Design To Cost - What It Is And How It Works

2023 Author : Hannah Pearcy | [email protected] . Last modified: 2023-05-24 11:12

Product development is under increasing pressure to develop inexpensive products . With the usual procedures so far, higher costs often arise at the start of series production than previously thought. However, it is too late in this phase to save costs without complex design changes. Design-to-cost methods used in advance can remedy this.

Design to cost - what is it?

The term “design to cost” (DTC for short) is used today in an inflationary manner and research often does not provide a comprehensible description. It is therefore important to understand that design to cost is not a described method, but an undefined collective term .

The DTC approach is composed of many different, well-documented methods and cannot be described consistently. The use of the right methods in a design-to-cost project basically depends on the goals of the project, which can be very different. Possible goals are:

• Process cost optimization
• Product cost reduction
• Life cycle cost optimization
• Total cost of ownership

Methods and techniques in a design-to-cost project

Various methods and techniques are used to achieve the goals of a design-to-cost project (development project). However, the terms methods and techniques are not always clearly delimited.

Possible DTC methods are:

• Target Costing: Here the target costs for the product and its components are systematically determined
• Reverse engineering: Reverse engineering provides detailed information about cost differences compared to competing products
• Experience curve analysis: The analysis shows possible cost reduction potential and the cost gap to the competitor
• Quality Function Deployment: Here the focus is on customer requirements and competitive comparisons. Over-engineering should be avoided here.
• Value analysis: The analysis of functions and functional costs in an interdisciplinary team creates new solutions with high cost reductions.

By combining several methods, cost reductions of 15 to 60 percent can be achieved.

Techniques used include:

• Creativity techniques
• research
• Interdisciplinary teamwork
• Visualization

If you are interested in design-to-cost methods in detail and want to learn more about the specific application, we recommend the seminar "Design-to-cost methods". Here, users learn how the various DTC methods are used and what positive influence the application of the DTC methods has on the analytical ability and creativity of the product developers and how the methods are integrated into the product development process (PEP).

This is how design to cost works in the development process

In most cases, a DTC project is about developing a product. This can be a successor product or a fundamentally new product. The procedures then differ in part.

Due to the ongoing intensification of competition, it is no longer sufficient to use just one method, such as value analysis. This always leads to a cost reduction, but further cost reduction potential remains undetected.

It is therefore important to choose and combine different methods based on the client's goals. This is basically part of the preparation of a DTC project.

The critical success factors

The following factors contribute to the success of a DTC project:

• Clear goals and requirements
• Ability to analyze
• creativity

DTC work focuses on goals and requirements . If the requirements are incomplete and cannot be clarified with specialist consultants, then assumptions are continued.

Thorough analysis creates a detailed understanding of the competing products, complexity cost drivers, cost of functions, technology trends and much more. Solutions for the product to be developed are partially presented on the silver tray.

Creativity develops from the way an interdisciplinary team works and above all from new information from the important analysis results.

Seminar: Design-to-cost methods

In the seminar, Hermann Schlichting, who has overseen DTC projects for over 30 years, brings the design-to-cost methods and techniques closer to the participants. If desired, the seminar can also be booked as a separate in-house seminar .

Upcoming appointments:

• April 1st to 2nd, 2020 in Würzburg
• July 16 to 17, 2020 in Würzburg
• November 25-26, 2020 in Stuttgart

More info

What a DTC project start can look like

A DTC project is described below as an example to illustrate a possible process

The DTC project starts with a five-day workshop. The goals were defined in advance with the client. The product is new, there is no previous product. Around 80 percent of the requirements are met. The company and the employees involved have no experience with DTC methods so far.

A team with five employees is formed. This includes developers from construction, electrical engineering and software as well as a cost manager. The team is moderated by a consulting company.

After presenting the system and methodology, the process follows:

• The team develops a common understanding of goals
• The requirements are worked through and some are supplemented with assumptions
• A functional analysis with around 40 functions is carried out
• Solution ideas for fulfilling the function are sought
• Solution ideas are checked for feasibility
• Solution ideas are developed technically and evaluated with manufacturing costs, development effort, investments, etc.
• A morphological matrix with the evaluated solution ideas is created
• Four solution concepts with different manufacturing costs and development effort are defined, evaluated and compared
• This is followed by the final presentation with the client and decision for a solution concept
• Then the further DTC development work begins with step-by-step technical elaboration of the selected solution concept

With normal conference technology or small workshops, it would have taken several months to reach at least an approximately comparable result.

More information about the DTC seminar

Summary:

• Design to Cost is a collective term for different methods and techniques
• The combined use of different methods leads to higher cost reductions than with just one method
• Goals, creativity and analytical skills are the critical success factors
• The possible cost reductions are between 15 and 60 percent

Smart engineering day

The digitization of production requires a rethink in product development. The Smart Engineering Day offers decision support for the selection of the most suitable methods for the conception, design and development of smart products and machines.

More info

* Hermann Schlichting, management consultant and managing director at Schlichting-Consulting