What does an effective Product Costing process look like?
A common product cost reduction strategy is to design individual parts to be simpler, easier to manufacture and less expensive to produce. From the following chart, you can see why an engineer might put all their focus on part costs.The reality is that this strategy can actually lead to a higher total product cost relative to a strategy that focuses on minimizing assembly labor. How could this be? The answer lies in the fact that designing parts to be easy to manufacture tends to increase the total number of parts, while designing a product to be easy to assemble usually reduces the number of parts. Industry research has shown that thanks to modern manufacturing techniques, using fewer parts will frequently be less expensive than using a large number of inexpensive parts.
What benefits does DFM Concurrent Costing provide during this process?
Besides providing real-time accurate cost estimates, DFM Concurrent Costing serves as the focal point of communication between designers and manufacturers. DFM identifies the major cost drivers for each manufacturing process so that both manufacturing and design can ask the essential cost related questions at the most relevant time. This results in a faster product development process because there are fewer problems to address during the latter stages of development. With Product Costing, product development becomes a more focused and educated effort than previously.