Manufacturing Estimating & Quoting Software
* Phone: 413-733-1972
Customer
##### 
  + 
  + Webinars
# Costimator helps Machine Shops win Jobs
* /
* December 1, 2003
## Get a Free Demo
!
Learn how Costimator will save you money and win more jobs.
Call
1-413-733-1972
### Costimator helps Machine Shops win Jobs
December 1, 2003
When jobs become more difficult to win, Northeast Manufacturing Inc. of Stoneham (Boston), MA selected Costimator JS Estimating Software System to produce fast, accurate bids.
Northeast makes precision parts for industries such as aerospace and high technology, processing many RFQs and bidding on very expensive prototypes. President Chris Lobdell said, "We don't want to misquote a job, underbid it and only break even or lose. Costimator JS produces effective quotes, eliminating underbids, and helping us keep an accurate handle on our costs."
Northeast's Estimators quickly generate "what if" scenarios, costing various manufacturing and tooling options, identifying the fastest and least expensive process. Many quotes are done in an hour or less. RFQs for complex parts requiring a variety of high-tolerance machining are routinely processed within a standard 3-day deadline. Mr. Lobdell noted Costimator also benefits processing plan, routings and other reports supporting customer service and sales, in addition to improving the accuracy of shop floor scheduling.
"Prior to Costimator JS, about 40% of our total (manual) estimates were 'losers,' or less profitable," said Lobdell. "Now estimates are accurate to within +/- 5% of actual manufacturing cost, virtually eliminating ‘loser’ quotes. Costimator JS also helped us win more business in the emerging medical equipment market."
*Copyright © 2003 Society of Manufacturing Engineers*
#### Costimator®
Cost Estimating Software for Manufacturing
* Cost Estimating Sheet Metal
* Estimating for Machined Parts
* Quoting for Machining and Fabrication
### Discover how Costimator will save time, costs and win bids!
MTI Systems is the leading developer of innovative cost estimating software solutions for the manufacturing industry.
#### Links
#### Contact
MTI Systems
1111 Elm Street, Suite 6
 West Springfield, MA 01089 USA
* 413-733-1972
#### Newsletter
© Copyright 2025 by MTI Systems, Inc. All rights reserved.
search here
# Knowledge is key in Should Cost negotiations
* September 16
### Knowledge is key in Should Cost negotiations
October 10, 2003   -    By Tom Charkiewicz - Founder and CTO, MTI Systems, Inc.
A challenging global market has most OEMs trying to shave costs wherever possible. One way to do this is with Computer-Aided Cost Estimating (CACE) software, which helps companies understand the real cost of their parts. This is especially valuable when at the parts that OEMs outsource. With the knowledge of a part's true cost, OEMs no longer need to rely on market-priced supplier quotes. CACE software is accurate within 3 to 5% of the actual cost on manufacturing a part. This information gives OEMs significant leverage when negotiating price with suppliers. They can now confidently tell a supplier what they expect to pay for a part and why.
For example, one heavy-equipment manufacturer used CACE to cost out an outsourced chassis part. The software estimated a part cost at $12, compared to the $20 they were paying. When the existing supplier refused to lower their price, the manufacturer sent out RFQs to several other suppliers, using the $12 figure as a target price. The winning bid was $11.75, resulting in a savings of $8.25 per part or an annual savings of $66,000.
!Conversely, contract manufacturers can also benefit from CACE when negotiating with their OEM customers. Detailed cost estimates help justify the quotes they submit and demonstrate the degree of profitability in a job. In fact, when the OEM and the supplier use the same estimating system, adapting a "standard estimating language," it streamlines the RFQ and purchasing process, benefiting both.
CACE also utilizes recent advances such as shop-rate calculators that provide users of the software with shop rates (including labor and burden) in both the U.S. and abroad. These shop rates, when attached to the estimated manufacturing cycle times, generate the true cost of manufacturing a part.
Some CACE systems also provide a method for feature-based estimating, allowing design engineers to estimate the cost of parts based on its features. This allows designers to consider costs and manufacturing feasibility before designs move into production. Likewise, manufacturing engineers can find the most productive, cost-effective ways to make parts. Quality-control departments may use the information to build process-plan procedures for gaining ISO 9000 certification.
Since CACE provides in-depth comparison data of machine times and costs, it can significantly aid in the decision-making process when evaluating major equipment purchases.
CACE systems can front-end manufacturing-management systems. Data on machine and labor times, along with shop-floor routing information, can be electronically transferred to MRP2 and enterprise systems. This eliminates data entry duplication, making the planning process faster and more accurate.
In a nutshell, CACE provides the knowledge needed to lower costs and increase efficiency, profitability and ultimately, competitiveness. But remember, cost isn’t the only issue to consider when designing parts and evaluating suppliers. CACE is no substitute for due diligence. Quality matters as well.
# Cost Estimating Saves OEMs Time and Money
* September 1, 2003
### Cost Estimating Saves OEMs Time and Money
September 1, 2003   -
*!David P. LaJoie is vice president of MTI Systems Inc. (West Springfield, MA), developer of the Costimator OEM cost estimating and shop management software.*
**Manufacturing Engineering:** What type of companies are using computer-aided cost-estimating software?
### David LaJoie:
In the past, Costimator was strictly used by job shops to develop cost estimates faster with more accuracy and consistency than manual methods would allow. Over the past few years since the economy has been in a decline, we've found that more OEMs want to use our software, even more so than job shops.
**ME:** How does the Costimator OEM software work for automotive manufacturers and other OEMs?
### LaJoie:
Costimator OEM provides manufacturers with the knowledge they need to identify and understand the cost drivers in parts they design, make, and purchase. Our software allows them to determine the actual cost of manufacturing a part, both in the design stage and with parts they currently make themselves or outsource to suppliers. Once they have this information, OEMs can make informed decisions on part designs, whether they should make a part in-house or send it out, and most importantly, what they should be paying. The software comes with industry time standards elements and allows for three levels of estimating. The process, or detail level, allows the user to create a cost estimate looking at how a part should be made, operation by operation. The other two levels use parametrics to calculate costs. Feature-based estimating, which is used mostly by design engineers, allows calculating costs based on part features, such as holes, slots, etc. The software's Configurator level enables looking at a company's historical cost data and generates cost estimates through regression analysis tables within our systems IQ Builder module.
**ME:** What estimating method do most OEMs use to arrive at fair-cost estimates?
In most cases, they use the detail method. Some OEMs will use this method to mimic each of their suppliers' equipment and methods to arrive at a cost. Most OEMs develop these "should-cost" models by determining what the cost of a part would be if they had all the best equipment in the world. Costimator OEM comes with more than 1700 work centers and processes already built into the system, so playing a 'what-if' scenario that compares cost effects of using various processes and equipment is straightforward.
**ME:** Does this estimating software work with other manufacturing software?
Our software is written in Visual C++ and is compliant with the ODBC [Open Database Connectivity] standard so it can be easily integrated with enterprise systems; we have several partnerships with ERP and MRP companies, including Lilly Software and Made2Manage, where we have developed links to their software.
**ME:** Why would OEMs in the automotive or aerospace industries want this type of cost-estimating?
OEMs want to lower their part costs. Since most OEMs outsource a large percentage of their parts, keeping costs to a minimum is a key for them to stay competitive in today's marketplace. Our software gives OEMs the knowledge they need to leverage lower pricing. When they go to a supplier to seek a price reduction, they can now justify why they think it's warranted.
**ME:** Automotive OEMs have been demanding cost concessions from parts suppliers for years; doesn't this put even more pressure on suppliers?
I would say that it makes everyone more aware of how parts are made and the costs involved, creating the possibility that there may be a better, more cost-effective way to make the part. The goal is not to pressure suppliers, but instead for the supplier and OEM to communicate more effectively to understand what drives the cost of parts. Ultimately this will produce the best method of making a part, profiting everyone involved.
"The goal is not to pressure suppliers."
**ME:** What can OEMs do with the Shop Rate Calculator software module?
The Shop Rate Calculator program is a tool we developed with several of our customers to provide an accurate method for calculating shop rates for various manufacturing activities. The program combines actual labor rates as reported by the Bureau of Labor and Statistics with other cost factors to compute a shop rate. Our OEM customers use the tool to determine what their suppliers should be charging them for shop rates.
**ME:** What kind of OEMs use the system as a cost-reduction tool?
Our customer base is pretty widespread, covering industries such as automotive, aerospace, electronics, and construction equipment. We deal with many of the Fortune 500 companies, including Caterpillar and Boeing. There is a definite need out there to understand and drive down costs, not only to remain competitive but to stay in business. Our software helps companies do that.