As a global leader in drives technology, Danfoss sought to enhance its product development processes and gain deeper visibility into cost drivers early in the design phase.

Together, we implemented Siemens Teamcenter Product Cost Management (PCM), transforming how Danfoss manages cost simulations, supplier benchmarking, and product development efficiency.

Unlocking the power of Teamcenter PCM:
Insights from Danfoss

With global supply chain challenges such as resource constraints and increasing complexity across the value chain, Danfoss turned to Siemens Digital Industries Software’s Teamcenter Product Cost Management (PCM) solution.

Through the implementation of Teamcenter PCM, Danfoss has transformed its approach to product development, achieving greater speed, precision, and transparency in early-stage costing. Supported by its dedicated cost engineering team, Danfoss has leveraged PCM to overcome supply chain challenges and build a stronger foundation for data-driven decision-making.
“For us, Teamcenter PCM is more than a costing tool, it's a strategic enabler” says Andrew Arul Rose Amalraj, Head of Cost Analysis Center, DPD. “It allows our team to drive precision, speed, and transparency in product development while elevating our role from cost checkers to value creators.”

Harnessing expertise and driving innovation

Danfoss’s cost engineering organization combines technology cost engineers specialized in manufacturing processes with product experts overseeing entire product groups. Finding professionals with this combined expertise has long been a challenge, but with the implementation of Teamcenter PCM, this gap has been effectively bridged.

The solution now empowers Danfoss’s teams to calculate product and tool costs with remarkable precision and consistency across projects.

Streamlining for strategic success

Through the implementation of Teamcenter PCM, Danfoss has been able to conduct in-depth analyses of materials and production methods. By automating recurring cost calculations through an automation tool that speeds up standardized cost calculations in Excel, cycle times have been drastically reduced.

This innovation has enabled the creation of technology cost models that capture valuable intellectual property, facilitating fast and standardized cost calculations for common components.

Turbocharging cost calculations

With the implementation of Teamcenter PCM, Danfoss engineers now only need to enter a few predefined parameters to generate detailed bottom-up cost calculations. This streamlined process has reduced calculation times by over 95%, enabling efficient simulations and scenario analyses.

The technology-driven costing models have also delivered significant cost savings compared to traditional parametric approaches.

Precision and flexibility in every calculation

The seamless integration of the Parametric Models Framework for Excel with Danfoss’ cost models have made it easy to generate precise cost results with minimal effort. This flexible setup allows calculations to be manually adapted to meet specific requirements, preserving valuable knowledge and accessibility across the organization.

Storing supplier data for enhanced benchmarking

Through Teamcenter PCM, Danfoss now stores detailed information about its suppliers’ production environments, including overhead structures and process parameters. This comprehensive data foundation enables accurate cost simulations and effective supplier benchmarking. By gaining full transparency into supplier cost structures, Danfoss can make informed sourcing decisions and optimize its procurement strategies. This capability supports fact-based negotiations and strengthens supplier collaboration through reliable, data-driven insights.

Balancing costs with operational efficiency

Danfoss continuously validates its cost calculations to ensure alignment with industry best practices. By leveraging new manufacturing technologies that reduce material waste and energy consumption, the company effectively balances cost efficiency with sustainability.

Teamcenter PCM’s data-driven insights, implemented with support from ET Advisory, have been key to enabling fact-based decision-making and fostering closer collaboration with both customers and suppliers.

Exploring carbon footprint calculations

Looking ahead, Danfoss is exploring the integration of carbon footprint calculations with Teamcenter PCM to complement cost data. This initiative aims to provide a comprehensive view of both cost and environmental impact, helping Danfoss to make more sustainable decisions in their production processes.

Conclusion: The imperative of Product Cost Management

Danfoss’s journey with Teamcenter Product Cost Management has been truly transformative. With faster calculation times and better collaboration across functions they are not just saving time, they are building a foundation for cost-informed innovation.

“Teamcenter PCM has truly elevated our cost engineering at Danfoss” says Vengatesh Ramamoorthi, Consultant, Electromechanical SME, Cost Analysis Center. "It’s helped my team work faster and smarter, turning complex calculations into quick, reliable insights. It’s not just a tool, it’s a trusted part of our daily workflow." 

Digital costing solutions like Teamcenter PCM are essential for today’s manufacturing leaders. By supporting Danfoss in leveraging its full potential, we continue to drive greater cost transparency, strategic efficiency, and impactful supplier negotiations across the organization.

“For us, Teamcenter PCM is more than a costing tool, it's a strategic enabler” says Andrew Arul Rose, Head of Cost analysis Center, DPD. "It allows our team to drive precision, speed, and transparency in product development while elevating our role from cost checkers to value creators. The ability to simulate supplier cost structures and run quick design trade-offs empowers us to collaborate more confidently across engineering, procurement, and business functions.”

Key results

• 95% reduction in cost calculation time through automation and standardized Excel-based processes.
• Significant cost savings compared to traditional parametric approaches.
• Streamlined cost engineering workflows, enabling faster and more accurate bottom-up cost simulations.
• Increased precision and flexibility in cost modeling through the integration of the Parametric Models Framework for Excel.
• Creation of standardized technology cost models that capture and preserve valuable intellectual property.
• Enhanced supplier benchmarking and fact-based negotiations through detailed supplier production environment data and overhead structures.
• Improved cross-functional collaboration between engineering, procurement, and business functions.
• Data-driven decision-making enabled by transparent, reliable cost insights.
• Operational efficiency and sustainability gains achieved through reduced material waste and energy consumption.
• Foundation for future sustainability initiatives, including the integration of carbon footprint calculations for combined cost and environmental impact.
• Transformation of the cost engineering role from “cost checkers” to “value creators”.
  

About ET Advisory

ET Advisory supports manufacturers in leveraging Siemens Digital Industries Software solutions to unlock value through digital cost management, product data optimization, and operational excellence. As a trusted Siemens partner, ET Advisory helps companies like Danfoss to achieve measurable results through technology-driven transformation.