Cost reduction

Cost reduction

Cost reduction is the process used by companies to reduce their costs and increase their profits. Depending on a company’s services or Product, the strategies can vary. However, it is important to remember that every decision in the product development process affects cost. Companies typically launch a new product without focusing too much on cost. Cost becomes more important when competition increases and price becomes a differentiator in the market.

Main cost reduction strategies

• Supplier consolidation
• Component consolidation
• Re-source to low cost countries
Request For Quotations (RFQ)
• Supplier cost breakdown analysis
• Function analysis / Value analysis / Value engineering
• Design For Manufacture / Design For Assembly
• Reverse costing
• Cost driver analysis
• Should cost
• Product benchmarking
• Design to cost
• Design workshops with suppliers
• Competitor benchmarking

Tools for cost reduction

"Tutorials and cost reduction analysis tools"
"Should cost estimating"
"eSourcing system"


Barrett R. Crane, "Cycle time & cost reduction in a low volume manufacturing environment", MIT DSpace
Apichart Jearasatit, "Using a total landed cost model to foster global logistics strategy in the electronics industry", MIT DSpace
Bryan K. Parks, "Cost and lead time reduction in the manufacture of injection molding tools", MIT DSpace

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Look at other dictionaries:

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