
accordance with the present invention.
[0010] FIGS. 4A and 4B (collectively FIG. 4) show a flow chart of a
method for determining a best of the best assembled product
according to subcomponent costs and market based target costs in
accordance with the present invention.
[0011] FIG. 5 shows a flow chart of a method for determining
forecast schedule data for subcomponents common across one or more
assembled products in accordance with the present invention.
[0012] FIG. 6 shows a flow chart of a method for determining the
set of cost reduction projects to pursue in accordance with the
present invention.
[0013] FIG. 7 shows a flow chart of a method for extracting
additional overall cost savings by advancing the general
availability (GA) date of high savings cost reduction projects in
accordance with the present invention.
[0014] FIG. 8 shows an exemplary spreadsheet utilized as
implementing the forecasting and coincident component 230 in
accordance with the present invention.
DETAILED DESCRIPTION
[0015] The present invention will now be described more fully with
reference to the accompanying drawings, in which several presently
preferred embodiments of the invention are shown. This invention
may, however, be embodied in various forms and should not be
construed as limited to the embodiments set forth herein. Rather,
these embodiments are provided so that this disclosure will be
thorough and complete, and will fully convey the scope of the
invention to those skilled in the art.
[0016] As will be appreciated by one of skill in the art, the
present invention may be embodied as methods, systems, or computer
readable media. Furthermore, the present invention may take the
form of a computer program on a computer-usable storage medium
having computer-usable program code embodied in the medium. Any
suitable computer readable medium may be utilized including hard
disks, CD-ROMs, optical storage devices, flash memories, magnetic
storage devices, or the like.
[0017] Computer program code or "code" for carrying out operations
according to the present invention may be written in an object
oriented programming language such as JAVA.RTM., JavaScript.RTM.,
Visual Basic.RTM., C, C++ or in various other programming languages
or may be written in the form of a spreadsheet such as one which is
run in a Microsoft Excel.RTM. or Lotus 123 environment. Software
embodiments of the present invention do not depend on
implementation with a particular programming language or
spreadsheet. Portions of the code may execute entirely on one or
more systems utilized by a server in the network or a mobile
device.
[0018] FIG. 1 shows a diagram of a system 100 employing a cost
reduction project management system in an environment accordance
with the present invention. The illustrated system 100 is
implemented as a stand-alone personal computer or workstation 112.
As described in further detail below, system 100 includes cost
reduction project management software 130 in accordance with the
present invention which is stored in memory and run by the central
processing unit of the personal computer 112. The presently
preferred cost reduction project management software 130 is
embodied in an Excel spreadsheet. However, the present invention
contemplates that the data stored in the Excel spreadsheet may
alternatively be stored in a database. In that environment, the
cost reduction project management software 130 may be embodied as a
program which stores, retrieves, and modifies the data in the
database. Cost reduction project management software 130 achieves
one or more of the steps defined in FIG. 3.
[0019] The computer 112 includes a number of standard input and
output devices, including a keyboard 114, mouse 116, CD-ROM drive
118, disk drive 120, and monitor 122. Optionally, the computer 112
includes an Internet or network connection 126 to automatically
retrieve over network 150 input data utilized by cost reduction
project management software 130 such as inventory data of
sub-components from remote suppliers utilizing known systems such
as electronic manufacturer services (EMS), supply chain portal,
Webplan.RTM., DataMart.RTM. implemented on computing systems
140.sub.1 . . . 140.sub.n, respectively, general availability dates
for subcomponents from design and development system 180, forecast
data for assembled product from customer systems 170.sub.1 . . .
170.sub.n or a sales system 160 containing a database 162 which
tracks won and lost contracts. Alternatively or in combination with
automatically retrieving input data over network 150, input data
may be manually inputted into cost reduction project management
software 130.
[0020] It will be appreciated, in light of the present description
of the invention, that the present invention may be practiced in
any of a number of different computing environments without
departing from the scope of the invention. For example, the system
100 may be implemented with portions of the cost reduction project
management software 130 executing on one or more workstations
connected to each other over network 150 or a portion of the cost
reduction project management software 130 may execute on a server
while a complementary portion of the cost reduction project
management software 130 may execute on a workstation networked to
the server. Also, other input and output devices such as laptops,
handheld devices, or cell phones, for example, may be used, as
desired.
[0021] One embodiment of the invention has been designed for use on
a stand-alone personal computer, laptop, or workstation on an Intel
Pentium or later processor, using as an operating system Windows
XP, Windows NT, Linux, or the like.
[0022] FIG. 2 shows the software components of and interfacing to
the cost reduction project management software 130 of FIG. 1 for
managing cost reduction projects in accordance with the present
invention. Cost reduction project management software 130 includes
a market based target cost(MBTC)/best of the best (BOB) component
210, a prioritizing and tracking component 220, an economic
buildout component 250, a forecast and coincident component 230,
and an optional business case component 260. Cost reduction project
management software 130 interfaces with a known actual profit
margin tracking component 240. The actual profit margin tracking
component 240 receives projected cost savings from the prioritizing
and tracking of cost reduction project component 220 and revenue
data for sold product.
[0023] The economic buildout component 250 utilizes cost data of
old and new unique subcomponents and weekly and total forecast or
demand for an assembled product to determine at what point in time
the old assembled product should cease assembly and the new
assembled product should begin assembly. An exemplary embodiment of
an economic buildout component 250 is discussed further in commonly
owned patent application entitled "System and Methods For Reducing
Stranded Inventory" U.S. patent application Ser. No. _______, filed
concurrently with this application which is hereby incorporated by
reference herein in its entirety.
[0024] The forecast and coincident component 230 receives sales
forecast data for at least one configuration of an assembled
product, decomposes the at least one configuration into
subcomponents, and determines a forecast schedule over time for the
subcomponents composing the one or more configurations. An
exemplary embodiment of the forecast and coincident component 230
is discussed further in connection with the discussion of FIG.
8.
[0025] The optional business case component 260 compares costs of
subcomponents of two or more technologies which address
configurations of an assembled product over a period of time. The
optional business case component 260 may receive sales forecast
data from the forecast and coincident component 230 or from manual
input for subcomponents over time and across a variety of
configurations of the assembled product. The optional business case
component 260 also receives usage data of subcomponents of a
technology to address configurations of the assembled product. The
optional business case component 260 determines relative cost
savings over time between the one or more technologies according to
a forecast plan of the assembled product. The optional business
case component 260 may automatically select the most cost effective
technology for a given forecast plan. The selected technology and
corresponding usage data associated with the subcomponents defining
the technology may be transferred to the market based target cost
(MBTC)/best of the best (BOB) component 210. An exemplary
embodiment of the optional business case component 260 is discussed
further in commonly owned patent application entitled "System and
Methods of Determining a Business Case for Selecting a Least Cost
Technology" U.S. patent application Ser. No. _______, filed
concurrently with this application which is hereby incorporated by
reference herein in its entirety.
[0026] The market based target cost(MBTC)/best of the best (BOB)
component 210 receives competitive data on competitor's equivalent
product costs, price erosion trends and determines two items.
First, a best of the best assembled product is determined by
aggregating the least cost subcomponent taken from one or more
competitor products or the business enterprise's assembled product.
Second, a market based target cost or goal which takes into account
a constant profit margin to be achieved at a later point in time.
The later point in time is the estimated amount of time it would
take to develop and integrate the BOB product. Comparing the
subcomponent costs of the BOB product with the business
enterprise's assembled product identifies cost gaps of like
subcomponents between the two. Additionally, if the BOB product is
greater than the market based target cost, the subcomponent costs
of the BOB product are reduced accordingly. An example of how to
determine the BOB cost and market based target cost(MBTC) is
discussed further in commonly owned patent application entitled
"System and Methods of Managing Cost Reduction Projects to Increase
Cost Savings of Replacement Subcomponents" U.S. patent application
Ser. No. _______, filed concurrently with this application which is
hereby incorporated by reference herein in its entirety.
[0027] The prioritizing and tracking component 220 receives the
fixed cost for developing each new subcomponent, the cutover date
from the economic buildout component 250, a general availability
date from the design/development team assigned to develop and
integrate the new subcomponent into the assembled product and the
forecast schedule on a subcomponent basis from the forecast and
coincident component 230. The general availability date represents
the date at which the new subcomponent will be assembled in the new
product for delivery to customers. The prioritizing and tracking
component 220 based on cost savings, development cost, and the
forecast schedule over which subcomponents will save the most money
for the business enterprise over time allows the business
enterprise to select which new subcomponents should be pursued. The
prioritizing and tracking component 220 also allows subcomponent
cost reduction projects to be grouped according to resources
assigned or project owners who have authority to assign resource
across the group of allows subcomponent cost reduction projects.
The prioritizing and tracking component 220 further provides means
to advance a GA date for one subcomponent and delay a GA date for
another subcomponent in order to save additional total costs. An
exemplary embodiment of the prioritizing and tracking component 220
is discussed further in commonly owned patent application entitled
"System and Methods for Prioritizing and Tracking Cost Reduction
Subcomponent Projects" U.S. patent application Ser. No. _______,
filed concurrently with this application which is hereby
incorporated by reference herein in its entirety.
[0028] The actual profit margin tracking component 240 receives as
input a cost roadmap specifying the cost of subcomponents as a
function of time and the actual sales of assembled product
containing the subcomponents. The actual profit margin tracking
component 240 calculates the total cost of an assembled product
containing replaced subcomponents and the total cost of the
assembled product containing new subcomponents to calculate a
percent reduction in cost. This percent reduction in cost is
compared to the BOB product to determine whether the targets/goals
established by the MBTC/BOB component 210 are accomplished.
[0029] FIG. 3 shows a flow chart of an overall method 300 for
managing cost reduction projects in accordance with the present
invention. The components of FIG. 2 when executed by system 100
perform one or more of the steps described in the overall method to
manage the cost reduction projects. At step 310, a best of the best
(BOB) assembled product according to subcomponent costs and market
based target costs of the subcomponents of a business enterprise
version of the assembled product is determined by, for example, the
MBTC/BOB component 210. Further details for determining the BOB
assembled product will be discussed in connection with FIG. 4. The
market based target costs are determined at a point in the future.
The point in the future is a date which initially estimates an
amount of time to design, develop and deliver a new assembled
product with one or more new subcomponents.
[0030] At step 325, a cost reduction goal for each subcomponent is
identified by selecting the costs of the subcomponents found in the
best of the best assembled product. The cost reduction goal and
subcomponent combination defines a cost reduction (CR) project for
replacing the subcomponent in a newly assembled product. In some
cases, the subcomponent will be replaced with a less expensive
version. In other cases, a subcomponent's function may be
integrated into a new subcomponent which replaces more than one old
subcomponent. At step 335, forecast schedule data for subcomponents
common across one or more assembled products over a period of time
are received by, for example, the forecast and coincident component
230. Further details for determining forecast schedule data for
subcomponents will be discussed in connection with FIG. 5.
[0031] At step 340, an economic build out (EBO) analysis date is
received. The EBO date indicates the cutover date at which the new
product should be assembled in order to either minimize cost and/or
stranded inventory. Further details for determining that cutover
date are discussed in commonly owned patent application entitled
"System and Methods For Reducing Stranded Inventory" U.S. patent
application Ser. No. _______.
[0032] At step 350, the general availability (GA) date for
subcomponents identified as having cost gaps in step 325 is
received by, for example, the prioritizing and tracking component
220. These GA dates may be supplied by a development team assigned
to developing the new replacement subcomponent. At step 355, fixed
costs for developing each replacement subcomponent are received by,
for example, the prioritizing an tracking component 220. The fixed
costs may be supplied by project managers assigned to tracking the
development projects for each replacement subcomponent.
[0033] Due to a business enterprises budgetary and/or resource
constraints, it may be too costly to pursue each cost reduction
project. At step 360, the set of cost reduction projects to pursue,
out of those identified as having cost gaps with the BOB, is
determined based on the cost savings produced by each cost
reduction project. Further details for determining which cost
reduction projects to pursue will be discussed in connection with
FIG. 6.
[0034] At step 365, additional overall cost savings are obtained by
advancing GA dates on subcomponents having high cost savings. Cost
savings are advanced when the GA date for a corresponding cost
reduction project is made sooner in time. Cost savings are delayed
when the GA date for a corresponding cost reduction project is made
later in time. Since the GA date is provided by the development
team, advancing a GA date would correspond to allocating additional
resources to the corresponding cost reduction project and delaying
a GA date would typically correspond to removing resources from the
corresponding cost reduction project. In order to balance overall
resource allocation, when a GA date is advanced on a cost reduction
project, a GA date of another cost reduction project is typically
delayed. At step 370, the GA dates for all the cost reduction
projects are compared against the market based target cost date.
Recalling that the MBTC date is an initial estimate, it is compared
against the GA dates of the cost reduction projects to see if
method 300 should be iterated again. If the GA dates are after the
MBTC date, then a new MBTC date should be determined. In that case,
method 300 proceeds to step 310. Otherwise, method 300 ends.
Further details for extracting additional cost savings determining
which cost reduction projects to pursue will be discussed in
connection with FIG. 7.
[0035] FIG. 4 shows a flow chart of a method 400 for determining a
best of the best assembled product according to subcomponent costs
and market based target costs in accordance with the present
invention. In particular, method 400 further defines step 310 and
one or more of the steps of method 400 may be performed by the
MBTC/BOB component 210. At step 410, price erosion data over time
for an assembled product is received by, for example, the MBTC/BOB
component 210. The price erosion data is forward looking in time
and reflects a decrease in price due to factors such a shrinking
market demand, manufacturing efficiencies, or the like. At step
420, cost erosion data is determined from the price erosion data to
sustain profitability. For example, a business enterprise may
require a 50% profit margin on an assembled product. In that case,
the cost erosion data is found by multiplying the price erosion
data by 0.50 at each point in time.
[0036] At step 425, the cost erosion data at a particular point in
time in the future is a market based target cost (MBTC) which acts
as a threshold cost of the assembled product at that particular
point in time. The particular point in time is typically set far
enough in the future to accomplish the cost reduction projects for
a new assembled product. At this point in the overall method 300,
the particular point in time is an estimated date rather than a
firm date.
[0037] At step 430, one or more competitors' versions of the
assembled product are reverse engineered to determine their
subcomponents. At step 435, competitive intelligence cost data for
the competitors' subcomponents are received. At step 440, the
competitive intelligence cost data is applied to the competitors'
subcomponents to determine the costs of the competitors'
subcomponents of the assembled product. The lowest cost
subcomponents between the competitors' assembled product and the
enterprise version of the assembled product are selected to
determine a best of the best (BOB) cost for the individual costs
for the subcomponents in the assembled product. At step 450, the
method compares the total BOB cost with the MBTC determined in step
425. If the total BOB cost is less than or equal to the MBTC, the
BOB cost is more than enough to ensure profitability. Method 400
proceeds to step 325 in overall process 300. If the total BOB cost
is greater than the MBTC, the BOB cost for the individual costs for
the subcomponents in the assembled product, although reduced from
the currently assembled product, will not ensure the business
enterprise's profitability. In this case, method 400 proceeds to
step 455. At step 455, the BOB cost for the individual costs for
the subcomponents in the assembled product is reduced by the
difference between the MBTC and the total BOB cost determined in
step 445. Various techniques may be utilized to reduce the total
BOB cost. One technique includes reducing the cost of each
subcomponent composing the BOB product by a pro rata amount.
Another technique includes reducing the costs of the highest cost
subcomponents, subcomponents whose costs are over a predetermined
threshold, by a pro rata amount. Method 400 then proceeds to step
325 utilizing the reduced BOB cost. An example on how to determine
the BOB cost and market based target cost (MBTC) will be described
in connection with the discussion of FIGS. 8-10.
[0038] FIG. 5 shows a flow chart of a method 500 for determining
forecast schedule data for subcomponents common across one or more
assembled products in accordance with the present invention. In
particular, method 500 further defines step 335 and one or more of
the steps of method 500 may be performed by the prioritizing and
tracking component 220. At step 510, forecast schedule data for one
or more assembled products over a period of time is received. The
one or more assembled products are composed of subcomponents common
between the one or more assembled products. In other words, the one
or more assembled products may include varying configurations of an
assembled product. The forecast data includes the number of
assembled products expected to be sold on a monthly basis for a
period of time such as over the next 18 months. At step 520, the
forecast schedule data for each assembled product is divided
according to its subcomponent composition. At step 530, the divided
forecast schedule data is combined according to like subcomponents
to define a subcomponent forecast schedule. At step 540, the
subcomponent forecast schedule is arranged to meet a demand plan on
a monthly basis for each subcomponent across varying assembled
product configurations. For example, the subcomponent forecast
schedule will indicate the number of each subcomponent expected to
be utilized on a monthly basis to satisfy customer orders.
[0039] At step 550, contract data including won and lost contracts
for the sale of assembled products may optionally be received. If
this step is invoked, the subcomponent forecast schedule is updated
to reflect additional contracts won and lost. Step 550 allows the
subcomponent forecast schedule to dynamically track forecast data
at a subcomponent level of granularity. At step 560, forecast
schedule data for common subcomponents across one or more assembled
products over a period of time is generated. The method 500 returns
to step 340 of the overall method 300. An exemplary embodiment of
the forecast and coincident component 230 is discussed further in
commonly owned patent application entitled "System and Methods for
Producing a Forecast Schedule of Subcomponents" U.S. patent
application Ser. No. _______.
[0040] FIG. 6 shows a flow chart of a method 600 for determining
the set of cost reduction projects to pursue in accordance with the
present invention. In particular, method 600 further defines step
360 and one or more of the steps of method 600 may be performed by
the prioritizing and tracking component 220. At step 610, a record
is created for each subcomponent associating a subcomponent with
its respective GA data, EBO date, subcomponent forecast schedule,
and fixed development cost. At step 620, a savings schedule for
each subcomponent is created on a monthly basis according to the
subcomponent forecast schedule found in FIG. 5. The savings
schedule will begin accumulating savings on the date the
replacement subcomponent goes into live production, the
subcomponent's EBO date.
[0041] Two alternative techniques are utilized to select the set of
cost reduction projects according to a business enterprise's
budgetary constraints. The first technique is defined by step 630.
At step 630, the cost reduction projects with the highest total
cost savings are selected. The number of cost reduction projects is
determined by applying the budgetary constraints to the fixed costs
of the highest total cost savings projects until the budgetary
constraints are exhausted. The budgetary constraints are consumed
by subtracting out the fixed development costs from the highest
total cost savings projects until the budgetary constraints are
exhausted.
[0042] The second technique for selecting the set of cost reduction
projects is defined by steps 640 and 650. At step 640, for each
subcomponent identified to have a cost gap with the BOB cost, a
fixed cost recovery time is calculated. The fixed cost recovery
time indicates how long it takes to recover the fixed costs for
developing a new subcomponent by savings caused by use of the new
subcomponent in the assembled product. The fixed cost recovery time
is determined by adding up the monthly cost savings found in step
620 until the sum of the monthly cost savings first equal or exceed
the fixed costs for the corresponding new subcomponent. At step
650, the cost reduction projects with the lowest fixed cost
recovery times are selected to be pursued. It should be recognized
that different multiples of the fixed cost recovery time, such as
two times, four times, ten times the fixed costs, and the like, may
be utilized by the present invention in order to prioritize the
order in which to pursue cost reduction projects.
[0043] FIG. 7 shows a flow chart of a method 700 for extracting
additional overall cost savings by advancing the GA date of high
savings cost reduction projects in accordance with the present
invention. In particular, method 700 further defines step 365 and
one or more of the steps of method 700 may be performed by the
prioritizing and tracking component 220. At step 710, the selected
cost reduction (CR) projects found in step 360 are divided into
sets where there is a common attribute shared by each of the cost
reduction projects. For example, the cost reduction projects may be
divided based on design/development personnel resources assigned to
the respective cost reduction projects, locations of development
resources, suppliers of the corresponding subcomponent, and the
like. Preferably, all the cost reduction projects within a set
share the same resources for developing their respective new
subcomponent. At step 720, within each set, the GA dates of the
cost reduction projects having the higher yearly cost savings are
advanced earlier in time with advancement limited to their
respective EBO date. In order to effectuate an advancement of a GA
date, additional resources have to typically be assigned to the
respective cost reduction project. As a result, advancing the cost
reduction projects having the highest yearly cost savings may cause
one or more cost reduction projects in the same set to have their
GA dates delayed. Conversely, delaying a cost reduction project
having a lower yearly cost savings, one or more cost reduction
projects in the same set having high yearly cost savings may be
advanced depending on the relative fixed cost of the delayed cost
reduction project.
[0044] Each set of CR projects may be assigned to a project owner
where the project owner is responsible for analyzing the cost
savings of the set of CR projects, advancing the GA dates of higher
cost saving CR projects, and, potentially, delaying the GA dates of
lower cost savings CR projects. Alternatively, the prioritizing and
tracking component 220 may include a threshold automatically
categorizing those projects whose cost savings exceed the threshold
as higher cost saving CR projects and categorizing those projects
whose cost savings do not exceed the threshold as lower cost saving
CR. In this environment, the GA dates of the higher cost saving CR
projects may be advanced automatically, and the GA dates of the
lower cost savings CR projects may be delayed automatically.
[0045] An exemplary embodiment of how additional cost savings are
achieved by advancing the GA date and there effects thereto are
discussed further in commonly owned patent application entitled
"System and Methods for Prioritizing and Tracking Cost Reduction
Subcomponent Projects" U.S. patent application Ser. No.
_______.
[0046] FIG. 8 shows an exemplary spreadsheet 800 utilized as
implementing the forecasting and coincident component 230 in
accordance with the present invention. Spreadsheet 800 includes
input areas 810, 815, 820, and 830. Spreadsheet 800 also includes
output areas 840 and 850. Input area 810 reflects various
configurations or product mixes presently available or to be
designed for an assembled product. Columns B, C, and D in input
area 810 contain labels indicating three different configurations
of an assembled product. Referring to input area 830, configuration
1 of the assembled product contains 1 cabinet, 3 radios, 6 filters,
3 amplifiers, and 1 backplane. Configuration 2, on the other hand,
contains 1 cabinet, 6 radios, 6 filters, 6 amplifiers, and 1
backplane. Each column in input area 830 is referred to as the
usage factor for a particular configuration. Input area 815
contains the total year demand for the three configurations of the
assembled product. The data input area 815 is determined by
contracts for sales of assembled product. As the sales of any of
the configurations go up, the total year demand for the
corresponding configuration goes up accordingly. Consequently, when
contracts are won or lost the data in input area 815 is modified
manually or programmatically to reflect those sales conditions.
[0047] When modified programmatically, the prioritizing and
tracking component 220 allows for continuous input of supplier
contracted pricing and direct purchase component costs. The
prioritizing and tracking component 220 continuously multiplies the
usage factors in input area 830 by updated forecast data for each
assembled product configuration.
[0048] Input area 820 distributes the yearly demand from input area
815 across the four quarters in a year according to the delivery
time on contracts. Output area 840 determines the total annual
forecast for each individual subcomponent such as the cabinet,
radio, filter, amplifier, and backplane on a subcomponent basis.
Output area 850 distributes the total annual forecast for each
individual subcomponent on a subcomponent basis across each quarter
to meet the assembled product forecast in input area 820.
Furthermore, within each quarter, output area 850 distributes the
quarterly forecast for each subcomponent on a subcomponent basis
across each month in the respective quarter.
[0049] By utilizing spreadsheet 800, new assembled product
configurations may be easily added by inserting new columns,
existing configurations may be easily modified by changing the
entries in input area 830, and old configurations may be easily
removed by clearing the contents of a respective configuration or
deleting the respective column for the configuration. By making any
of the previous adjustments to the spreadsheet, the effect on the
content in output areas 840 and 850 will automatically be updated
to see the forecasted demand for a particular subcomponent in any
month.
[0050] It should be recognized that the input areas 810, 815, 820,
and 830 may be records stored in memory or in a database on
computer system 100. In that environment, the contents of output
areas 840 and 850 may be calculated and associated as additional
fields to those records. In either embodiment, contents of output
areas 840 and 850 are inputted to or retrieved by the prioritizing
and tracking component 220. It should also be recognized that the
length in time forecasts on a subcomponent basis may be extended is
dependent on how far out in the future data exists on forecasts for
the assembled product.
[0051] While the present invention has been disclosed mainly in the
generic context of sub-components and assembled products, it will
be recognized that the present teachings are applicable to all
manufactured products such as cell phones, internet protocol (IP)
routers, wireless access points, or the like, which contain
components manufactured or assembled by multiple suppliers.
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