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Cost reduction - Reduce your manufacturing cost. Our cost reduction program shows 8 strategies on how to significantly reduce cost. Cost reduction can result in significant product cost saving.Cost reduction can result in significant product cost saving, manufacturing cost saving, and life cycle cost saving when companies interested in cutting cost implement all 8 the elements of the following cost reduction strategy: 1. Cost Reduction by DesignCost Reduction Opportunities:
The Results:
How to Reduce Product Cost by Design:
Activities Supportive to Low Cost Product Development:
2. Lean Production Cost ReductionCost Reduction Opportunities:
The Results:
How to Reduce Manufacturing Cost: Activities Supportive to Lean Production:
3. Overhead Cost ReductionCost Reduction Opportunities:
The Results:
How to Reduce Overhead Cost:
Activities Supportive to Build-to-Order & Mass Customization:
4. Standardization Cost ReductionCost Reduction Opportunities:
The Results:
How to Reduce Cost with Standardization:
Activities Supportive to Standardization:
5. Product Line Rationalization Cost ReductionCost Reduction Opportunities:
The Results:
How to Reduce Cost with Product Line Rationalization:
Activities Supportive to Product Line Rationalization:
6. Supply Chain Management Cost ReductionCost Reduction Opportunities:
The Results:
How to Reduce Cost in Supply Chain Management:
Activities Supportive to Supply Chain Cost Reduction:
7. Quality Cost ReductionCost Reduction Opportunities:
The Results:
How to Reduce the Cost of Quality:
Activities Supportive to Quality Cost Reduction:
8. Total Cost Measurement to Support All Cost Reduction ActivitiesCost Reduction Opportunities:
The Results:
How to Reduce Cost with Total Cost Measurements:
Activities Supportive to Total Cost Measurements:
How Not to Lower Cost; Short-sighted attempts prevent real cost reductionDon't try to remove cost after the product is designed because cost is designed into the product and hard to remove later; see article on How Not to Lower Cost Don't use low-bidding, which only appears to save one category of cost, but can substantially raise many less-obvious costs and compromise other important goals like quality, delivery, and missing out on the major contributions that vendor/partners can make when they help product development teams design products; see article on Low-Bidding. Don't outsource or offshore manufacturing for cost, which will not result in a net cost savings because of hidden overhead costs and because it inhibits, compromises, or thwarts 6 out of the 8 cost reduction strategies (presented on the home page) due to the following reasons: Outsourcing or offshoring manufacturing separates manufacturing from engineering and thus thwarts Concurrent Engineering and compromises the 80% of the cost determined by the design. Further, transferring, supporting, and dealing with quality and delivery problems of remote manufacturing absorbs many resources in engineering (in one case, 75%), manufacturing, and purchasing whose time would be better spent developing low-cost products. See Cost Reduction by Design summary and the article Design for Manufacturability Outsourcing or offshoring manufacturing to distant contract manufacturers increases the delivery time, which makes it hard to pull parts just-in-time and makes build-to-order impossible. Further, parts may be batched for shipping, which is opposed to the one piece flow aspects of Lean Production. Finally, outsourcing or offshoring manufacturing removes production from the control of the OEM manufacturer. All of these effects conspire to:
If all 8 cost reduction strategies are implemented, the cost
savings will be much greater than appeared possible through outsourcing
or offshoring. For more, see the article on
outsourcing and then, for additional considerations for offshoring, read the article on offshore
manufacture.
Correcting counterproductive policies
may be a prerequisite to designing Half-Cost Products.
Dr. David M. Anderson, P.E., fASME, CMC Seminars Consulting Credentials Articles Books Site Map Cost reduction - Reduce your manufacturing cost. Our cost reduction program shows 8 strategies on how to significantly reduce cost. Cost reduction can result in significant product cost saving. |