Manufacturers, is your business benefitting from product cost reductions in material and process cost? This initiative is an important building block in a product development strategy. It enables a company to maintain market pricing flexibility, increases supply availability and increases margins.
Engineered cost reduction is the act of evaluating technical product requirements, and using a robust process to identify, select and prove new materials and manufacturing methods. Terms for this include “Design for Manufacture” or “Design for Assembly”. Through these initiatives, changes in materials and manufacturing methods are made in order to realize lower cost. Changes are implemented with full consideration of customer and regulatory requirements. Results include products that continue to meet all requirements, at lower material and processing cost than in former times. Leadership for this effort rests with the technical or engineering organization, with input and assistance from sales, manufacturing and purchasing.
Let’s take two examples. A structural subassembly is fabricated using stainless steel. Stainless steel is required by some customers for corrosion protection, and is offered by all competitors in the industry. Eliminating stainless steel, in favor of a coated steel or aluminum, is not an option at this time. A cost reduction idea is to use a different grade of stainless steel which is less costly. The technical organization then designs and evaluates a proposed subassembly using the new material. Evaluations can include hand calculations, computer-based stress analysis, a wide variety of laboratory tests, and field prototypes. When all product requirements have been met, the change is presented to the organization for approval. After approval, the change is brought into the production environment, and the company enjoys the cost reduction.
A second, very simple, example is reduction of manufacturing cost. An electrical device has two wires – positive and ground. An idea from the manufacturing team is to implement a grounding feature into the housing of the device. The proposal would eliminate a wire, the assembly time to attach the wire, and would reduce the potential for field failure of improperly connected wires. As in the previous example, the technical organization screens and evaluates the proposal against all customer, company and regulatory requirements using calculations, tests and field trials. When the proposal has met all requirements, it is brought for approval, and introduced into production.
In using these approaches, products can be adapted to changes in materials availability in the supply chain, and can be flexibly priced in the market.
In summary, engineered cost reduction is necessary element for a thriving product development strategy. Benefits are better flexibility of sourcing and pricing, faster manufacturing, and higher margins. Wilmarco Technologies has deep experience in automotive and industrial markets leading engineered cost reduction initiatives. Contact us now to learn how to do this in your business!