In the New Product Development (NPD) process, 90% of the cost of a product is fixed by the end of the design phase, By this time in the process the direct material, direct labor and product specific capital equipment costs are set in place, whether we fully realize it or not. The ability to control cost is greatest during the concept development stage. Getting manufacturing and suppliers involved early and clearly understanding customer needs from the start are key to managing product costs.
Ways to implement such approach involves careful selection and early collaboration with suppliers for help in making design tradeoffs for customer requirements, functionality, and cost. What is needed is great communication across the design and supplier network that is responsive to customer requests and priority requirements. This effort will reap great dividends for a more salable and profitable product.
Of course, it is important to first probe deeply into customer requests. Is a functional capability a must have, need to have or nice to have? Clarifying and prioritizing of customer requirements provides design engineers with the maximum range of options, and allows them to make informed trade off decisions when handling competing performance and cost goals in the design process. Finally, be sure to evaluate usability to deliver a user-centric design, which is critical for total design success.
With these practices of understanding customer needs and usability and by collaborating with the supplier base during the concept development phase, designers will be in the best position to deliver an optimal design – and to maximize their impact on 90% of product cost from the start.
Sigma Design Company – Turning Smart Ideas into Product Solutions
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Since the peak of 2.5 million US high tech jobs in 2000, the US has lost 687,000 of those desirable manufacturing jobs. Meanwhile, about 85% of R&D growth in US multinational corporations since 2004 has been based abroad. These trends reflect an emphasis by large US corporations on high growth and low cost labor markets found overseas over the past decade – especially in China*. The good news is that now economists estimate that production cost differentials between US and Chinese markets are rapidly dwindling – with a very narrow gap expected by 2015**. SIGMA believes US small business manufacturers are nimble and competitive enough to grow and lead the turnaround in high-tech production and employment in the USA. Read on to find out “how”.
“In New Jersey the creation of about 40,000 new jobs (only 12% of our current manufacturing base) would restore the manufacturing sector back to its peak level. This is a realistic goal over the coming few years”, proclaimed Lynch of SIGMA. “If we could start more small manufacturing businesses that each create 25 to 50 jobs per company, then we will be well on the road to reestablishing our hi-tech manufacturing might. Each small manufacturing firm needs to buy screws, paint, machining, plastic which all builds momentum”, he added. A recent Business Week article confirms his point – “manufacturing still has the highest leverage factor of any sector. It creates much more value and many more ancillary jobs than any other sector”*** And the National Association of Manufacturing (NAM) indicates that each dollar’s worth of manufactured goods creates another $1.43 of activity in other sectors, twice the $.71 multiplier for services.
For its part, SIGMA will follow its successful B2B technology commercialization model. One example is a diagnostic laboratory apparatus that SIGMA newly designed in 2011 for the US market and which SIGMA has been producing monthly since August 2011 (see our Sept 2011 blog article) . This product is creating steady work for SIGMA employees and for numerous local suppliers. Significantly, about 40% of sales are for export, which is also beneficial for the US trade balance, the US dollar and for US competitiveness. SIGMA is committed to repeating this local B2B commercialization-production model for other highly engineered products at our New Product Manufacturing Center in Middlesex, NJ. Come join us!
Sigma Design Company – Promoting the New American Manufacturing Era
Sources: *Manufacturing.net, **Boston Consulting Group, ***Business Week
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Almost every local and global economy is suffering or worrying about a financial meltdown. Leaders and citizens alike are struggling and feel the sting of the dwindling economic pie. While some are complaining, some occupying and others grandstanding, at Sigma Design Company we are taking positive action by working to promote a New Manufacturing Era. We are doing this by investing, creating, producing and employing.
Sigma Design Company is bullish on the inventiveness and ingenuity of the American people. We believe in ourselves, our suppliers, our clients and our collaborators. We have more than doubled down on US manufacturing by expanding eight-fold and by just opening (in October) a Technology Commercialization and New Product Manufacturing Center in Middlesex, New Jersey.
We believe that we, and others like us, can compete right here in the USA and right here in New Jersey! We are doing this by conceiving, designing, and producing state of the art, high-valued, high-engineered systems and solutions for a range of industries. We bring team spirit, professionalism and innovative collaboration for total new product development and manufacturing. We seek to spur on others across this great land to stand up, work smart and be part of the solution to build a New Manufacturing Era. Come join us!
Sigma Design Company – Promoting a New Manufacturing Era in New Jersey and USA
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Our Point of View (POV): From Sigma Design Company, LLC
We applaud the hedge funds and private investors who are brave and smart enough to invest today for the technologies of tomorrow. Early stage technologies, which historically had the highest risk profile, now have a better outlook given the stagnant macroeconomic environment.
As everyone knows, traditional safe industries have been whacked the past few years and others may be on the brink of new unknown disasters. At least many people are sitting on the sidelines on their cash and their backsides. However, these once conservative plays in steady state businesses are no longer your dad’s (or mom’s) blue chips – and most have very little upside potential. On the other hand, investments in R&D for emerging technologies and new product development have enormous upside potential with the right mix of success factors and players.
More importantly, investing in U.S. based entrepreneurship and new product engineering provides, and importantly grows, local know-how and good living wages. These are both critical assets that are fundamental to any sound economy and nation and also important for our families and neighbors. So big kudos to those with the guts to go for the glory of spurring new technology commercialization and local engineering services and manufacturing in New Jersey USA during these uncertain times.
Onward and upward!
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