C A S E S TU DY
NMHG Drives Down Product Costs
with aPriori
COMPANY: NACCO Materials Handling
Group (NMHG)
VERTICAL: Materials Handling,
Industrial Machinery
PRODUCT LINE: Yale®, Hyster®,
Sumitomo and Utilev® forklift trucks
HEADQUARTERS: Cleveland, Ohio
REVENUE: $2.5 billion
Product cost management platform also provides
key insights to help lift product innovation and
accelerate time to market
BACKGROUND
NACCO Materials Handling Group (NMHG), headquartered in Cleveland, Ohio, designs,
engineers, manufactures, sells and services a comprehensive line of lift trucks and aftermarket
parts. Marketed globally under the Hyster®, Yale®, Sumitomo and Utilev® brand names, these
are some of the most successful lift truck brands in the industry. NMHG is one of the world’s
largest lift truck manufacturers, comprised of a global network of 12 strategically located
manufacturing facilities and four product development centers on three continents. With
such an extensive reach, the company is able to provide localized service and expertise across
diverse geographic regions, translating into huge cost savings and competitive advantages to
its dealers and customers. Today the company has over 750,000 Hyster® and Yale® lift trucks in
operation worldwide.
THE CHALLENGE
As a leading manufacturer with over $2.5 billion in global sales, NMHG sets the bar high
for designing and delivering world-class products. NMHG faces stiff competition in North
America, Europe and Japan, and more recently, China. Product quality and cost management
have always been key measures for the company. From concept to launch, every new product
follows a carefully structured and staged development process.
With manufacturing and product development centers across the globe, streamlining the
product development process to offset the rising cost of materials while maintaining an
C A SE ST UDY
“ L ike many things, success in product
cost management comes down to
leadership and execution. aPriori is a
vital tool in that regard. It provides the
tools the design team needs to take
responsibility for product cost. It also
highlights the need to do something
about product cost — in black and
white details. Prior to aPriori, our team
simply did not have the insight into
cost analytics. There was no focus or
awareness and therefore no action.
Today, that has all changed — and
aPriori is playing an integral role in
enabling and causing that change.
”
RICK GOLDSMITH
MANAGER OF CORPORATE
MANUFACTURING ENGINEERING
AND TOOLING
NACCO MATERIAL HANDLING GROUP
(NMHG)
efficient project schedule was no easy feat. Product engineers typically sent their designs
to cost engineers on NMHG’s manufacturing team for cost estimating. The manufacturing
team leveraged a Product Resource Management System (PRMS) that rolled up into NMHG’s
IBM MRP system to calculate the estimated product costs. It was a very comprehensive, but
highly manual process that took time and was designed for use by a small group of cost
estimating experts. As a result, cost information was not always available and it was difficult
to share that information across different departments or physical locations. The company
was setting product cost targets in design, but frequently finding itself over those targets
when the product was handed off to production. This had a drag effect on NMHG’s product
development process, slowing time to market for new products.
It became increasingly clear to Rick Goldsmith, manager of corporate manufacturing
engineering and tooling at NMHG, that the company needed to take a different approach to its
product costing efforts. Initially, he was looking for a tool that would help it roll up costs into a
single system so teams could analyze and monitor product costs and bridge those gaps more
effectively. He also wanted a solution that would enable the design team to take on more
of the responsibility for delivering product designs that could be manufactured within the
product cost goals.
THE SOLUTION
NMHG was introduced to aPriori in mid-2006; almost by chance. A colleague had introduced
aPriori, and Goldsmith decided to take a look; primarily as a tool to roll up, analyze and monitor
product costs. Goldsmith liked what he saw. Not only could aPriori help him roll up costs, it
also provided a flexible costing engine to instantly and precisely determine the cost of any
part or product from a CAD model, based on the manufacturing process, materials to be used
and the factory or region where it would be produced. It could also be used by designers,
cost engineers and sourcing professionals rather than just cost estimating experts in the
manufacturing organization.
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C A SE ST UDY
About aPriori
aPriori software and services generate
hard-dollar product cost savings
for discrete manufacturing and
product innovation companies.
Users include some of the leading
manufacturers in Europe and North
America. Leveraging aPriori’s realtime product cost assessments,
employees in engineering, sourcing
and manufacturing make moreinformed decisions that drive costs
out of products pre- and postproduction. As a result, manufacturers
launch products at cost targets,
maximize savings in re-work projects
and never overpay for sourced parts.
To learn more about aPriori and its
product cost management solutions
and services., visit www.apriori.com
or call 1.978.371.2006. To see an
overview demonstration of aPriori,
click here.
NMHG’s design engineers could use the aPriori software to quickly and easily compare the cost
of different design alternatives and understand the cost impact of different design options.
As design changes are made, or new product specs are introduced, aPriori automatically
re-assesses and provides an updated product cost quickly and easily. This opened up a whole
new set of cost optimization alternatives for NMHG. It enabled it to attack cost earlier in the
product lifecycle and make more informed design and production decisions to reduce product
costs from the start.
In November 2006, NMHG began its initial implementation, testing aPriori at one of its
factories in Mexico. Goldsmith was impressed. aPriori identified considerable savings in just
24 hours of use across eight different assemblies. The implementation also gave his team a
chance to test the accuracy of aPriori’s industry standard cost data. What he found — that
aPriori was more accurate than his plant’s own cost estimates — cemented his confidence in
the software platform.
In 2009, NMHG restructured its design and manufacturing operations in an effort to accelerate
cycle time and shorten the time it took to design and deliver new products and parts to
market. The company was also continuing its effort to create more accountability for costs
earlier in the product development process. In Goldsmith’s view, aPriori became a very
important communications tool in this effort. Because of its ability to provide accurate and
detailed cost estimates in real time, it helped the company communicate more clearly across
the organization about product cost. aPriori also helped raise the questions to be asked about
product costs; e.g., why a particular part costs a certain amount and whether there were other
ways to design a part that would bring down the cost without taking away user functionality
and benefits.
THE RESULTS
Today, NMHG uses aPriori across the globe and in all four of its product development centers.
It has 30 licensed users in engineering and product development. aPriori’s manufacturing
process modules for Sheet Metal, Welding, Sand Casting, Bar & Tube and Machining provide
NMHG engineers with accurate, industry-standard cost benchmarks for what new products
and parts should cost. By providing this information early in the product design process,
engineering and manufacturing are able to determine which design concepts and alternatives
to pursue – compressing cycle times, reducing development costs and getting new products
to market more quickly. It also allows the company to increase the number of design
alternatives that can be explored during design.
300 Baker Avenue
Concord, Massachusetts 01742
Tel:978-371-2006
Fax:978-371-2008
[email protected]
www.aPriori.com
© 2013. aPriori. All rights reserved. aPriori and
aPriori Technologies are registered trademarks
of aPriori Technologies Inc. All other trademarks,
registered trademarks or service marks belong to
their respective holders.
According to Goldsmith, aPriori gives NMHG a viable solution where it didn’t exist before. It’s
helping NMHG achieve its strategic product cost reduction goals while keeping projects on
schedule. “Access to real-time ‘should cost’ assessments reduces the number of supplier quotes
and allows our employees to evaluate more cost-saving alternatives for each product concept.
As a result, our employees are using aPriori to re-quote production parts at lower prices and
re-design a number of products for more efficient material utilization and manufacturability.”
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