Design-to-Cost (DTC), as part of
cost management techniques, describes a systematic approach to controlling the
cost
Cost is the value of money that has been used up to produce something or deliver a service, and hence is not available for use anymore. In business, the cost may be one of acquisition, in which case the amount of money expended to acquire it i ...
s of
product development
New product development (NPD) or product development in business and engineering covers the complete process of launching a new product to the market. Product development also includes the renewal of an existing product and introducing a product ...
and
manufacturing
Manufacturing is the creation or production of goods with the help of equipment, labor, machines, tools, and chemical or biological processing or formulation. It is the essence of the
secondary sector of the economy. The term may refer ...
. The basic idea is that costs are designed "into the product", even from the earliest
concept
A concept is an abstract idea that serves as a foundation for more concrete principles, thoughts, and beliefs.
Concepts play an important role in all aspects of cognition. As such, concepts are studied within such disciplines as linguistics, ...
decisions on and are difficult to remove later. These costs are seen as an equally important parameter besides feature scope and schedule, the three taken together yielding the well-known
project triangle.
By taking the right design decisions as early as during the initiation and
concept phase of the
product life-cycle, unnecessary costs at later stages can be avoided. But DTC also tries to capture the necessary measures for cost control during the complete
development cycle. In DTC, cost considerations also become part of extended
requirements specifications.
[http://www.cs.odu.edu/~mln/ltrs-pdfs/iaa-ceso-11-90.pdf ]
In contrast to the closely related
target costing
Target costing is an approach to determine a product's life-cycle cost which should be sufficient to develop specified functionality and quality, while ensuring its desired profit. It involves setting a target cost by subtracting a desired profit ...
, DTC does not mean a product will exactly reach a defined cost, rather, it is about "considering cost as a design parameter in your product development activities".
DTC can also be contrasted with ''Design-to-value'' which emphasizes the value that can be delivered to the customer, instead of the production costs for the manufacturer or company.
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See also
*Cost reduction
Cost reduction is the process used by organisations aiming to reduce their costs and increase their profits, or to accommodate reduced income. Depending on a company’s services or products, the strategies can vary. Every decision in the produ ...
*Total cost of ownership
Total cost of ownership (TCO) is a financial estimate intended to help buyers and owners determine the direct and indirect costs of a product or service. It is a management accounting concept that can be used in full cost accounting or even eco ...
References
{{wiktionary, design to cost
Manufacturing
Product development
Cost engineering