Cutting costs at every part of the product development process is the core purpose of value engineering. Let’s explore what that looks like.
Let’s do a quick recap:
- Part 1: Discovery – You recognize a need for a new product and begin to define it
- Part 2: Design – A production design is created and specifications are defined
- Part 3: Alpha Prototyping – We prove the function of your design with a rough prototype
- Part 4: Beta Prototyping – We create a handful of prototypes that look, feel, and function like the final product will. Customers, marketing, engineers, and the lab test it.
- Part 5: Pre-Production – Once we know the product is good, we’re ready to start planning for production.
- Part 6: Production – When the product is in production, we are managing every facet of the pipeline and searching for opportunities to increase efficiency/profits.
Always engineer for value
The biggest thing to remember is that you should be value engineering from the very beginning. You shouldn’t think as costs as your number 1 focus, but more of a filter. Don’t discourage new ideas, but always put them through a cost filter to see what effect it will have on the bottom line. Let’s talk about what value engineering looks like at each step of the product development process – We’ve narrowed it to 3 major areas for easier digestion.
In this case, design represents the discovery phase, design phase, and both prototyping phases. Nothing is being produced yet and we are still fine tuning the product design. Typically, at this point in the process, we call it “cost avoidance” since we are preventing costs rather than reducing them.
Selecting materials that are easy to source, choosing manufacturing processes that fit your projected volumes (vacuum forming can be much cheaper than injection molding on low volumes), investigating possible product failures, creating packaging that accounts for shipping/storage, etc. can all be ways to avoid costs at the design stage of the process.
Understanding when to ask a specialist is one of the biggest issues we run into. Some companies have great design engineers, mechanical engineers, and industrial engineers, but when they decide to incorporate a small electronic component into a new product and choose not to consult an electrical engineer, they can run into big problems.
During production, you’re always looking for ways to decrease the cost of labor and the cost of materials. if your design was well made, there probably won’t be much fat to trim in the materials (unless your volumes go up), so we shift focus to labor.
Defining and redefining processes can go a long way to streamlining costs. Large and small companies struggle with this for various reasons.
Large companies may not have the visibility into every step because of the distribution of work. Blindly working off of an outdated process can leave gaps and no accountability.
Small companies struggle to maintain processes because of a lack of structure and formality that can be required to ensure efficiency.
Auditing and measuring throughput, yields, etc. will help expose areas for improvement
End of Life
When a product earns the label “legacy,” a whole new set of opportunities for value engineering. The down-side to legacy products is that your volumes will decrease and you will likely lose the discounts you were getting on large quantity orders from vendors.
Generally, a good amount of time will have passed since the original design was created and materials sourced. Depending on the type and complexity of your product, you might be able to find improved, cheaper alternatives. There might be a new off-the-shelf product that combines multiple components for less money. You also might be able to consolidate vendors to lessen the complexity and build up large quantity discounts by ordering multiple products from a single source.
We’ll go into more detail on how to handle products at the end of their life cycle next week.
Where do we fit?
We have helped major players in the tire, automotive, snack, and medical device industries engineer products to decrease costs and increase profits. In some cases, we designed the products from the beginning, but in others, we stepped in to make adjustments to their existing production line that slashed costs drastically.
If your yields are low, suppliers dragging their feet, or maybe you’re having safety issues with machinery, let’s talk about your product and your goals.
You’ve almost made it! Only one more segment in our product development series and we really appreciate you joining us along the way. Don’t forget to tune in next week for the conclusion where we discuss End of Life products.
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