Management

Study Shows Product Redesign, Not Outsourcing to China, Holds Cost Advantage for U.S. Manufacturers

14 Sep, 2004


A new study from Boothroyd Dewhurst attacks longstanding assumptions about product costs that have troubled manufacturers for decades, both in the United States and worldwide. In "Improved Product Design Practices Would Make U.S. Manufacturing More Cost Effective: A Case to Consider Before Outsourcing to China," the authors argue that U.S. companies should do a much better job of integrating cost analysis into product design. If rigorous cost analysis were instituted as a foundation for product design, the study states, U.S. manufacturers would be able to develop innovative products that are more economical to produce in the United States.

One of the study's more provocative conclusions is that it can be more advantageous for U.S. manufacturers to lower costs by redesigning products than by outsourcing production to other countries such as China. In many instances, the study shows, redesigning a product and manufacturing it in the United States is a better option for saving money.

To support this idea, the authors identify two design best practices that many U.S. manufacturing companies overlook when making outsourcing decisions: It's possible to redesign products to reduce part count and cost. It's necessary to account for all the additional costs associated with offshore manufacturing and to apply those additional costs to the product. The complete text of the study is available at http://www.dfma.com/truecost.


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Lynn Allen

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