Development of a cost reduction methodology for start-up SMES developing a novel product.

This thesis is concerned with identifying cost engineering requirements of start-up SMEs in the manufacturing sector and developing a solution to address a number of their major requirements. The focus of the thesis is on cost reduction at the product development stage of a novel product. The aim of the thesis is to develop a cost reduction framework for SMEs developing a novel product in order to transfer necessary cost engineering knowledge to an SME in a structured way. A literature review has been completed to identify potential areas for cost reduction and build an understanding of SMEs’ characteristics in cost engineering requirements. The review confirmed the finding that SMEs lack cost engineering knowledge. Therefore, cost reduction best practices were identified through literature review and analysed for relevance for SMEs. Collaborating with a start-up SME developing a novel product helped to identify SMEs cost engineering requirements. By close observation and participation of the SME, areas lacking knowledge were identified. In addition, potential cost reduction opportunities were examined. Due to the nature of cost reduction activities, it was required to study day to day activities of the collaborating company and become familiarised with development, production and business plans for the product. The identification of the requirements and development of the AS IS model of the SME helped to build an understanding of characteristics and requirements of start-up SMEs. Based on these the cost reduction framework was developed. The framework includes best practice tools and methods which comply with start-up SMEs’ characteristics. Where a suitable method could not be identified, the method was developed in this research to address their requirements. The framework was implemented in the collaborating company and was validated by presenting the results to internal and external experts from industry and academia. Keywords: Start-up SME, Cost Engineering, Manufacturing, Novel product, production cost.