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Product cost reduction study

Brief

Our client had a successful range of wireless communication products that existed within a product family. However, competitive pressures meant that the manufacturing cost of the products needed to be reduced. Cambridge Consultants was engaged to undertake a product cost reduction study that considered the present products, as well as derivative products anticipated in the future roadmap.

Approach

Cambridge Consultants employed its established ‘Design to Cost’ (DtC) methodology, supported by its proprietary cost modelling tools, to provide a comprehensive study of possible cost reductions. The methodology considered the overall product family and roadmap, as opposed to specific products alone. As such, cost reductions were identified that had maximum effect across multiple products.

The cost reduction methods included review of possible architecture changes, circuit enhancements, component substitutions, component pricing improvements, production test and manufacturing changes, as well as in-field/service considerations. As such, a holistic set of improvements were identified that extended well beyond the bill of materials (BoM) alone.

Benefit

The study resulted in a structured appraisal of potential cost savings. Taking straightforward changes alone, which would avoid the need to re-submit the products for FCC regulatory approval, resulted in a $2M cost saving per annum for the client for the single product family.

A further benefit of the study was the creation of cost models that showed where the dominant costs in the products existed. Further analysis and brainstorming then led to the generation of several new product concepts focussed on eliminating the most significant cost drivers. These ‘minimum cost’ products, which reached a cost point that had been considered unachievable up to that point, were then submitted into the client’s product approval process for consideration for future development.