In order to have a successful product it is vital that the product meets two main criteria; it has to be affordable obviously, but in addition it has to be a quality product or no matter how cheap it is, your customers will vote with wallets and purchase elsewhere!
But the concept of good value products that meet quality objectives is one that is easy to specify but less easy to achieve. After all it can feel like a contradiction to want more and better performance at a lower overall cost. How can this be achieved?
Increasingly there is a shift towards ensuring that the design of a product produces value: design to cost. This does not affect quality but ensures that quality is integral whilst costs are kept low! This may sound too good to be true, but in fact it is extremely effective.
The Importance OF Good Design
Once a product has been designed and produced there is little leeway available to change it. Or if it is changed the costs can be extortionate. But the production of a product is the expensive part of the process; up to 80% of a product’s value is determined by the design and subsequent production… so why not design it so that it costs less?
When a product is in production and a company is faced with having to implement a set of cost reductions, they tend to focus on cutting the costs of supply chain, administration, the reduction of overheads etc. But to some extent it has to be acknowledged that this can be too little too late; the main costs are in the production and raw materials that are used to make the product, so again it makes absolute sense for the product to be designed in a way that is as cost effective as possible.
Design To Cost In Practice
Design to cost is in effect a management strategy that regards the target cost of the product as being an independent and important design parameter which has to be given attention and consideration throughout all of the design process.
Design to cost has as its basis a comprehensive understanding of the pricing requirements involved. The whole driving force within the design process is not just delivering a quality product, but a quality product that will drive down target costs to a stage where they can be effectively managed.
All the key personnel involved within the design and development process will also be committed to meeting budget targets and keep target costs manageable. They are not isolated from the budgeting and target costs management, but rather they are viewed as being integral to ensuring costs are kept low.
Due to the fact that both management and all those involved within the design and development process have to be fully committed to the design to cost process, it is often necessary to undertake training to ensure that commitment is in place, since without the commitment the DTC strategy will fail.
Supplier involvement is integral to a DTC process because up to 70% of production costs can be attributed to raw materials, so the design and development team have to work with the suppliers to ensure that any materials can be reduced in price. In addition, suppliers will also have to understand the process and why it is being introduced, so there has to be a good, long term relationship established with suppliers.
In essence any DTC strategy needs to be implemented over a long time, so that the supplier can meet any requirements that the company may have, but be able to survive any drop in revenue.
Although it is a very simple concept, the concept of designing something to be as cost effective as possible is, at heart, a complex strategy that requires a change in thinking and an almost radical approach to the design process; but for those who implement it, the benefits outweigh the difficulties that may be experienced initially!