Design for Costing: Can It Make the Cut?

Design for Costing? Is this something new or is it what I did for much of the 42 years that I was a working mechanical engineer? We almost always ran cost estimates on our product designs well before engineering release because there was usually present some projected selling price in the product specifications. Even in my first job in 1960 the engineering department had a full time cost estimator. This guy had the only Friden mechanical calculator in the company. One of his jobs was to run a cost estimate on each drawing as we finished it. This normally involved him coordinating closely with the production engineers for the development of machine cycle times, tooling and casting costs.

So what's new about designing for cost? (ing?) It's just like designing for performance, reliability, product life, manufacturability, serviceability, etc. etc.

I found a good white paper on the subject by a fellow named Kenneth Crow of DRM Associates:

http://www.npd-solutions.com/dtc.html

It discusses the subject in some detail. IMHO the only thing new about this subject would be the integration of cost calculations into parametric solid design software. When I retired 6 years ago my company was in discussions with several of the engineering design software companies including Autodesk about developing such capability in their new products. Having not kept up with the subject I can't say if that idea ever took hold.

I always thought that on the fly cost calculations that displayed right on the screen while the engineer is developing the solid model, then the tolerances and other attributes for each part would be immensely helpful to the design engineer in the early stages of design. The continuing rollup of assembly and product cost in the engineering project management database would provide a useful tool for supervisory people.

Ed Weldon

Dear Ed Weldon,

YES. Design for costing can certainly make the cut. Cost cutting measures in industries have become the order of the day. Take for example - the Automotive Industry. you will find separate departments working round the clock on this subject,giving different names to the same subject like- VALUE ENGINEERING / VALUE ANALYSIS Dept. or Division headed by senior persons - Manager, or GM or Vice- President ( Value Engineering ). Their only motto is COST REDUCTION.

Value Engineering ( in short we call it VE ). VE is the systematic application of recognised techniques by a multi- disciplined Team including DESIGN Members which identifies the FUNCTION of a product OR Service ; establishes the worth for that function; generates alternatives through the use of creative thinking & provides the needed functions to accomplish the original intent of the project. This is done at the lowest life-cycle cost without sacrificing project requirements for safety, qualitity,reliability & environment.

Google search under the heading value engineering, you find whole lot of articles/ref. for BOOKS on this subject.

GOOD LUCK !!

Regards,

P.Rangasamy

P.RANGASAMY --

I respect your enthusiasm for value engineering. But I do not share it. Perhaps it has its place. As a downstream program in a large company that has made cost reduction of existing designs a major strategic objective it can have value. I think the automotive industry, especially in the USA, can probably make good use of that management tool. But the bottom line is that formal VE efforts and structures are always to some extent reactive rather than proactive. They cannot be 100% proactive because to be so they would be assuming the design engineer's role and place in the manufacturing industry's organizational structure.

IMHO the success of value engineering will depend a lot on the corporate leadership and culture. Highly politicized organizations will have difficulty with value engineering as the design engineering team views the VE team's second guessing, meddling and inevitable project delays for late date redesigns with hostility. Further, to the extent that senior managers, especially those lacking design engineering credentials, must impose their power and attention on the project the whole corporation will suffer.

A competent design engineer in the present day work environment prides him/herself on having a wide view of all classes of product requirements, not just simple physical form and performance. The best engineers will consciously test every stage of the conceptual process against each area of requirements including cost, VE, safety, quality, reliability & environment that you mention. This makes the effort very proactive.

The real world problem for most engineers when confronting each area of consideration while proceeding with his design effort is getting access to specialized expertise in the organization to answer questions and review his design on a timely basis.

In today's "lean and mean" organizations with strong imperatives to bring product to the marketplace in the shortest time it can be difficult to gain the timely and direct assistance of other department specialists who have all they can do to complete their primary tasks. This is a particular problem when engineering projects are in their early stages and are receiving scant notice from the bulk of the company middle management. Seldom is the assistance of the design department any more than a low level collateral duty in the job description of people working in the manufacturing organization or other staff departments like Quality, Reliability, Safety, Environmental, Legal, Marketing, Cost Accounting, etc.

Another very important factor here is the tendency to employ assign project responsibilities to young engineers with lots of energy to complete primary engineering tasks like solid modeling and drawing preparation in a minimum of calendar time. These are the folks who haven't yet gained the experience that enables them to give good consideration to all aspects of the design mentioned above. And fully half the time they are designing the hours are late and there is nobody at work in the other departments to answer their emails or text messages.

It is factors like these that suggest putting the multi-discipline support right in the software that the designer is using. The algorithms that would, for example, suggest a certain part form can be made from both a stamping or an injection molding and go ahead and produce a part cost correct within +/- 20% as well as tooling cost and lead time are not all that complex once a solid model for a part is created.

Oh and, by the way, the computer could easily send a text message to the injection molding guy letting him know what the design engineer is thinking. Or how about flagging the Environmental crew or the Safety group when the design engineer starts messing with a problematic material.

This is what proactive is all about. Shorten as many as possible of the thousands of decision loops that comprise a major engineering project and do that as early in the design process as you can.

Ed Weldon

Dear Ed Weldon,

Thanks for your comments on this interesting subject of Design to Cost. These things differ from Industry to Industry. I gave an example of one such tool called Value Engineering. You know that there is no single solution exists. But cost cutting programmes will always remain constant.

I can quote yet another example from the Car industry in India - TATA MOTORS have announced the arrival of Design to low cost their latest model " NANO " car. New concepts in Design called " Simultaneous Engineering " are working wonders for them. This is not a VE for one component. Technological innovations to suit customers expectations like best price ,service etc.will have to be taken into account.

Perhaps you may be aware, the MOTOROLA engineers in USA first designed and developed the so called MOBILE PHONE - the size of a big Transister Radio. What is happening today with NOKIA. All Design to cost.Todays design Teams are not working in isolation. They seek help from customers, suppliers, specialists,employees ( TOP to Bottom. Every of their feedback is thoroughly analysed & all possible improvements are getting due credit before the product is designed.

In the end, it is a big game of " SURVIVAL OF FITTEST "

Regards,

P.Rangasamy

Perhaps companies that have separate 'Value Engineering' groups have missed the mark in their original projects. Every engineer should consider cost as an integral and important part of the overall design. Maybe the lack of cost discipline at the automotive houses is why they want a bailout. Wonder if Toyota has a value engineering group?

Design for Costing can never exist on it's own. Low cost is normally connected to low quality, low quality to low customer confidence, low customer confidence to reduced sales which compromises the foundation for design for costing as it is based on estimated sales quantities. It starts to become fashionable to reach targets for costing by using low cost resources (man and material!) but even this is risky unless the target customer is going to accept the reduced quality. So in my opinion Design for costing should always be balanced with design for quality (whatever the quality spec is!). I would even suggest that sometimes it is better to focus more on the quality aspect and accept that your product is costing more than that of your competitors if you are able to "sell" it to your customers. If you can convince them that the increase in quality will mean less downtime and hence higher reliability and maybe lower running costs then that will mean Low Cost for the customer rather than just a lower purchase price. Furthermore Design for Costing will add one more cost-base to your product cost and that is design cost. It is generally known that to reduce product cost (being material, manufacturing, assembly cost) will reversely increase the design cost which is not always directly added to the product cost. On another note, will Design for Costing inspire creativity? Yes, I believe it will, and sometimes it will bear fruits for future developments but it should never be a goal on its own.

The real problem with designing for quality is that you end up with a product that has lousy margins because manufacturing cost is too high. So then the marketing people say "add features so we can sell it for a higher price". Then you get feature creep. In the extreme you have an expensive Mercedes Benz with a high frequency of repair record because all the creative gadgets pasted on a fundamentally good car at late stages in the design process are keeping it in the repair shop.

Ed Weldon

Designing for quality, in the grander scheme, is designing for cost. What is the cost of warranty support, recalls and returned goods? What is the cost of lost customer base and bad brand reputation?

An interesting question, I have for the past few years allways been asked to design and then present a price. This I feel does not allways allow for "thinking out of the box" and usually is the standard operating procedure for most companies. Designing towards a target price often requires some very creative thinking and I suppose the birthplace of a lot of new innovations stem from this. It definitly inspires creativity that is essential towards progress in the relative fields. Yes I think it will make the cut.

Any experienced design engineer will tell you he wants to know what you want him to design up front; i.e. give him a complete design spec, marketing spec or whatever you call it. Every change made once the design effort is started (and that includes changes to reduce costs)will serve to jeopardize the budget, schedule and quality of the engineering project effort.

Better to give your engineer a cost target up front than have an unexpected product cost estimate explode in everyone's face partway through the program. Yes, you risk having him come back early on and tell you that the project is impossible. But I'll bet most of the time you'll get that response a lot sooner than the "kiss of death" effect that an unexpected high cost estimate can produce at the likely later date. Especially when politics gets involved.......

Ed Weldon

ED i have enjoyed especially the give and take between you and P.Rangasamy on this thread.

Perhaps what separates our ideas about this topic are recognizable in a n old HP printer I have.

At an HP meeting, the ceo of HP comes out and stands on a cheap lexmark printer. it crushes under his weight.

Then he stands on another brand of printer, and it crushes too.

Then he stands on an HP printer, which supports his weight., the audience cheers wildly.

Then he asks them, how much more does it cost us to build a printer that will support the weight of a fully grown adult, and why do we do it?

WHat value is added value, and which is waste?

You are correct that the initial design should give a petter view of the requirements. but ...

Really enjoyed your posts on this.

milo

I would like to share my experience of product pricing. I worked for 33 years in factory mfg. Material Handling Equipments.We had a German Collaboration and one their engineer was deputed to our country for developing local design of the Hoist. Earlier there were 5 to 6 mfrs. in the Field and they had control of the market. They had their own quality problems due to their designs being suitable for the country from where they originated.

First of all we studied all the hoists available in the market. We visited some of the large customers who had been using these hoists. We collected their feed back as far as performance, design limitations, maintenance problems and their suggestions etc.

We sat down and searched for ideal design to suit our local customers. We selected components to suit rugged operations in any working conditions we did not bother about the cost aspect. Finally we designed the hoist to meet most of the customer's expectations.

We initially introduced our product at competitive introductory price for entering the market. Latter on as our hoist proved its performance we increased the price so as to earn reasonable profit margins. Even though our hoist was costliest hoist in the market it became the most demanded hoist in the country.

If the product is designed to meet the customer's needs and it gives best performance for many years trouble free then for customer price is secondary consideration.

When I was interviewed by the CEO of our company for my current position he had one main question. It was, "Why are we here?" My answer was, "To make money."

Unless your contracted to design some kind of politically driven product for a government (the kind where they waste our tax dollars) then the only reason you are even considering engineering or designing a product (be it hardware, software, textile....) is to make money. Cost is a priority.

The difference comes when your product is mass market (like a bread clip) or one special (like a navy destroyer). More emphasis is made to save a fraction of a cent on a mass market item than on a special project. Well..... unless your a bean counter.

Perhaps if we designed like bean counters North American products would be more globally competitive today.

yes, i think it will. But, designing have much more parameter need to consider, not only the cost.

I totally agree. Even before cost you look at your tagret market. Am I designing a system for a BMW or a Chevrolet? Is it a common dollar store item or expensive specialty item?

Engineering and design involves a lot of parameters with all of their different nuances. But even a basic thing as material is cost driven. (which is kind of ironic since if the best materials were always used then the cost of them would typically be driven down by mass production)

Even safety is cost driven. How many gadgets would be sold if they hurt or killed people? Business plans inculde acceptable liability and related loss.

This almost sounds evil but it is driven by a global market that is ruthless. And many countries see it as though it's a matter of survival to be competative at any cost.