Phil Stoten interviews Eric about CBA’s new TCO tool

2013-10-10 08:42:00


EMSNow:  What exactly is this new tool?

Eric Miscoll:  
Our new TCO (True Cost of Outsourcing) tool quickly and accurately estimates the average industry cost for any electronics production build, PCBA or box build, in any global region in which the industry currently operates.  


EMSNow:  How have you developed the model?  

Eric: 
 This tool is the next evolution in the work we have been doing for many years.  It relies on the case study data for the electronics manufacturing industry that we have in our Outsourcing Navigator Series (ONS) data set.  We gather and analyze this data every quarter for our clients

The ONS data set is comprised of three core methodologies that are included in the tool and that we have taught in workshops over the last several years.  Those are:  Global Pricing, OEM Internal Spend, and Geographic Risk.  These three methodologies when used in combination have a historic accuracy rate of 97% in predicting the average industry cost for any electronics production build.  


EMSNow:  Why is it needed?  

Eric:  
The simple answer is that it is the only tool in the market that provides an accurate industry TCO benchmark.  The application of the tool does differ somewhat depending on whether you are an OEM or EMS.

For OEMs - it allows supply chain/operations/purchasing personnel to determine what the expected average industry cost would be prior to issuing a RFQ, and/or benchmark the pricing they receive in quotes from the industry.  It effectively establishes the middle of the curve and allows OEMs to predict and judge the pricing they receive from their suppliers.   

For EMS - it allows sales and management personnel the ability to judge their proposed pricing versus what the average industry pricing would be in advance of submitting a quote.  This is an element that most EMS do not know when they submit quotes and adds significant benefit.  

Both OEMs and EMS expend considerable time and resources trying to do what this tool does, but based on limited data.  This tool provides a quick, accurate, and fairly inexpensive solution to both types of companies, and the data is more extensive than what they are able to gather.


EMSNow:  How will it work?  

Eric: 
 The tool is a formatted Excel workbook that includes our related methodologies and industry data sets.  Users input certain variables (e.g., BOM cost, volume, geographic region, etc.) which extract the related data points from the current data sets. Because the "tool" is a spreadsheet, as soon as you make the entries you have the answer in real-time.


EMSNow:  Don't people have their own internal versions of this?

Eric:  
Yes, many people have tried to do this.  The problem is that any data they have is limited in nature.

They do not have access to the same scope of case study data that we do.  Plus our data is updated every quarter, includes industry-wide, objective benchmark data, and is segmented by market sector and project scale.  


EMSNow:  How can I access it?  

Eric: 
 The initial release of this tool is scheduled at an event on October 2 & 3 in San Jose, California hosted by Cisco.  The two day event includes one day of industry presentations and discussion, and then one day of training on the tool.  People attending this event will get the tool and a one year subscription to the data sets that drive the tool.  These will be supplied on a quarterly basis.

Anyone who is interested but cannot attend the event should contact me directly at (817) 251-4929 or eric@charliebarnhart.com.



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