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White Paper

Effectively Setting Product and Component Cost Targets and Designing to Them

 

With up to 80% of the product cost being driven by design, design-to-cost is particularly effective in addressing cost, quality, and cycle time issues.

Organizations are changing the way they set their targets for product and component costs in an effort to achieve desired profit margins. In November 2015, APQC conducted a research project, with support from Tata Consultancy Services, on the shift to an approach focused on design-to-cost and how organizations are balancing different requirements and elements internally. The survey focused on answering the following key questions:

  • Are organizations integrating design-to-cost into their product development process?
  • How are product and component cost targets defined?
  • What functional areas of the organization are involved in the management of product and component costs?
  • How are product targets tracked and managed during the product life cycle?

APQC sent the survey to product development, innovation, and supply chain professionals and received valid responses from 100 organizations, nearly one-third of which individually generate more than $1 billion in annual revenue and with an employee population of more than 10,000 workers. Participating organizations operate in a variety of geographic regions and represent more than 36 industries. In addition to fielding the survey, APQC interviewed several organizations, which indicated on the survey that they adopted design-to-cost practices in their product development process.

Download the white paper to check insights from the survey results. It also provides a snapshot of what organizations are doing to set product and component cost targets that can be used by organizations to benchmark their own practices.