5 Ways Tset Can Help Cost Engineers Contribute to Business Success in a VUCA World

VUCA (Volatility, Uncertainty, Complexity, Ambiguity) - once only discussed in think tanks, strategy circles and in management - has become a consistently used term over the past ten years. 

For many manufacturing companies that are globally networked through supply chains and customer structures, this is part of their daily business. Naturally, the automotive industry is particularly affected. Here - apart from the laws of physics and the rules of mathematics - everything is constantly in flux and in global competition. What CEOs and CFOs often somewhat neglect the strategic importance of cost engineers and their teams in the VUCA world.

Here at Tset, we have identified five factors that make the "current VUCA" particularly challenging, and derived possible measures to successfully meet said challenges.

1. It Can Be Assumed That Trade Restrictions Will Increase Internationally

We are currently experiencing a series of (punitive) tariffs and quota regulations between the USA and Europe, as well as between Europe and China, not to mention sanctions resulting from wars and armed conflicts. 

The "classic" response to this is "local-for-local" supply chains, where production and assembly takes place in the appropriate configuration in the respective region. The extent of the "local content" (i.e. the added value at the location) then has an impact on customs (price) or availability (quota), for example. This addresses and mitigates the cost, availability and delivery risk. Such a change in the supply chain is usually associated with cost increases. In order to manage these well, sophisticated negotiation preparation with target/shadow calculations is required - and often with very short lead times.

For new developments, suppliers in different markets need to be verified quickly, and it is the cost engineers who are there to support these processes. Tset offers up-to-date master data for cost factors from the respective markets worldwide. This also allows logistics costs and potential savings to be calculated quickly.

In the early phase of new product development, it is often challenging to maintain an up-to-date bill of materials for cost calculation. If such a list is not yet available in the PLM or ERP system, then it can be created in Tset, and further serve as the basis for calculating costs and CO₂ emissions at various (supplier) locations during development, as well asmanage other customer or supplier-specific additional information.

2. Armed Conflicts and Wars Affect or Disrupt Supply Chains

Examples include the impact of the activities of Houthi militias on global shipping traffic in the Gulf of Aden, or disruptions to supply lines caused by Russia's war against Ukraine. Companies usually respond to this with a dual-source strategy, i.e. parallel suppliers who each have to meet specific requirements and - depending on the situation - can supply different proportions. Professionals rely on a "supply agreement", which may include penalties, escalation levels and obligations to cooperate. This must be negotiated for each specific project/product. Tset can be used to quickly calculate the cost impact of the associated volume changes.