How to you define your product price?
- Are you “pushed mode” ? Price = Cost + Margin
You consider the market will fund your company Costs (labor + procured goods) and, on top, provide a Margin.
- Or are you “pulled mode” ? Cost = Price - Margin
You consider your company Costs will be defined by the Market price and the Margin you need
In Aerostructure markets, over the last 10 years, aircraft makers and Super Tier 1 have developed digital tools that predict products costs. Even for work packages of hundreds of parts, such “engine costing” tools can instantaneously read the definition data packages (3D models, 2D drawings, BoM…). And use of machine learning has enabled these tools to reach a very good accuracy level, for more than 90% of parts of commercial aircrafts airframe.
So, are you still confident with “pushed mode” to win the business?
Over the last decade, in various product and customer environments, I had the chance to cooperate with several companies and help them developing improvement initiatives to support a target pricing approach.
- working in relation with Customer’s Procurement to understand and converge with him on the Target Pricing.
- developing program-based coordination with key company functions to identify cost drivers and internally adopt the Target Costing
- convincing teams from suppliers and plants to change mindset and adopt a Target Producing approach, as THE benchmark response to develop the right innovations in manufacturing and supply chain
Those companies or plants were in various context
- established supplier to the aerostructure market
- established supplier to the aerostructure market
- new aerostructure company from green field project
and in different regions of the world: France, UAE, China, Korea, Portugal, Tunisia, Morocco, Poland…
My team and I were driven by simple values: Project Monitoring, Autonomy & Authenticity, Coherence, Transmission, Team Leadership. This enabled to create trustful relation with sales and industrial teams from these companies and install real cooperation.
It has never been an easy journey, but thanks to the pull mode approach, most of these companies met the market price, with increased operational performances.
On Air Consulting is a consulting firm with solid practice and expertise in the “Target Pricing to Target Producing” journey.
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