Smart Home Technology
Value Engineering
Value Engineering Case Study.
Large multinational plc developing smart home technology.
We helped them achieve cost reduction strategies without compromising their ambitious roadmap.
Value Engineering Case Study.
Large multinational plc developing smart home technology.
We helped them achieve cost reduction strategies without compromising their ambitious roadmap.
Value engineering techniques used for a smart home company. A product line had been developed which was technically good but its costs exceeded the set targets and therefore eroded expected profit. The company had been struggling to recruit permanent staff internally and had also had a bad experience with an on-site contractor not delivering. They needed to get the benefits of a cost reduction without impacting on bringing other roadmap products to fruition.
What did we do
We took a three-pronged approach to identify costs saving opportunities. We started with potential component and circuit changes where we worked with the companies’ internal purchasing team and with component vendors to identify potential lower cost, acceptable performance component replacements. Production helped us to understand the manufacturing costs for the product to allow informed trade-offs between component costs and placement costs. Finally we objectively reviewed the cost savings available from functionality reductions which didn’t impact on the products core functionality.
Evaluating Risk
Each of the changes were evaluated against implementation risk, approvals risk for EMC and radio as the product already had international compliance approvals and against timescales and achievable cost savings. These were presented to and reviewed by respective internal stakeholders to enable decisions on which aspects to implement.
Where possible the circuitry modifications and alternate component selections were modified onto existing units and compared with the performance of unmodified products which allowed confidence in changes without the time and cost of prototype pcb production.
Cost savings
The cost savings were then implemented on a small test batch of production units in two phases. The first phase incorporated all of the modifications possible without a pcb change i.e. those which were footprint compatible or where components were simply removed from the pcb.
The second phase required changes to the pcb, care was taken here to ensure test points, manufacturing location marks and locations of large components (connectors, capacitors etc) didn’t clash with the unit’s enclosure.
This cost reduction project resulted in an overall saving of c$7 per unit which for the expected volumes of 500,000 pieces per year giving a $3.5 Million per year saving.
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