“Should Costing” and “Tear Down Analysis” Evolving Methods For Communication Networking Product Industry

Abstract

While Should Costing and Tear Down analysis are widely considered to be crucial decision-support techniques for addressing the issues of cost transparency and negotiation in the networking industry, they have received limited practical application in the network space with very episodic use and varying reliability. We look at the current use of these techniques, their inhibiting factors for sustained adoption, and the circumstances under which reliable and acceptable organizational cost insight can be gained from using them. The focus is on the challenges of high upfront analytic effort, reducing returns from repeated use, risks of reverse referencing associated with inferred manufacturing equivalence, and the limits on legal, ethical, and intellectual property that such analyses have to work within.
Adopting a qualitative and minimally quantitative, industry-embedded research design blending an extensive review of academic and practitioner literature with semi-structured interviews with representatives from procurement, design engineering, component engineering, manufacturing, and commodity management functions both within and outside the focal organization. This is reinforced by targeted industrial case studies involving teardown-based cost analysis of networking hardware. This approach to research provides triangulation between expectations from theory, practical, and observed analyses, permitting the study to move beyond prescriptive paradigms and to explore how Should Costing and Tear Down are conducted in complex organizations and supply-chain environments.
The results suggest that the constraints of Should Costing and Tear Down are not due to methodological weakness but to a mismatch between past exhaustive practices and current industrial conditions. The cost factors, as well as perceived diminishing returns, organization deficiencies and supplier resistance were found to be interconnected rather than being independent barriers. The study finds that sequential, architecture-relevant and process embedded techniques can enhance the sustainability and contribution of such techniques. By reframing Should Costing and Tear Down from one-off tools for negotiation to longitudinal learning mechanisms, organizations can better understand costs. They are thus better positioned to meet the legal, ethical and relational risk they face through it. The research offers an empirical view of how developments ought to be made today in the highly dynamic networking product environment.