Supriya Ghosh (Editor)

Cost reduction

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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. 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.

Cost reduction strategies

  • Supplier consolidation
  • Component consolidations
  • Low-cost country sourcing
  • Request for quotations (RFQ)
  • Supplier cost breakdown analysis
  • Function cost analysis / Value analysis / Value engineering
  • Design for manufacture / Design for assembly
  • Reverse costing
  • Cost driver analysis
  • Product benchmarking
  • Design to cost
  • Design workshops with suppliers
  • Competitor benchmarking
  • References

    Cost reduction Wikipedia


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