How to keep the integrity of your design and reach target costs.

What people are saying about Mulberry Fields
Your blog speaks to the many issues I have experience doing business with in China “ a company in California

When you spend time developing a product you sometimes develop an emotional attachment to that product. After all, so much effort has gone into it. When it comes time to manufacture the product you give your vendor a target cost and they come back with a cost that is far over what you had in mind. At this point you are more or less forced to redesign the product. One of the big challenges almost every product development dept faces, I would venture to say, is how to get to target cost while maintaining the integrity of the design, for depending on the product even the slightest modification can change the character of a product. For example, I once worked on a cabinet that had plantation shutter doors. When we got a quote on the project, it was well over target. It turned out that the only way we were able to get to target was to replace the plantation shutter doors with plain doors. This was our initial thought and our vendor’s as well. Needless to say without the plantation shutter doors the cabinet would have been an entirely different cabinet altogether and our buyer insisted on the doors. Fortunately we had a good vendor who was able to offer more suggestions to help us reduce the cost, including changing the wood used on the louvers to MDF and making bigger and fewer louvers. We also had to change some of the pure brass hardware to brass plated.

There are two lessons here.

1.) You should never sacrifice the whole for a part. If you need to change the design in your product to get to target cost, you should accept this. In fact, the inspiration for this post is a customer of mine who is wedded to his product design and does not seem flexible about changing it, even though the product now costs more than he wants to pay. At the same time I have another client who recently decided that rather than have the logo embroidered on his product – which would put him over target cost – he would go for a printed logo on a nylon label. The effect is not nearly as nice but he can live with it.

2.) It is very important that you work with a vendor who has PD expertise, and can make suggestions. I once had a boss who preferred to let vendors figure out solutions to problems on their own rather than suggesting solutions to vendors. Her reasoning, she told me, was that if you suggest a solution to a vendor and it does not work, then they will blame you. I did not agree with her at the time and I still don’t agree with this kind of narrow thinking. After all, what happens if you know of a solution that will work, but your vendor comes up with an entirely different solution that you know will not work.? Do you remain silent ? I don’t think that would be advisable.

In short, I think the best relationship is one where both sides work together to solve problems. If you have problems and think you have solutions you should not hesitate to run them by your vendor. A good vendor will tell you if your solution are effective or not. At least that has been my experience.

http://www.theeastasiaco.com

fair 2What they are saying about China Tips for Small Businesses:

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