CR is principally a process that attempts to lower the costs of producing and supporting a product (a product is defined as all goods, services, processes and knowledge sold)¹.  But, when you think about it… what it really means is that you want to maximize the revenue gap between the total cost of consumer ownership (i.e., the purchase price plus on-going related consumer and service costs that the consumer shells out over the product's useful life and end-of-life) and the total cost of producer outlay (i.e., the cost per unit that the producer incurs during defining, developing, testing, producing marketing, distributing and supporting the product over it's useful life and end-of-life).

Reducing the total cost of producer outlay would allow (1) an increase in revenue or (2) maintaining revenue while also lowering the consumer costs.  Sometimes increasing the revenue gap can be achieved by increasing the sales price or charging more for or increasing on-going service to the consumer.  However, let's assume the more conventional rationale of lowering total cost of producer outlay and/or the total cost of consumer ownership that is financed by the producer, as this is what seems to be on most peoples' minds when the term CR is used.

Since much of the producer's costs are unknown, or at best hypothesized on a running basis, during PD, CR from the point-of-view of a product development team is more of an ambiguous concept.  So how can it be couched in terms of what a product development team actually does?

Let's start with a view of CR from 30,000-feet (9144-meters).  Others have taken similar global views of product costs, e.g.:

• WHOLE-LIFE COSTING -This is an interesting concept used in the UK for assessing all the costs a public sector consumer incurs in purchasing and using a product over its life-cycle. http://www.wlcf.org.uk/ 



• Enterprise Cost Reduction - This is a global approach towards controlling a company's expenses and managing improvements to the organization.  Enterprise cost reduction addresses a number of enterprise-wise key costs that include business configuration, organizational structure and design, business and process complexity, external expenses and the benefits.  http://www.theleadingarticles.com/aid54920/Role-Of-Six-Sigma-In-Enterprise-Cost-Reduction.html, http://ezinearticles.com/?Role-Of-Six-Sigma-In-Enterprise-Cost-Reduction&id=825978



• VALUE ENGINEERING -"...is the formal or informal attempt to assure highest value by delivering all required functions at the lowest overall cost."
  http://www.valueengineering.com/, http://www.vetoday.com/