VE in High-Tech & Precision Industries

Published on 2 November 2022 at 13:21

High-Tech means High-Cost, Right?

Developing in technological challenges and tight timelines, neglecting cost of manufacturing can be tempting. Making trade-offs between innovation & cost often feels like a true balancing act, and prioritizing cost effectiveness & design for manufacturing always is a challenge. 

However, every company can benefit from Value Engineering during their design process, no matter the complexity of its products. Here are five tips to help you through any high-tech development process.

Not focusing on cost is a common mistake in high tech & high precision oriented markets. Quite often, people just assume things to be expensive because of their performance. Some even believe they don’t have to think about costs because their customers will pay whatever price they ask anyway.

However, having highly valued, high-tech products or being a market leader in performance doesn’t mean your company cannot gain from increasing cost awareness. Especially in complex & expensive products, small changes can actually lead to big savings. These five tips will get you started!

1. Identify your key technology

In highly innovative technologies, performance or precision obviously is more important than costs. But a high precision machine consists of more than key technology only. To create a cost aware design, a clear distinction between parts that are key for performance and less important peripherals is crucial. Let's take the example of a high precision laser cutter. Its outstanding performance is achieved by its pristine laser source & high tech cutting head. Needless to say these parts should be engineered at the best of technological abilities, without bothering about costs. However, almost all other parts of the machine: its frame, housing, controls, fume filters etc. are not key for the performance of the product, and therefore should be designed as cost effective as possible. 

2. Disconnect cost & price

A common misconception is the difference between cost & value. A high performing product that is highly valued by your customers doesn't necessarily have to be of high cost as well. They often are somewhat related; a product's value should be higher than the cost for a sustainable business case, and vice versa your customer might expect a certain cost related to the price he's paying. But in general, a decrease in cost doesn't imply a decrease in price as well.

3. Don't assume cutting cost is Bad

Especially in high precision markets, you might encounter an aversion to cost reduction. Companies what to stay the best in class, and therefore fear value engineering or cost reduction projects. The reality is of course much more nuanced. Every cost analysis will lead to extensive trade-offs and well-weighted decisions. Value engineering isn’t just cutting costs. It is creating value for your customers in a cost-effective way.

4. Differentiate in products & options

When engineering for performance, it can be tempting to develop a product that has it all. The best possible technologies combined with the fanciest interfaces. However, not every customer values each feature in the same way. Probably, for many customer the second best is also sufficient. Maybe some have to deal with tight budgets, and would rather compromise on look & feel for a more affordable product. Therefore a company should always try to offer a range of products & options besides its flagship. A careful consideration of different models & options helps you better serve customer needs, and reduce cost simultaneously. 

But be careful! Although being beneficial for sales and costs, introducing different product variants also has the drawback of lowering volumes and introducing new parts. Therefore, all variants should be designed with high commonality, using as many standard parts as possible. 

5. Create commonality

Almost all companies offer more than one product. Despite all products being substantially different in specs & performance, value engineering can help increase the commonality within these products. Re-using the same parts in different products not only increases the sales volumes and thus the volume discount, but it also saves time and money in procurement, engineering or after-sales. Creating a distinct product portfolio that closely matches the wishes of your customers with as little different parts & variants as possible really is a true artform.

At Manuformance, our experts work with many clients operating in the high-tech & high-precision industry. That's why we understand the struggle of balancing cost & performance thoroughly. Could you use some help identifying your key technology, increasing commonality or saving cost in your products? Have a look at Our Services or Contact Us Now

How can we help you optimize your manufacturing performance?