Design for Cost

For some years now, the Department of Defense has been asking contractors to design to cost. Each of the services has defined a design to cost process. Dean and Unal (1992) make a distinction between design for cost and design to cost as follows:

"Designing for cost is the conscious use of engineering process technology to reduce life cycle cost. Design to cost is the iterative redesign of a project until the content of the project meets a given budget. Designing for cost seeks to increase system performance while reducing cost. Design to cost usually reduces performance until the budget is met. Designing for cost seeks to reduce cost as far as possible while meeting customer demands. Design to cost reduces the degree by which customer demands are satisfied until an often arbitrary cost bogey is met. Designing for cost is an engineering driven process. Design to cost is a management driven process. Designing for cost seeks to design the product once and only once. Design to cost is iterative by nature and hence incurs redesign and rework cost. Designing for cost seeks to minimize the life cycle cost to the customer by designing high quality into the product. Design to cost attempts in vain to attain product quality by inspecting quality into the product."

"Designing for cost requires designing both the product and the product delivery process for simplicity. Complexity, the opposite of simplicity, increases cost. Designing for cost is thus an integral component of the engineering process. Design to cost is focused on cost and after-the-fact-management, but only incidentally on the engineering process. Low cost cannot be managed into a product; it must be engineered into a product."

"Designing for cost is the orientation of the engineering process to reduce life cycle cost while satisfying, and hopefully exceeding, customer demands."

Design for cost is the proactive and conscious solution of the cost minimization equations of a system. The solution can either be quantitative in the sense of Taguchi methods, response surface methodology, and multidisciplinary optimization, or qualitative in the sense of Deming (1993). Target costing is a practical and powerful optimization algorithm for reducing cost which takes one more step each design cycle.

An unmistakable conclusion of this research is that cost is a measure of engineering and business process. It is a fundamental measure of the genopersistation of the product or service. In order to attain low cost, the engineering and business processes must be focused on low cost. Proper focus will require that many existing paradigms about cost must be changed. The challenge for the future is to choose engineering and business subprocesses so that the integrated whole produces a product or service which is low in cost and which meets customer expectations, provides what the customers desires, and even delights the customer with new and exciting features.

Powerful methods for designing for cost include value engineering, business process reengineering, Taguchi methods, response surface methodology, multidisciplinary optimization, Kaizen, total quality control, total productive maintenance, just-in-time, autonomation, task interleaving, cost tables, target cost, comprehensive quality function deployment, cost deployment and the economics of trust. Why attempt to do your own thing when so many ways have already been demonstrated?

A cautionary note: While many means exist for reducing cost, the average person seems to be able to handle only one or two new ways of doing business at a time. A Primer on Cost for COSTLESS discusses several of the above means of reducing cost and their successful temporal integration within Toyota.

References

• Dean, E. B. and R. Unal (1991). "Designing for Cost," Transactions of the American Association of Cost Engineers, 35th Annual Meeting, June 23-26, Seattle WA, pp D.4.1-D.4.6.
• Dean, E. B. and R. Unal (1992). "Elements of Designing for Cost," presented at the AIAA 1992 Aerospace Design Conference, Irvine CA, 3-6 February, AIAA-92-1057.
• Deming, W. E. (1993). The New Economics for Industry, Government, Education, Massachusetts Institute of Technology Center for Advanced Engineering Study, Cambridge MA.

Bibliographies

Design for Cost Bibliography

Manufacturing Cost Bibliography

Table of Contents | Cost Technologies | Design for Value | Use