The global economy is in an unusual situation. The future is difficult to predict, and changes can be sudden. But there is no reason to lose hope: every crisis is followed by a recovery. Shortages of components and materials have already hit hard, and companies are urgently looking for ways to mitigate their impact. It is also worth remembering that the cost structure of a product or service is an essential part of developing any new offering—even when the global economy is stable.
The upward trend in costs is also evident in product development projects at consulting companies. Jari Lehikoinen, Onni-Matti Halkola, and Mika Tarvonen took up the issue and discussed how product development can help identify cost-effective solutions by anticipating risks in new and existing products.
All three are seasoned professionals with extensive experience in product development, both high- and low-volume products, and changes throughout the product life cycle. Each has worked on numerous cost-reduction projects and understands the critical factors involved in managing a product’s cost structure.
Cost Meditation Creates X-Ray Vision!
“Product costs begin to take shape before a single line has been drawn,” says Jari Lehikoinen. Based on his experience, Jari makes a bold claim: “Finnish companies often seem to be in a hurry to finish a product, yet they do not take the time to complete the product definition before design begins. This comes back to haunt them later in the project.”
Onni-Matti continues: “At the outset, it is worth challenging the actual initial requirements. Customer needs research is not nonsense. It is easy to end up developing a product with features that are not actually needed, thereby creating unnecessary costs.”
A misstep can occur when design is rushed and no one stops to consider what will happen once production begins. Onni-Matti explains: “Assembly testing is an essential part of development. The goal should be to make the assembly process as intuitive as possible. On the other hand, the end product may be easy to assemble while its components are expensive. Cost optimization therefore requires a broad understanding of the product as a whole.”
The Superpower of Tacit Knowledge
At LINK, designers work with devices and solutions across many industries and technologies. This team possesses diverse experience and cumulative knowledge regarding different suppliers, materials, production methods, and technologies. In other words, they have built a significant library of tacit knowledge to draw upon for various customer needs. Similar challenges can arise regardless of the product, even if the industry is completely different.
Mika draws on his own experience: “It is a real advantage to have access under one roof to colleagues’ practical knowledge of both technical solutions and cost levels. We can quickly bring together insights, tips, and experience from experts in different fields.”
Cost-conscious thinking is part of a consultant’s work, and the best results are achieved through close collaboration with the customer and the purchasing team. Jari playfully calls this the “X-ray vision created through cost meditation.”
Don’t Skimp on Prototyping
All three agree that LINK’s in-house prototype workshop is one of the most effective tools available to designers and a clear benefit to customers. In product development and design, costs can be addressed by creating rapid mockups and prototypes. These reveal not only whether an idea works, but also potential assembly challenges. They also make it possible to investigate component availability and pricing and to optimize the design.
Jari explains: “You have to incur costs during the design phase to understand what the product will ultimately cost. You cannot skimp on prototyping.”
Developing Something New Does Not Always Mean Reinventing the Wheel
These days, cost savings are often sought for products already on the market due to component and material availability issues or rising prices. When considering how to cut or optimize costs, you must first know where the costs originate. “There is no point saving cents if you are wasting thousands,” says Jari. Costs and savings can only be influenced by examining the whole and through close cooperation with the entire supply chain. Simple across-the-board cuts do not work.
As a final lighthearted note, Jari offers this “aphorism”:
“If sales slow down, don’t stop the machine.
We’ll help you work through it. Through cost meditation, we’ll develop the X-ray vision needed to get the machine moving again.”
Onni-Matti Halkola
Director, Technology
Jari Lehikoinen
Director, Development
Mika Tarvonen
Lead Engineer
