How do I create a component?

In WTP, you can build cost models in different ways depending on how your product is made. If a product consists of several components, you can decide whether to model it as one full product or as multiple components that are later combined.

Step 1: Understand your product structure

First, determine how the product is produced:

• Scenario A: All components are produced by the same supplier
  → The supplier manufactures all parts in-house, within the same industry.
  In this case, you can model the product as one cost model, with all materials and processes included directly.

• Scenario B: Components are produced in different industries
  → The supplier buys some components (half-fabricates) from other suppliers.
  In this case, it’s best to create separate cost models per component.

Step 2: Create a cost model for each component

When you create a cost model for a component, follow the same process as for any other cost model:

1. Select the country and industry cost profile where the component is likely made.

2. Add all commodities (materials) that go into the component, with their estimated weights.

3. WTP will then generate the component cost model, including all relevant cost drivers and overhead for that industry.

Repeat this for every separate component that is purchased or produced elsewhere.

Step 3: Combine components into a full product model

Once all component models are ready:

1. Create a new cost model for the final product.

2. Instead of selecting Add Commodity, choose Add Component.

3. Select the relevant component models you created earlier.

You can also mix components and commodities:

• If your supplier buys some components → Add those as components.

• If they produce some parts themselves → Add the raw materials (commodities) for those parts directly.

This allows you to represent your supplier’s real production situation accurately.

Step 4: Understand the difference between components and in-house production

When you create a cost model for a bought component, WTP applies the overhead costs and cost drivers of the component’s industry.
Your supplier pays for those when they buy the component.

When you add commodities directly (for components your supplier makes themselves), the overhead of your supplier’s own industry applies.
This distinction ensures the cost structure correctly reflects whether something is made in-house or purchased externally.