What is Design to Cost?
Design to Cost (DTC), is an integral part of the product design process which focuses on controlling the cost of the product as early on in the product life-cycle as possible. With 70% of the product cost being committed to during the design phase, DTC considers aspects such as labor, assembly time and handling as well as careful consideration of materials and manufacturing methods with the aim of designing in cost from the very outset of a product.
In general cases, around 70% of the product cost is determined and committed to during the design and development stage of a product’s lifecycle. This means that it is critical to understand every feature and element that is being designed from a manufacturing and production cost standpoint.
What is the optimal design to cost?
Creating a design that has the right balance when it comes to features and functionality is ultimately what a new product should aim for. Creating a minimal viable product (MVP) or a product that has been over-engineered both miss the mark from an optimization point of view. The MVP may put the organization on the back foot from a marketing point of view and the over-engineered product will have excessive material cost and additional processing costs.
The assembly process
A key aspect to take into consideration is the assembly process.
How many components go into making the product and how much labor is required to assemble the product. Labor cost often gets ignored at the design stage, but with a good Design to Cost plan, this will be considered in the early stages of design and development.
Having different function heads or representatives that form the cross-functional team will allow you to understand aspects such as procurement of certain parts. Understanding that a part can be purchased at a low price if it were a standard color, for example, will help the design team select the correct product and save cost.
All the actions that go towards the task of DTC are not worked upon in a singular isolated action, Design to Cost is an integral part of the overall design strategy, including Design for Manufacturing (DFM), and error proofing for example.
Other elements to include in the ‘Design To Cost’ plan
- Overhead costs
- Full BoM inventory costs
- Feature creep within the design
- Non-recurring costs such as test rigs and tooling
- Returns and warranty, what is the strategy and costs associated with this?
- Service or throw away parts are products
Read more about how DTC fits into NPI in The New Product Introduction Process Guide for Hardware Startups.