Role of Product Design and Development in the Process of Reducing Costs

Key to the success of a company is to achieve and sustain competitive advantage in the market. Long term competitive advantage and greater market share are achieved by delivering products of the same characteristics and quality at lower prices, or by delivering products of higher value at the same price. Lowering costs is a complex problem with many influencing factors, different approaches, methods and options applied in an attempt to attain that goal. Production costs are affected not only by the production process, but also by technical solutions defined during the development and construction process. Upon completion of the product design, development and manufacturing documentation, the product is fully defined, and therefore the majority of the total production costs is determined. With this in mind, it is wrong to claim that engineers are responsible only for technnical solutions, whereas management is responsible for the costs. This paper analyzes how product development and design influence the production costs in various ways. Emphasis is put on those design process phases that significantly predetermine costs. Measures that can be taken during design and development process in order to reduce production costs, are elaborated. Taking into consideration production costs during the product design process requires additional creativity from engineers. An overview of the possibilities aimed at lowering the costs is presented. It is also pointed out that both cooperation between different company departments and systematic approach should be integrated in the process of reducing costs. Appropriate cost accounting and cost management model are required.