The manufacturing cost crisis has reached a breaking point. In a recent study, 74% of industrial manufacturers cite escalating costs as their number one challenge. With wages climbing and prices barely keeping pace with inflation, companies face mounting pressure to maintain a competitive edge.

One common strategy is to accelerate new product initiatives, bringing products to market faster to capture revenue sooner.  However, speed without strategic thinking can create negative consequences. Recent research reveals a troubling pattern: companies that doubled their development velocity experienced a 40% drop in customer satisfaction within 90 days.

What’s more, organizations that increase velocity by 50% or more face an additional 38% in production bugs, a 42% increase in customer complaints and technical debt that more than doubles.

The answer to reducing product design and manufacturing costs isn’t about moving faster at any cost or sacrificing quality for speed. It’s about strategic partnerships that transform how products are developed and manufactured from the very beginning, resulting in both rapid time-to-market and superior quality.

“By leveraging the engineers and facilities with strong technical capabilities through DENSO WAVE’s ODM, we were able to secure powerful resources. Since DENSO WAVE works as part of our team, we achieved much faster product launches.”

Is Hiring More Engineers a Strategy to Reducing Manufacturing Costs?

Traditional approaches to cost reduction—hiring more engineers, negotiating harder with suppliers or value-engineering existing designs—offer only incremental savings. Companies achieving dramatic cost reductions while improving quality share a common approach: early engagement with an Original Design Manufacturer (ODM). This partnership model transforms product development economics by addressing cost drivers at their source, during the design phase when decisions have the greatest financial impact.

Here are five ways that illustrate how strategic ODM partnerships deliver measurable cost advantages throughout the product lifecycle—and five steps you can take to realize cost advantages of your own.

Step 1: Engage with Manufacturing Partners Early in the Design Phase

The most expensive product decisions aren’t made in manufacturing—they’re locked in during the design phase. If you’re seriously interested in how to reduce manufacturing costs, this is the place to start. Engagement with an ODM from a project’s inception can help reduce the costs and project delays that result from late engagement:

• costly redesigns
• rushed tooling changes
• production delays that push market entry

Early ODM involvement enables Design for Manufacturability (DFM) principles from day one. This approach optimizes component selection by weighing performance specifications against cost and real-world availability. Real-time cost feedback during design iterations prevents expensive surprises that derail budgets and timelines.

Traditional sequential development often reveals manufacturing constraints after months of design work and possible tooling investment. With an early ODM partnership, parallel development informs the design from the initial sketch. As one customer noted, decades of engineering experience proved invaluable in initial planning discussions, validating designs through simulation prior to committing to production. As a result, products reach market months faster while meeting both performance specifications and cost targets.

Step 2: Access Specialized Expertise Without Permanent Headcount

Companies that partner with an ODM can realize savings by addressing both the obvious and hidden costs of building an internal product development team. Tapping into the depth of engineering expertise available through an ODM extends far beyond personnel salaries. When a company starts the product development process without a robust internal team, there can be disconnects among departments, including design, procurement, manufacturing and quality control. Also, companies often overlook the opportunity costs of diverting internal resources from core business activities.

When teams collaborate with an ODM, the internal team works alongside engineers who specialize in new product design, planning and development, and follow through to procurement, manufacturing, and logistics.

Step 3: Optimize Supply Chain and Component Costs

This engineering expertise helps companies optimize supply chain management. Consider the impact of component availability and pricing on the true manufacturing costs of a product. When selecting an ODM, consider the company’s size, as its scale and market influence can have a dramatic impact on supply chain advantages.

A larger ODM, such as DENSO WAVE, can take a proactive step in reducing manufacturing costs by leveraging its parent company’s connections. As part of a $50 billion organization, DENSO WAVE provides customers with the benefits of volume purchasing power and priority allocation during supply shortages.

As one practical illustration, this advantage proved critical during COVID-19 supply chain disruptions. While many manufacturers missed delivery deadlines, DENSO WAVE maintained perfect on-time shipment records. Some customers requested additional units beyond original forecasts when their other suppliers couldn’t deliver.

Proactive obsolescence management represents another critical supply chain advantage. ODMs maintain close watch on components nearing end-of-life, preventing costly last-minute redesigns when parts become unavailable. Strategic inventory for critical components avoids allocation premiums and ensures production continuity. These supply chain capabilities—from procurement power to forward-looking component management—translate directly into lower costs and reduced risk throughout your product’s lifecycle.

 Step 4: Design Platform Architectures for Future Variants

These immediate advantages set the foundation for long-term cost reduction through platform thinking. While one-off designs incur the highest per-product cost, platform thinking amortizes development costs across product families, with reusable components and subsystems reducing costs for successive generations.

The thermostat evolution illustrates this approach. Starting with basic programmable models, the platform architecture supported progression to communicating thermostats, then to smart connected systems with high-resolution graphics and Wi-Fi capabilities—all built on core platform elements. By leveraging automotive display technology and proven subsystems, each generation launched faster and more cost-effectively than starting from scratch.

Modular architecture accommodates market expansion without complete redesigns. When one DENSO WAVE customer experienced unexpected market success requiring dramatic production increases, the platform approach enabled rapid scaling without sacrificing quality.

A lower non-recurring engineering (NRE) cost for product development means a lower upfront, one-time investment in activities such as design, prototyping, and tooling. Leveraging existing tooling and code, or springboarding new products from existing ones, can lower NRE costs for product variants and market adaptations. This practice can multiply the ROI on initial development investment and significantly reduce manufacturing costs.

Step 5: Implement Quality Standards That Prevent Defects

Quality can reduce costs when it is built into a project from the beginning, by preventing issues rather than detecting them. Quality built in from the beginning results in:

• fewer field failures
• lower warranty claims
• less chance of product recalls
• reduced risk of downtime
• reduced rework

Quality is designed into processes, and not as an afterthought during inspections, catching issues during development rather than after customer shipment. This approach proved its value over DENSO WAVE’s 40-year relationship with Rockwell Automation, during which consistent quality earned recognition as its largest supplier and multiple supplier excellence awards.

Total Quality Management – The Strategic Way to Reduce Manufacturing Costs

ODM partnerships with DENSO WAVE provide access to proven processes and top-quality management without the burden of permanent headcount for temporary project needs. At DENSO WAVE more than 50% of the organization’s personnel are engineers, with expertise across embedded software, digital and analog electronics, mechanical design and human-machine interfaces.

The Toyota Quality Management System approach embedded in DENSO WAVE operations applies top standards to industrial products.

• Stringent safety and regulatory standards
• Complex supply chain relationships
• Cross disciplinary complexity (embedded software, mechanical design, electronics)
• Quality and traceability

As one customer said, “By leveraging the engineers and facilities with strong technical capabilities through DENSO WAVE’s ODM, we were able to secure powerful resources. Since DENSO WAVE works as part of our team, we achieved much faster product launches.”

Having decades of engineering experience is invaluable for initial planning discussions and for validating designs through simulation before committing to the product. As a result, products reach market months faster while meeting both performance specifications and cost targets.

Begin Your Roadmap to Reducing Manufacturing Costs

Cost reduction through strategic ODM partnerships addresses root causes rather than symptoms. Early engagement eliminates waste throughout the product lifecycle, creating compounding effects: faster time-to-market, better quality, plus lower total cost of ownership.

Companies that engage ODMs early gain competitive advantages that traditional approaches cannot match. The question isn’t whether you can afford ODM partnership—it’s whether you can afford not to optimize your product development process.

Contact DENSO WAVE to discuss cost-optimization strategies for your next product development project and discover how a strategic partnership can transform your product economics.