The process of designing a product with a trusted supplier in order to eliminate costs that may appear at the delivery stage is known as which cost management strategy?

'Cost out' is a proactive cost management strategy focused on designing and engineering costs out of a product, service, or process from the very beginning. This approach involves cross-functional collaboration, particularly with suppliers during the design phase (Early Supplier Involvement), to prevent unnecessary costs from being built in. The question specifically describes designing a product with a trusted supplier to eliminate future costs, which is the exact definition of a 'cost out' strategy. It fundamentally changes the product or process specification to achieve a lower cost base, rather than simply negotiating a lower price for an existing specification.

A. Cost acceptance: This is a passive strategy where an organisation accepts the current cost structure and does not actively seek to change it, which is the opposite of the described process.
B. Cost engineering: This is a very broad discipline that encompasses all cost management activities. 'Cost out' is a specific strategy within the field of cost engineering, making it the more precise answer.
C. Cost down: This is a reactive strategy aimed at reducing the cost of an existing product or service, often through negotiation or finding cheaper alternatives, without changing the fundamental design.

1. Lysons, K., & Farrington, B. (2020). Procurement and Supply Chain Management (10th ed.). Pearson. In Chapter 11, "Price and Cost Management," the text distinguishes between 'cost down' and 'cost out'. It explains that 'cost out' involves "designing cost out of the product/service specification" and is a proactive, cross-functional approach often involving suppliers, contrasting it with the reactive nature of 'cost down' which seeks to reduce the price of an existing specification.

2. CIPS (Chartered Institute of Procurement & Supply). (2019). Managing Costs and Risks in the Supply Chain (L5M6 Course Book). Profex Publishing. The official CIPS course book for this module details various cost management techniques. It presents 'cost out' as a strategic method involving value engineering and supplier collaboration during the design stage to eliminate costs before they are incurred, which directly aligns with the scenario in the question.

3. Monczka, R. M., Handfield, R. B., Giunipero, L. C., & Patterson, J. L. (2016). Purchasing and Supply Chain Management (6th ed.). Cengage Learning. Chapter 14, "Price and Cost Management," discusses collaborative approaches to cost management. It highlights that working with suppliers during product development to redesign components and eliminate non-value-adding activities is a key strategy for permanent cost removal ('cost out'), rather than temporary price reductions ('cost down').