The Positive Impact of Supply Chain Visibility on Design-to-Cost

Designers have the greatest impact on product life cycle cost

Problem: Deep in a design problem, an engineer may not notice cost blowouts in the Bill of Materials (BOM) until they click “Report -> Bill of Materials”. Coarse views of the BOM seldom reveal this issue until it’s too late. 

Electronic design teams face a daunting challenge in rapidly fluctuating global markets. Challenged with ever-shorter time-to-market requirements, design teams need to understand and mitigate against supply chain risks during the design process. This is particularly crucial since choices made during the design phase impact 70% of the life cycle cost of a new product. Another source estimates this impact as being even higher, in the range of 70-80%. Another expert, Kenneth Crow, states that the cost structure in a company is locked in place because it is based on design decisions about the company’s products.

Product design teams often overlook supply chain risks. Even if they do focus on costs, someone on the team typically must enter data into an Excel spreadsheet for each component. This approach causes data entry errors which will inevitably occur. The spreadsheet may also not include lead times, volume pricing, volume capacity, or logistics information.

To gain and maintain competitive advantage, the design team needs access to real-time supply chain data to assess design choices with cost objectives in mind. This well-developed process  is called “Design-to-Cost.”

To read more see: The Positive Impact of Supply Chain Visibility on Design-to-Cost