Cost Estimating Purchased Parts Or Materials

Bill of material items are those items which are purchased as raw materials and used to combine with other products and services to produce a new product.   Job costing bill of materials is a critical step in the estimating and quoting process.  Classic ERP and MRP software provides tools to help estimating the bill of materials.

When you are performing cost estimates for purchased parts or materials there is a need to determine if these purchased parts can be manufactured internally or are they economically better to be purchased.   When larger quantities of materials are used it is often better to purchase these parts from suppliers who are experts in producing these materials.   The specialization of companies to produce goods and services is critical to producing a finished product within costs.   There are two ways to get a cost estimate on purchased parts.   The first way is to actually get specific bids from one or more suppliers and have the supplier respond back with their bid.  The second method requires looking up in some sort of catalog and using the cost from the suppliers catalog as the cost.   The first method is a more desired approach because the catalog could be out of date or the possibility that a relationship could occur between you and the supplier giving you a potential discounted price.

MIE Solutions provides software products to make your business process more efficient so please take a look at our product line below.  MIE Trak and QuoteIt are two products which provide an efficient way to do job shop cost estimating.

Author: MIE Solutions

David Ferguson has over 20 years of experience in the manufacturing and fabrication industry. David Ferguson has been to over 100 manufacturing companies helping and guiding them to be more efficient and cost effective. As a child in Junior High School David Ferguson found a passion for the early computer systems, which would drive much of his future work. David Ferguson created and sold his first computer program, Arrow Data Systems, which was an early CAD/CAM system for the Apple 2e Computer. In the late 1980's after seeing his father (a sheet metal manufacturer) come home many nights estimating, David Ferguson saw an opportunity to optimize his effort through computer technology. Shortly thereafter the FabriTRAK Production Control package was developed. The Quote It! estimating package was developed out of the FabriTRAK system to become one of the leading sheet metal estimating packages in the world. David Ferguson has always had a passion for developing software to make the manufacturing process simpler, faster and more efficient. Prior to founding MIE Solutions David Ferguson worked with his father at Alco Sheet Metal, METALSOFT Inc. and was a consultant at Toyota Motors Sales. David Ferguson has his Masters in Computer Science and Mathematics from California State University, Long Beach.

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