Product Cost is gaining increasing importance and is a point of differentiation in the market, with customers demanding “More for Less”. With large external factors, beyond the control of organizations, organizations now need to focus on controlling internal costs that include manufacturing costs, quality costs etc. Typically 80% of the manufacturing cost of a product is determined once the design is finalized. Needless to say, marginal reduction in product cost has a direct and huge impact on the organization’s profitability.
Mr. Ambarish Raj, Senior Principal Consultant & Business Head, Breakthrough Management Group International (BMGI) unveiled a white paper titled “Cost and Profit – Redefining Traditional Model”, jointly with CII at the “CII Manufacturing Innovation Conclave” at Nashik, on 27th Aug’14. (To get the entire White Paper, email Nimish Danani, at firstname.lastname@example.org)
The traditional approach to reduce product cost has been dominated by the functional cost assessment & value engineering approach that often provides quick results but with certain limitations. Thus, in order to maintain product value and cost equilibrium, it is increasingly becoming important to shift focus towards Innovation. It is the need of the hour to have a radical change in the prevalent techniques for rationalizing product cost and move towards leveraging the models and tools of Innovation. Innovation is fast becoming the key lever, which can drive organizations towards growth and sustainability in the long run. Effective and Systematic use of various models of Innovations like Job To Be Done (JTBD) and Outcome Expectations that redefine the product design methodology, TRIZ (Theory of Inventive Problem Solving) that suggests mapping of abstracted problems and their related solutions irrespective of their subject matter and Bio-mimicry that seeks to map solutions offered by nature into the product design are fast gaining popularity and have reaped huge benefits for organizations that have implemented them. Andre Gide, Nobel Laureate in Literature (1947) once said, “You cannot discover new oceans unless you have the courage to lose the sight of the shore”. To make this happen, fundamental changes are needed, accompanied by change in perspectives of organizations. In a nutshell it is time to Innovate or die! Do check out our Q&A video with Ambarish on various aspects of innovation including internal barriers, incremental vs disruptive & empowering teams: