Why is it important?
Many companies realize that effective cost management, through the product life cycle, is very important. However, we often see that most of these efforts happen when the product is in the production phase, and there is a need to control costs to improve margins. Many companies try to manage costs during the product development phase with varying degrees of success.
The primary issues with effective cost management, in new product introduction, (NPI) are
However, the benefits of early cost reduction are significant. As shown in the picture below, the biggest cost impact is possible, during the NPI phase, when product specifications, design, and manufacturing processes are being defined. Working on cost reduction projects in the production phase is mostly limited to commercial levers, because design related changes are fairly slow and painful.
What are necessary elements of a successful NPI cost management process?
There are several tools necessary to facilitate effective cost management structure, like total cost of ownership (TCO), should cost modeling, visibility dashboards, etc. that teams need to be trained on to apply, going forward, for best results.
CGN has worked with multiple clients in the manufacturing space on managing their product cost, throughout the life cycle, and has a suite of tools and techniques that have been proven successful through the years. We help our clients not only identify and validate opportunities, but work side – by – side with them to drive realized product cost savings.