In our Manufacturing Pulse Blog, we have often reiterated that, 'To optimize costs and spending, you will first need to improve the way you create products'. The majority of businesses acknowledge that product cost optimization, or as some companies refer to it as cost reduction, is one of the key strategic initiatives used to drive profitability.
Product cost optimization for manufacturers aims at a holistic product design, development and manufacturing process that builds competitive products with optimal time-to-market. Value engineering, or VAVE approach as it is popularly known, is one of the most effective solutions in the product cost optimization startegy.
Value engineering (VAVE) approach is the practice of substituting alternatives; parts, processes, materials etc. in the product to reduce cost and maximize value of the product manufacturing process. This substitution eliminates the majority of unwarranteed high costs that are associated with mass volume product manufacturing, all while retaining a standard of quality.
In the infographic below, we mention various VAVE approaches that your company can use for product cost optimization.
The VAVE approaches in this infographic are some of the best methods to reduce your product costs. Has your team used VAVE approaches for optimizing product costs, or are you planning to use this approach on your current product line? It would be great to hear from you. Please share your thoughts in the comment box below.
Here is a must read guide on key metrics that you should be tracking in a product cost optimization initiative. Click below to download.