Home » Concepts » Product Cost Management » Multidimensional optimization
From the company’s point of view, it is not only necessary to optimize material costs, but also to address other types of costs, such as tooling costs, supplier development costs or investments in production equipment. Non-monetary targets are also increasingly coming into focus, above all the carbon footprint of a product and sustainability.
These targets cannot be optimized independently of each other. Reduced investments in automation, e.g., lead to higher manual assembly costs. Reduced CO2-emissions, which can be achieved by using regranulated plastics or “green” steel, also have a countervailing cost effect in many cases.
The solution in choosing the optimal path lies in reducing all target variables to one common denominator, i.e. in monetary terms, in an appropriate cost model. In a next step, all optimization ideas are mapped in a morphological box and the combination(s) that satisfy all fixed constraints are identified. An assessment of the total cost of ownership (TCO) of the viable solutions takes all secondary effects into account (e.g., those resulting from the avoidance of CO2-emissions) and leads to a direct comparison of the options, so that the best option is chosen. The flexibility in supplier selection and the associated increase in resilience can also be considered in a similar way.
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