In business, cost structures require constant attention. Even companies with a good history of profit margins continually target areas where they can further streamline costs. The increasingly competitive marketplace, shrinking product development cycles, ongoing leaps in technology, changing taxation policies, and environmental sensitivities compel organizations to continually drive down their internal costs. However, the sheer scale and complexity of their industrial processes make cost reduction with quality retention difficult to attain. Most companies introduce cost-savings plans in the early stages of their product development cycle but implementing cost-saving measures to achieve financial targets along the way can be a struggle.
Overcoming Common Impediments to Cost Control
One of the factors that affect their efforts is shifting consumer preferences. At times, tradeoffs between features and cost of a product become essential. Making adjustments like these can be even more intense in a competitive marketplace where customers have a myriad of options and upgrading a product to incorporate a new functionality can significantly increase manufacturing costs.
One common problem is that organizations may adopt a siloed approach to cost control and reduction, with different targets for design, manufacturing, and supply chain teams, that may not fully align with the broader business strategy. Disparate processes such as enterprise resource management, customer relationship management and product life-cycle management are also contradictory to total cost and quality control.
However, there are product design and system engineering consultant firms that offer customized solutions for cost control in manufacturing. Partnering with these specialists enables product developers to reduce operating expenditures and accelerate time-to-market, while retaining and often improving the quality of final output.
What matters most is the ability of these experts to understand the unique challenges faced by organizations in various industries, and to deploy appropriate cost-reduction strategies while also fulfilling market goals.
An Holistic Approach to Cost Optimization
An end-to-end engineering company with comprehensive product development knowledge spanning design, manufacturing and supply chain optimization can help its clients to trim down the costs associated with a new product development or tailoring of an existing product to new locations.
A multidisciplinary product engineering framework is vital for cost-optimized design and development. The concepts must be validated from design-to-manufacture, design-for-assembly and design-for-reliability standpoints. The next step is to deploy advanced simulation tools in computer-aided engineering systems for further design optimization. A suitable engineering partner should also assist its clients in the development and testing of prototypes.
Value engineering is a common approach that experts use to bring down design costs and better manage bill of materials costs. This is the practice of using alternative materials, methods and technological processes to reduce product costs without compromising on functionality.
Product modularization is another way end-to-end engineering firms help manufacturers emerge as process innovators. This method simplifies engineering workloads across multiple products, sites and product lines. Here, product development costs can be optimized at floor level by using appropriate techniques to ensure sub-systems and functionally independent product modules can operate in tandem.
Advanced analytics, backed by big data and the Internet of Things, are also enabling cost optimization for manufacturers. This practice is used to drive predictive maintenance, helping companies foresee, diagnose and solve potential problems in their operations before they occur. Key benefits of predictive analytics include reduced unplanned downtime, improved asset utilization, better production quality, and lower maintenance costs.
Once cost reductions are achieved and organizations record an increase in their profit margins, these can be passed on to end customers in the form of lower prices, thereby boosting demand.
Product cost optimization also has long-term implications along the value chain. By collaborating with an experienced design, build, operate and maintain partner, enterprises can fundamentally innovate their engineering and manufacturing functions in order to adopt ideal practices for cost reduction.
Learn how Cyient’s end-to-end design and engineering solution helped a client add a 175-ton mining trailer to its product line within a year, enabling streamlined operations and overall project costs.