Design to Thrive

Innovative approaches to managing new product introduction costs can bring in higher returns and ensure a new product's success


The principle technology underlying the FBCA process is feature-based cost analytics software. These solutions allow the NPI team to mine and analyze information from separate design, costing and supplier databases and develop accurate baseline cost targets by determining the cost impact from the individual features of new products. FBCA software solutions use a top-down approach to cost management of individual parts. They use sophisticated data mining algorithms to generate predictive cost models that enable users to analyze part features, construct "baseline target cost" curves across part families, and determine the key drivers that affect part costs.

With effective FBCA software solutions, companies can quickly evaluate multiple NPI alternatives before a product design is finalized. In this way, they can optimize the product design by analyzing and evaluating the impact of the inevitable tradeoffs between performance, reliability and cost. Ultimately, FBCA will help them select the design that best balances customer performance and price requirements with corporate quality standards and profit margin objectives. FBCA will also allow the product development team to pre-plan supply management and bundling of contracts with existing and new parts suppliers.

FBCA in Action

Consider, for example, a manufacturer developing a product that uses an assortment of cast aluminum parts. If the development team has accurate cost and design information at the beginning of the process, they can strive to reduce design complexities and develop more commonalities among families of similar castings, based on individual part features. They can also monitor how their cast component designs stack up against target costs at any stage of the design process and how they affect the costs of the subsystems and platforms to which they belong.

Supply management specialists can then tie the cost and design information to a selection of appropriate foundries and finish shops with the right capability set and be empowered to work with these suppliers on a feature-based cost basis to achieve a lower cost by modifying the design, materials and/or production process. Manufacturing engineers can then plan specific production requirements around the forging and finishing of the parts correctly the first time, eliminating costly changes and rework downstream. And, with a realistic cost structure firmly in place, financial specialists and other internal supply chain partners can work together to determine anticipated sales volumes for the platforms in which the parts belong, and a real-world pricing structure that maintains the desired profit margins.

As a result, the company can rationalize its supply base by understanding the cost drivers and how they align with the suppliers' efficiencies. The company can also reduce part number count and effectively control complexity, resulting in greater product functionality with a more streamlined number of design features. Moreover, if the NPI team decides a different type of part is required, it can quickly consult established cost curves to obtain more accurate cost information for the new part. The net result is to help companies get their products to market faster with higher margins.

Information Drives NPI Success

One major manufacturer of complex machinery was developing a new product line involving hundreds of new parts. The product manager held internal workshops that brought together product designers and supply chain managers. In the workshops, team members looked at various parts within commodity groupings and used FBCA to evaluate and understand the ship costs, cost drivers and supplier efficiencies of the various parts in the groupings.

During the workshops, participants were able to bring up the information generated by their FBCA software on product costs, design elements, part comparability and supplier efficiencies. They used the aggregated information to help explain what they knew about the critical parts and determine how the part costs could be reduced. This facilitated a healthy dialogue that resulted in designers and supply chain managers jointly agreeing on new target ship costs for most of the parts. In some cases, the information showed prices that were out of alignment with target pricing and the prices of comparable parts. This led to effective renegotiations with current suppliers for better pricing. In other cases, designs were improved to lower costs. In yet other cases, alternative suppliers were suggested that were more efficient at producing the parts. Overall, the collaborative exercise enabled the teams to develop concrete action plans that led to substantial reductions in the overall costs of the parts.

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