Automotive supplier Brose generates billions in sales every year, but the company is not satisfied with its return of 1.1 percent. The reason is said to be a lack of employee motivation. Costs in production, logistics and administration are therefore to be reduced.
Cost engineering methods such as design to cost as possible starting points?
“Only” paying attention to costs in purchasing, production, logistics and administration is too short-term thinking. 70 to 80 percent of later product costs are “designed” or “engineered” in the early phase of product development, so this is where the first steps must be taken. Purchasing, production or logistics cannot ultimately eliminate all cost-driving development features that are defined by the design in the early development phase and then have the greatest impact in the downstream company processes. For example, if the packaging costs shortly before series implementation of a product have a high impact on the manufacturing costs, the parameters or attributes defined in the early development phase often have the greatest impact. Ultimately, logistics can only have a limited influence on these “constructed” parameters, meaning that product development casts the “biggest shadow” in the early phase of product development.
Companies must relearn how to design a product in such a way that the performance/functional requirements can be met at the lowest cost and with the required quality. A disciplined and systematic approach to cost engineering in the early development phase of a product can help here. For example, “design-to-cost” involves designing at target cost from the first day of the new development task. This can improve a company’s competitiveness and increase profitability.
What is design to cost?
Design to cost (DTC) is a cost optimization process that is used in the development phase of products or services. The aim is to take costs into account during the design phase and thus enable cost-efficient production. One reason for this is the fact that around 70 – 80% of the manufacturing costs of a product are determined in the early development phase. Development therefore casts the biggest shadow on all downstream company processes. Cost targets (target costs) are defined and integrated into development in order to avoid unnecessary costs and at the same time maintain the quality of the product.
What does Design to Cost include?
DTC involves a variety of techniques and methods, such as analysing cost structures, identifying cost-efficient materials and technologies, optimizing production processes and minimizing waste. DTC also requires close collaboration between different departments and functions, such as engineers, buyers and production planners.
In which sectors is Design to Cost used?
DTC is used in various industries such as the automotive industry, mechanical engineering and electronics to develop competitive products with an optimum price-performance ratio.