Developing a product to meet a price point is a very common innovation constraint. Verhaert believes that the issue of end-cost is a fundamental part of the development process. Therefore it needs to be understood and tackled right at the beginning of the development process. When you address cost early, you avoid following paths which ultimately result in a product at the wrong price point.
- Understanding of the customer requirements and perceived value.
- Establishment and allocation of target costs down to systems and sub-systems.
- Comprehension and consideration of the product’s cost drivers in establishing product specifications.
- Developing the product life cycle cost model to project costs early in the development cycle and support decision-making.
- Setting up modules and design processes that radically lower costs.
- Active consideration of costs during development as an important design parameter.
- Low cost design approach by experimenting with concept and design alternatives.
- Value and function analysis to identify functions with a high cost to function ratio.
- Application of design for manufacturability principles.
- Continuous improvement through value engineering to improve product value over the longer term.
- Support in sourcing strategy to drive cost reduction
- Identify, evaluate and select vendors from low cost countries.
Cost reduction strategy, management and control
Design by objectives
In interactive sessions, often workshop formats, we define together objectives regarding the cost reduction and positioning. These purposed are monitored during the entire design and engineering process. Verhaert proposes different options and concepts so you can compare on the basis of actual cost assessments.
The models applied for cost calculation will evolve. They increase their level of detail and resolution during the New Product Development (NPD) and Introduction (NPI) process:
- Parametric estimation
- Product cost models
- Contribution analysis
- Feature rationalizing
- Cost reducing architectures
- Modular design
- Functional analysis
- Performance evaluation
- Feature analysis and comparison
- Mapping value contributing attributes
- Value driver analysis
- Use case and interaction-analysis
- Structured idea generation and selection
- Cost price verification process
Discount Usability Engineering (DUE)
- Identifying over served market segments
- Product stripping
Functional diagrams often lead to functional architectures. From a cost perspective there is a lot to gain from intelligent combination and integration of functionalities.