Cost reduction (CR) is commonly used as a retrospective concept, meaning that you already have a definite product cost and you want to go back and reduce it for whatever reasons.  But, does this make sense within the product development (PD) environment where a product is either not yet developed or is in the early stages of development, and the real pricing and development, production and support costs are not yet known... or are at least vague?  The thought of CR gives product developers angst, especially when they are asked (more often than not) to go back and redesign a product to lower the cost that had once been established and agreed to. Understandably, there are forces outside the knowledge or control of the product developers that sometimes make this necessary.  But, how can this be managed during PD?

There is an optimum solution, which this article will outline.  Simply... we'll take a 30,000-foot (9144-meter) view of costs that a producer and consumer will experience during the life of the product and delineate how 'anticipatory CR' efforts can be viewed initially from within the product development environment.  The goal is to find those direct and indirect costs that can be affected by the product developer and then minimize the costs or design-in cost management capabilities during PD.