Cost reduction
 | This article includes a list of general references, but it lacks sufficient corresponding inline citations. (November 2011) |
Cost reduction is the process used by companies to reduce their costs and increase their profits. Depending on a company’s services or product, the strategies can vary. Every decision in the product development process affects cost.
Companies typically launch a new product without focusing too much on cost. Cost becomes more important when competition increases and price becomes a differentiator in the market.
Cost reduction strategies
- Supplier consolidation
- Component consolidation
- Low-cost country sourcing
- Request for quotations (RFQ)
- Supplier cost breakdown analysis
- Function cost analysis / Value analysis / Value engineering
- Design for manufacture / Design for assembly
- Reverse costing
- Cost driver analysis
- Product benchmarking
- Design to cost
- Design workshops with suppliers
- Competitor benchmarking
References
- Barrett R. Crane. "Cycle time & cost reduction in a low volume manufacturing environment". MIT DSpace.
- Apichart Jearasatit. "Using a total landed cost model to foster global logistics strategy in the electronics industry". MIT DSpace.
- Bryan K. Parks. "Cost and lead time reduction in the manufacture of injection molding tools". MIT DSpace.