Building successful cost models is a critical step in design for manufacturing
Design for manufacturing is changing how companies approach medical device manufacturing. This is the second of a three-part series about design for manufacturing and its effect on different teams in the product development process. Click here to read part one.
Design for manufacturing (DFM) is a team approach to efficient, effective manufacturing. In the medical device industry, this is an important method for controlling costs while ensuring functionality.
A device’s development starts with the technical team, then moves to the commercial team once the CAD model and drawings are completed.
By examining the costs to make the product, the commercial team can identify ways to reduce expenses to improve a product’s development and future sales.
The role of should-cost modeling in DFM
The commercial team is responsible for should-cost modeling, also called cost modeling. Strategic and technical sourcing, commodity specialists, purchasing, buyers and planners may all be involved in this process.
The initial should-cost model is based on the drawings from the technical team. The model outlines how much a product should cost based on materials, machine time, machining capabilities, overhead, profit margins and a number of other categories.
Once the initial model is developed, the commercial team will begin to adjust numbers and inputs to determine how different features impact the overall cost of a product.
This process involves a series of what-if questions to determine potential cost savings. If a company has its own manufacturing capabilities, it may explore the cost difference to make a product in house compared to using a contract manufacturer.
Balancing excitement features and Voice of the Customer (VOC) with the bottom line
One of the biggest challenges for the commercial team is striking a balance among cost, excitement features and VOC research. The latter two are often high priorities for the marketing team, but may create manufacturability issues or increase production cost.
For instance, it only takes one excitement feature to make a commodity component into a specialty component – and have a corresponding increase in price.
In one customer example, a plate drawing included a complex cutout in the center for aesthetic purposes. The should-cost modeling exercise examined the cost difference of including or omitting the shape. The analysis revealed a price jump when the shape was included because the number of radii increased, which would require both additional machining and inspection time.
Thanks to should-cost modeling, the commercial team was able to identify potential savings on the cost of this product’s development. It flagged the cutout for further discussion with the technical and marketing teams, to determine if the feature was worth the added cost in terms of customer need.
Contract manufacturers can help identify cost savings
With the increasing interest in DFM, contract manufacturers are partnering with clients on their should-cost models. The manufacturer’s first-hand experience with machining technology, inspection data and associated costs is often a benefit to the commercial team’s process.
If you’re working with a contract manufacturer to machine your medical device, ask if they can help identify opportunities to save on production costs.
Lowell’s experienced engineers and machinists can offer insights into how different features may impact the cost of the product. To discuss your project and how we can help, contact us at (763) 425-3355 or firstname.lastname@example.org.