SELLING PRICE BREAKDOWN
(Figure 6.3 in firsts of second editions of DFM
book)
PROGRAMS THAT REDUCE SPECIFIC COSTS
HALF COST PRODUCT DEVELOPMENT
This is the only course that will show product development teams how
to design products to sell at half the selling price. Specifically, the
course will show how to achieve the following cost reductions to 1/N
of the previous state, followed by links to “how to” articles.
1/2 the project development budget,
in 1/2 the time : See the white paper:
http://www.design4manufacturability.com/concurrent-engineering.htm,
which includes vendor/partnerships:
http://www.design4manufacturability.com/vendor-partnerships.htm
1/2 the concept/architecture cost with
simplified concept breakthroughs, which is
important because the concept/architecture determines 60% of product
cost, as shown, with two generic examples, in the next article link.
Customized workshops will explore specific
design project opportunities:
http://www.design4manufacturability.com/designing_low_cost_products.htm
1/2 the assembly, labor, and
processing costs. See DFM article:
http://www.design4manufacturability.com/DFM_article.htm
1/2 of the quality costs. See the
Design in Quality article:
http://www.design4manufacturability.com/design_for_quality.htm
and increase savings to::
1/3 of the quality cost doing Design
in Quality AND Avoiding Cost reduction after Design:
http://www.design4manufacturability.com/cost_reduction.htm
1/3 of the Indirect
labor costs (fire-fighting, change orders); See comparison
timelines at:
http://www.design4manufacturability.com/half-the-time.htm
1/10 of material
overhead for standard parts based on surveys of Procurement
managers:
See opening page of Chapter 5:
“Standardization” in the definitive book on Design
for Manufacturability
1/10 of raw materials inventory
cost using:
Spontaneous Supply Chains,” Chapter 7,
in the 512
page BTO book which starts with a 60 page Summary
1/10 of work-in-process (WIP)
inventory* Cost, which can cost more than profits! See:
“Design for Lean and Build-to-Order:” Chapter 4 in
the author's DFM book, now translated into Chinese
1/10 of finished goods
inventory* Cost using Build-to-Order: See:
http://www.build-to-order-consulting.com/ or
Build-to-Order & Mass Customization,
the most thorough book written on Build-to-Order
SUMMARY OF 9 COST CATEGORIES
1/2 the project development budget
1/2 the concept/architecture
cost
1/2 the assembly, labor, and processing costs
1/2 of the quality costs
1/3 of the quality cost AND
Avoiding Cost cutting
1/3 of the Indirect labor costs
1/10 of material overhead for standard parts
1/10 of raw materials inventory cost
1/10 of work-in-process (WIP) inventory* Cost
1/10 of finished goods inventory* Cost
If your company or clients have high overhead charges, don't let these
excessive overhead charges burden your design project. Instead, spin
it off as a
"profit-and-Loss " center (see book section
.4.1.4 to get "Skunk-Works"
protection from excessive overhead
charges without needing a separate facility.
A Case Study in Appendix
A.1.3 A cites a 30% price Advantage
for an industrial equipment because their product was the only
product built in ait in a "focused factory" and their more
expensive copetitor still build everything they ever built!
This page presents a compelling
case for a quick financial return from momdist investment
providing nothing counter-productive gets in the way. If so, find
out how to identify and overcome whatever is Conter-Productive
page.
The very first
step may be to start with a few hours of thought-leader
consulting
to help formulate strategies and implementation
planning.
