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Blog

9/1/2022

3 Comments

A simple process to reduce product costs by up to 40% or more!

 
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​A straightforward proven method can yield substantial cost savings for machines and products consisting of mechanical and electrical parts and assemblies. 

​Depending on the project, savings of over 40% can be achieved, in my experience.

The 1st key to this proposed method is to 1st generate a structured and costed bill of materials (BOM) to work from. 

When sorting the list by (Unit cost) x (quantity used) from largest to smallest, you may find that as little as 10% of the parts on top of the list make up between 50% to 80% of costs!  It’s similar to the well-known 80/20 rule.   

This is all great news because now you can work on a small, targeted list to make a huge impact.

To get the maximum savings, you'll also need to make a similar list of the sub-assemblies or sub-systems, sort them, and look for ways to eliminate parts altogether, or simplify by combining several parts into one integrated part, such as Sheetmetal, casting, molded, or 3D printed component.   You can also make a list of functions and look for ways to combine or eliminate some functions.

I’ve seen this work with industrial machinery consisting of hundreds or thousands of parts. 
 

3 Comments
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    Richard Lee is the owner of Lee Engineering Inc. and provides engineering and design services to manufacturers

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