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Construction as an adjusting screw for cost reductions

The mammoth share of the product costs is already determined during the engineering. However, cost reductions are not just a solo task for designers, says Jan O. Fischer, head of the GKP Society for Cost-Oriented Product Development in Cologne. The best results would be achieved if company-wide project teams discuss the proposals and help drive them forward.

Tasks in the area of ​​cost-reducing product development are often initiated by the sales department of a company: The sales department observes market developments and knows that the customers of quality leaders definitely accept prices that are up to 15% higher than those of the competition. However, if competitiveness is to be maintained, they must not exceed the market level by 50%. “As this critical mark approaches, it is high time for effective cost management. In such a situation, the costs and thus the possible sales price of a machine or system must be reduced, ”demands Jan O. Fischer. At the same time, it must be ensured that the quality of the product is not impaired.

Conventional measures to reduce costs are often limited to the procurement or manufacturing area. "Since the design already determines up to 80% of the later product costs, it is obvious that it is the development that holds the effective lever for reducing costs in the hand," emphasizes Fischer. In order to use this potential, innovative approaches are required. “After all, design engineers are more professionals in technology than in cost-consciousness,” the consultant knows. Most of the time, the required cost reductions could not be achieved by simply redesigning the product. Measures such as reducing material costs or standardizing parts or components would often only lead to savings of around 10%.

Cost reductions: Focus on the customer's wishes

On the other hand, cost reductions of up to around 30% could be achieved with customization designs. A greater reduction in expenditure can be achieved if the functions required by the customer are the focus of the analysis. According to Fischer, impartial investigations and discussions of product features often show that all customers are offered the “egg-laying woolly milk pig” as standard, although a large number of the functions it contains are obviously only of value for some customers. The product functions, which have often grown over time, must therefore be critically examined. An important key to the success of the project is that the tasks are processed by an integrative team.

In particular, during the initial functional analysis, sales are just as important as the service staff. Fischer says: “Because they are on site, they have an ear to the customer and often know best where the problem is.” Once the functions that are actually required for the various market segments have been identified, the next step would be the most cost-effective options for their realization sought. Here, too, regular meetings would have to take place at which the suggestions of the designers are discussed in the project team. The formation of such a team across departmental boundaries is unusual for many companies, and very different mentalities in the various areas clash.

Cost reductions through innovative teamwork

But at the same time, this heterogeneity ensures that the entire specialist knowledge of all company departments downstream from construction flows into the development of the products. “Another advantage of the integrative team is that the company divisions that later have to 'struggle' with the production and sales of the new development were involved in its development from the start,” reports Fischer. Therefore, they are then open to innovative and possibly unusual solutions and have the motivation to face challenges such as new machining processes. Because when evaluating constructive proposed solutions, the costs must also be taken into account in addition to the technical aspects.

This means that reliable cost forecasts have to be made at a point in time when there is often nothing more than a sketch. Fischer explains: "For this purpose, special methods are used with which the later costs can be forecast at a very early stage of development." For example, the costs for new design solutions would be derived from comparisons with existing assemblies and components. Cost growth laws, relative costs and regression analyzes made it possible to draw conclusions on a case-based basis about the costs of similar objects. By contrasting the technical with the economic features of existing construction objects, cost functions can also be formed, which represent the cost trend as a function of the technical features.

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