Using Design-to-Value To Build Better Products
The Challenge: Designing what customers value most
Many input costs have exploded over the last years, driven by an increasing need for raw materials and a growing global mismatch between demand and supply.
From a product design and development perspective, many companies suffer from 'creeping elegance', meaning that their product designers implement complex and costly features that are not necessarily being paid for by customers.
Companies continue to invest efforts in reducing product cost. Since up to 80% of product costs are set during the design stage, it is important to make the right value/cost trade-offs in the early design stages. 'Value engineering' has emerged as an element of Product Cost Management which promises to unlock new margin and cost opportunities.
Design-to-Value: It is about understanding what product attributes customers care about most and to translate this into new design options that create more value at less cost. In other words: Design-to-Value increases the performance of a product if the customer needs it, wants it and is willing to pay more for such performance.
1. Design-to-Value (DTV) is a product cost management tool to optimize product cost and value at the same time. The approach helps to understand the perceived value for the customer, and to drive the right product (or system) design decisions.
2. Design-to-Value might be the right approach for your business if you experience declining product sales and margins, while customers are more intrigued to buy competitor products.
3. Design-to-Value typically improves product margins by up to 4-8%. Also, reductions in product development cost and the 'cost of good sold' of 10-15% can be achieved.