Vantage Point: Design for costing

Nov. 23, 2008
A better way to control engineering expenses from start to finish

Perhaps as much as any discipline, engineering has undergone radical changes in the last century — from the internal-combustion engine and first automobile to the space shuttle and Airbus 380.

Other advancements, although less publicized, are just as vital. Design for Costing (DFC) is an example of an extremely effective but underappreciated engineering development. While DFC is being applied successfully in some markets, it has yet to make a significant impact in North America and Europe. That should change as executives across the globe face increasing pressure to come up with innovative solutions to business problems.

DFC is a lean, streamlined approach to engineering that begins with a fixed price. Specifically, analysts determine what a company ought to charge for a particular product. Then engineers create the product within those parameters.

DFC programs start with a proof of concept validated with a pilot program. Next, they go straight to production. Costs are established and the product is engineered according to the predetermined figure. So value analysis and value engineering, which typically follow product development, are unnecessary.

Importantly, the DFC approach has zero tolerance for overruns. Instead, engineers are challenged to create innovative designs — via lighter or cheaper materials, more-efficient processes, or more-robust technologies, for instance — without compromising quality. DFC also helps engineers negotiate with vendors more effectively, leverage existing infrastructure, and decide whether to make or buy components.

This insistence on innovation spurs creativity and transformational thinking; eliminating design steps speeds time to market. All the while, the inherent fiscal discipline keeps costs down. Significant profits often result from exceptional sales, because DFC programs can make items available to new and very large numbers of consumers.

For example, Spice Mobile, an Indian telecommunications company, recently introduced the “Folks Phone” at the Mobile World Congress in Barcelona. The no-frills model can only send and receive calls. It does not suffer from feature creep, whereas most cell phones come equipped with a camera, calculator, games, and Internet capability whether consumers want them or not. Its simple design lets Spice offer the product for about $25, a figure affordable by great numbers of Indians.

DFC continuously monitors and validates such projects to ensure they stay on course and within budget. This control makes them especially suited to industries that need precise engineering and exceptional performance, but varying degrees of features. These include aerospace, automotive, and consumer appliances, to name a few.

In contrast, conventionally engineered products that exceed budgets are usually stripped to the basics, defeating the purpose of advanced design. The use by DFC of continuous checks reduces the need for reactive feature removal, letting more innovations see the light of day.

DFC should be the baseline of all design engineering. It keeps projects focused and lets engineers create products that connect deeply with new customers. As a result, engineers are far more likely to develop truly transformational products, rather than simply adding bells and whistles to existing ideas.

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