Profit Margin

Changing Your Manufacturing Strategy

When should you invest in tooling to reduce unit manufacturing costs?

The decision to invest in tooling for the purpose of driving down manufacturing costs is different for every product, company and market.  Quite often, when launching a new product or entering a new market, a risk averse design approach is taken that requires little or no tooling investment.  Three things must be considered when determining how to approach design and manufacturing strategies:

  1. The competitive unit price of the product for the intended market.
  2. The level of risk perceived for entering a new market with a new product.
  3. A tooling investment vs. unit cost at projected product volumes analysis to determine the most cost effective approach.