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   The first method is a more desired approach because the catalog could be out of date or the possibility that a relationship could occur between you and the supplier giving you a potential discounted price.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.