The crucial insight is that most costs are assigned when a product is designed. Often an engineer will specify familiar, safe materials and processes rather than inexpensive, efficient ones. This reduces project risk, that is, the cost to the engineer, while increasing financial risks, and decreasing profits. Good organizations develop and review checklists to review product designs.
At the system engineering level, requirements are reviewed with marketing and customer representatives to eliminate costly requirements. Shared modules may be developed, such as multipurpose power-supplies or shared mechanical components or fasteners. Requirements are assigned to the cheapest discipline. For example, adjustments may be moved into software, and measurements away from a mechanical solution to an electronic solution. Another approach is to choose connection or power-transport methods that are cheap or that used standardized components that become available in a competitive market.
In mechanical engineering, the process usually begins with a team review of the materials and processes. The team will include a cost accountant, manufacturing and design engineers. Quite often, parts can be combined into a single injection-molded plastic or die-cast part reducing both fabrication and assembly costs. Fasteners are eliminated, reduced or commonized. Tolerances (critical dimensions) are eliminated, widened and adapted to production processes to achieve theoretical 100% yields. Adjustments are eliminated.
The tooling cost and any production machinery costs are estimated, and financial feasibilty established with return on investment. Reuse of existing machinery and capabilities is often essential.
In some cases, the crucial insight is to substitute materials that require less time to form. For example, some products can substitute surfaces sputtered with coatings for heat-treated steel and save money because the production bottleneck of the time-consuming heat-treat is eliminated.
In electrical engineering, the process begins with a team-review of the circuit requirements. Requirements are reduced, and inexpensive electrical or software solutions are substituted for mechanical solutions. The circuit is examined to reduce adjustments and expensive parts. In the circuit design, detailed tolerance studies are performed to maximize the number of circuits that work first time. Mechanical parts and connectors are carefully reviewed to reduce assembly and testing costs. In particular, the printed circuit board is integrated with the mechanical design to eliminate cables between the printed circuit board and the connectors on the case. The printed-circuit board design is carefully scrutinized to use the least-expensive possible materials (such as phenolic paper board), make it solder reliably, and adapt it to automatic assembly.
In software engineering the process begins with a requirements review, to eliminate unnecessary requirements, and substitute software for mechanical and electrical components. Software generally has a lower per-component cost than other disciplines, especially in the large production runs typical of a lean product. The design then attempts to eliminate costly software components, especially those that are purchased.