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Better Product Design Equals Lower Manufacturing Costs

Published: Monday, September 13, 2004 - 22:00

Improved product design would make manufacturing products less expensive than outsourcing to countries like China, according to a recent benchmarking study.

The authors suggest that U.S. companies should do a better job of integrating cost analysis into product design. With rigorous cost analysis as a foundation for product design, domestic manufacturers would be able to develop innovative products that are more economical in the United States.

The study, co-authored by Nicholas P. Dewhurst and David G. Meeker, says it can be more advantageous for U.S. manufacturers to lower costs by redesigning products rather than by outsourcing production. The study shows this practice saves money and jobs in many instances.

To support this idea, Dewhurst and Meeker identify two principles of best design practices:

  • It’s possible to redesign products to reduce part count and cost. As an illustration, the study features an analysis showing how the redesign of an electric drill would eliminate offshore manufacturing cost advantages.
  • It’s necessary to account for all additional costs associated with offshore manufacturing and apply those additional costs to the product. The study warns that companies may not be accounting for the full costs of outsourcing. The authors identify a number of hidden costs, including shipping and logistics, that can add an estimated 24 percent to labor and material costs at the offshore location.

“Outsourcing is not the first step in lowering product costs,” Dewhurst says. “Considering the competitive nature of the global economy and the many hidden risks associated with outsourcing ventures, U.S. companies should scour product designs for efficiency before resorting to offshore production. We hope this study encourages the U.S. manufacturing industry to take another look at design cost analysis.”

For more information, visit www.dfma.com.


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