You might be the only person with your eye on costs, profitability, and cash flow.
Apart (hopefully) from the business owner.
Do you have a good handle on what the manufactured costs of the new product are likely to be? When was the last time you reviewed the cost build-up of existing product lines? Are there opportunities for margin improvement through a value engineering project?
New product development is often heavily front-loaded with costs with no revenue generated until launch. There is the opportunity cost of internal development teams, that could be working on other products, outsource dev teams and technical experts, prototyping rounds, tooling, compliance, manufacturing setup, packaging, marketing, and initial stock. Do you have a handle on all the likely costs and when they will be paid for? How are you planning on managing a product launch with unknown sales volumes?
And then product returns – do you have the confidence that the new product has been properly tested and production quality proven? If you are trialing a low volume with a few customers there is lower financial exposure than if the product is being launched and sold in high volumes. A problem that requires a product recall for high volumes can have huge implications on cash and reputation. Design verification and validation can be viewed similarly to an insurance policy to minimise risk.
We can help you here by identifying and testing alternate component sources. Where alternates aren’t available partial redesigns are often possible to keep the product line alive.
Manufactured product cost may be high on your agenda. If you’re losing sales to a lower-priced competitor or the gross margin is lower than you would like then it could be time for a cost reduction or value engineering project.
Not all products have high enough volumes to justify and recoup the project spend, but on the right product, this can be gold.