Providing customer value is critical to a successful product. Since typically 80% of product costs are committed based a decisions during concept development and design, a target costing and design to cost (DTC) orientation is key to a successful product. We can help with the following..
We can start by reviewing and assessing the current product development process, its practices, its tools, its methods, and its culture. This will help use identify what the gaps are and what steps are needed to but a target costing and design to cost approach in place.
A next logical step is to conduct our Target Costing and Design to Cost Workshop to teach the principles and practices. A DTC program begins with management understanding and commitment so management must also be involved in this training.
We can then assist with the implementation or improvement of an organization’s target costing and design to cost approach. PD-Trak contains templates to support this process. A Target Costing and Design-to-Cost process needs to be defined and established. We can review the current development process and define the changes and additional activities to establish this process. We can define supporting roles and responsibilities for these process steps and deliverables.
Product cost models and/or cost tables are required to evaluate concept and design alternatives and support decision-making. Parametric cost models are needed in the early stages of a development program to develop a proposal or establish a business case, to support analysis of concept alternatives, and perform trade studies. More detailed cost models based on analogy or industrial engineering build-up are needed in the later stages to evaluate product and process design alternatives. We can help in selecting, building, validating and establishing these cost models and define a process for their use.
Target costs must be established based on analyzing market niches, assessing customer affordability requirements, understanding cost drivers, considering trade-offs in costs vs. other requirements, determining elasticity of demand, and analyzing volume-cost relationships. We can help organize the data gathering, guide this analysis, and facilitate the use of tools such as quality function deployment to support requirement trades.
Methodologies such as design for manufacturability provide focus on how to design to reduce costs. We can conduct training with our Design for Manufacturability/Assembly (DFM/A) Workshop, help establish DFM guidelines, define a process for the application of QFD and DFM/A, and facilitate the use of these practices on a development project.
Supplier involvement in a DTC program is critical since typically 50-70% of product costs are materials. We can work with the procurement organization to help structure a supplier involvement program based on DTC, provide DTC training to suppliers, work with key suppliers to establish a DTC program, and develop pricing programs. Supply management software from companies like CBX Software will need to be utilized during this time as well, to make sure that everything is in place and working to its optimum level.
Monitoring of DTC results is key to a successful program. We can help in establishing metrics and determining baseline performance. We can then assist with developing DTC tracking systems, creating design review guidelines, and insuring appropriate management focus to a DTC program. We can then work with individual project teams to facilitate use of the overall target costing and design to cost process and use the supporting tools and methodologies.