ign as a Business Strate {As businesses continue to reduce costs to achieve competitive advantage, design issues are becoming increasingly important aspects of business strategy. Because product and service design touches every part of a business organization, from operations and supply chains to finance, marketing, accounting, and informa- tion systems, design decisions have far-reaching implications for the organization and its success in the marketplace. Product and service innovation is becoming a key avenue in pursuing a com- petitive edge, and sustainability issues are being gion increasing importance in business decisions. Product Redesign, Redesign, not offshoring production to countries such as China, holds the greatest promise of cast advantage for U.S. manufactur- rs, according to @ new study that attacks longstanding assump- tions about product costs that have troubled manufacturers for decades, bath in the United States and worldwide The study, “Improved Product Design Practices Would Make US. Manufacturing More Costéffectve:A Caseto Consider Before Outsourcing to China,” suggests that U.S. companies should do a ‘much better job of integrating cost analysis into product design If rigorous cost analysis were to be instituted es a foundation for product design, U.S. manufacturers would be able to develop innovative products that are mare econamical to produce in the United States, assert the reports coauthors, Nicholas P Dewhurst ‘and David 6. Meeker. Dewhurstis executive vice president of Boothroyd Dewhurst, @ solution provider specializing in software for design for manufac- ‘ture and assembly (DFMA). Meeker is @ DFMA consultant One of the more provocative conclusions of the study is that it can be more advantageous for US, manufacturers to lower costs (concluded) Countries with very low labor rates such as China, The authors identify a number of hidden costs, including shipping and logs- ties, that can add an estimated 24 pereantto labor and material costs at the ofshore location, ‘The study seeks to demonstrate thatf companies consider the Potential for design improvement slong with 2 realistic estimate of ‘the full costs of outsourcing, it often makes more sense to manu facture products in the United States. “We know, from years of consuting with design engineers, that U.S. manufacturers have very litle visibility into what their prod- ucts should cost to make,” said Dewhurst. “Companies histoi- cally do @ poor job of integrating cast analysis into early product design. Meny companies now rushing to outsource manufacturing READING ‘Apple has long been considered one of the most innovative companies in the world and their emphasis on cutting edge design has resulted in market leading products designed with customers! ‘noeds and roquirements in mind. Design thinking permeates Appl {rom the simplicity ofthe packaging to the streamlined product portfolio every stop that Apple takes is focused on achieving eff- cient and elegant solutions wich will delight thelr customers. READING by redesigning products then by outsourcing production to other ‘countries such as China. In many instances, the study shows, redesigning a product and manufacturing tin the United States is 8 better option for saving money. To support this idea, the authors identify two principles of design best prectices that, they seid, many U.S. manufacturing Companies overlook when making outsourcing decisions: + Firs, itis possible to redesign products to reduce part count and cost. As an ilustration, the study features an in-depth, ‘quantitative analysis shawing how the redesign of an electric 4ill would eliminate the cost advantage of offshore manufac- turing and justify @ decision nat to outsource production. ‘And second, itis necessary to account for all the additional costs associated with offshore manufacturing and to apply those addtional costs to the product. The study wems that companies may not be accounting for the full costs of out- ‘sourcing when they consider sending production overseas to (continued) stil o not understand thatthe design of the product determines. the final cost.” Dewhurst warned that outsourcing should not be the frst step in lowering product costs. “Considering the competitive nature af the global economy and the many hidden risks associated with outsourcing ventures, U.S. companies should scour product designs for efficiency before resorting to offshore production,” he said. "We hope this study encourages the U.S, manufacturing Industry to take another look at design cost analysis.”