Design to Cost
Although it may sound contradictory: in a developed market product innovation cannot be realized without product cost optimization.
Design to Cost describes how cost can be optimized during the development process without compromising customer functions or quality standards.
Design to Cost requires specific efforts, as there is an intrinsic cost increase tendency during product development.
Design to Cost is characterized by the search for new, creative solutions. Often good cost reduction ideas already exist but are not implemented. Therefore it is important to make best use of those concepts.
With various methods, a pool of cost reduction ideas can be developed. From the very beginning, requirements management is an important element.
What are typical project phases?
Typically, the cost target is the starting point for the DTC process. Basis conditions need to be clarified, such as requirements (specifications) and premises (product volumes and lifetime, SOP dates and manufacturing location, but also value chain structures and exchange rates as well as carry-over concepts).
In the beginning of the process, ideas need to be generated. Here, creativity needs to be given full scope. The objective in this phase is to find more potential savings than are required to achieve the cost reduction target.
A commercial (cost/benefit) and technical assessment is necessary in order to decide which ideas can be implemented.
Idea Monitoring / Project Controlling
In the majority of projects the necessary cost reduction will be achieved by implementing many small changes rather than introducing only a few large savings. Therefore, a strict idea controlling is needed.
With design to cost, a learning process occurs within the project team itself. Results and benefits should be shared with other teams as an active knowledge management.