‘Design to Cost’ is the key! Long regarded as a technical approach, the ‘Design to Cost’ method has now earned its reputation of excellence and is considered as an essential part of the value-creation toolbox of leading teams.
‘Design to Cost’: A set of methods and tools which attempts to strike a balance between the design decisions and the value-creation objectives for the client, while optimizing the costs for the company. In a nutshell, it is a powerful tool to increase competitiveness.
The ‘Design to Cost’ approach is spreading and maturing without any hype. It is giving rise to the development of multiple variants and extensions; the most tried and tested is undoubtedly the ‘Re-Design to Cost’ approach. The concept has managed to revamp itself regularly: Design to Market, Lean Design, Design to Value, Design to Total Cost of Ownership, or even Lean Engineering.
The reasons behind its success
Regardless of what you call it, today ‘Design to Cost’ is indispensable for most of the mature manufacturing firms. Why is it so? When used wisely, the ‘Design to Cost’ method always honours its “contract” – “guaranteed” savings ranging from 15% to 40% within its scope of action.
This is due to an angle of attack which is completely different from the traditional cost-reduction or other manufacturing actions. The traditional approaches which have prevailed in the past decades were in fact based on an implicit distribution of roles within several industrial firms: the resources dedicated to product design were primarily concerned about the value for the customer, while cost control was the responsibility of the Supply Chain stakeholders.
Contrary to the dominant trends of specialization where the customer-supplier relationships are centred on price negotiation and the search for economies of scale, the ‘Design to Cost’ method believes in an integrated vision and looks for savings by aligning to the “exact requirement” of the customer, linked to a “win-win” philosophy. This vision is about activating the product design lever for tackling all the direct and indirect costs of the company and its ecosystem.
Better still, the ‘Design to Cost’ approach, like its name only partially suggests, is advantageous compared to most of the cost-cutting techniques, for preserving, or even improving the customer perception. It helps restore the competitiveness of our industries by closely combining the cost reduction and innovation levers.
You want to learn more about ‘Design to Cost’? Have a look to our Point of View (French version for the moment, English version soon available).