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Prerequisite for Designing for Manufacturability and Low Cost:
Remove Counter-productive Polici
es

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Half of change is undoing counter-productive blocks


Half the challenge to implement new methodologies may be getting rid of existing counterproductive policies. For product development, here are some of the worst:

  • Don’t bite off more than Engineering can chew when planning product portfolios, which drastically decreases the success rate of all products. The book, Fast Innovation, (by Michael L. George, et al., 2005, McGraw-Hill; p. 167) presents a case study which clearly shows how too many projects diminish the chances of project success. 

  In the first, year a prominent company tried to develop 120 products, but resources were spread so thin that no products were introduced at all!     The next year the workload was reduced to 22 projects and they were able to introduce eight products in 24 to 28 months.  In the next year, as they got more focused on only 20 projects, they were able to launch 14 products in 12 months.  Thus they were able to successfully launch almost twice as many products in half the time!

 The results of focusing product development and rationalizing away most existing products during a three year period was that manufacturing productivity tripled, early life failures decreased by 38 times, customer satisfaction rose from 27% to 90%, revenue increased by 2.4 times, and operational earnings  increased from -6%  to +7%.

  • Don’t allow Sales to “take all orders” and “acceptall customizations” (or, worse, encourage them) and pollute operations with low-volume, hard-to-build products that drain resources away from product development and other improvement programs. Rationalize Product Lines to eliminate or outsource high-overhead products.
     

  • Don’t  “manage” product development with deadline management (track progress meeting deadlines and then putting on the pressure if any deadline is late) for the illusion of “early progress.”  This can counterproductive if poorly set deadlines don’t encourage thorough up-front work.
     

  • Be very sure that your your product development process actually has a product design phase: Some, even prominent and expensive "processes" don't, and skip skip from the "concept testing" phase to the "prototype testing." phase.  Check your to see if it has a strong product design phase, or has one at all!
     

  •  Don’t quantify only labor and part cost and then allocate (average) all other costs (overhead) over all products, good or bad.  Instead quantify total cost.
     

  • Don’t try remove cost after the product is designed, which is so hard to do that is a waste of resources.  See article: Seven Reasons Why “Cost Reduction” after Design Doesn’t Work.  
     

  • Don’t go for the low bidder on custom parts, which precludes vendor/partnerships and, thus, prevents those vendors from helping the company design the parts and their tooling.

 Companies that practice the above three will have to devote a very high percentage of product development resources of their time to: make change orders to try to implement DFM (because it couldn’t be done with Concurrent Engineering);  try to take cost out after the product is designed with change orders;

  • Don’t offshore manufacturing to "save cost," which makes it hard to do Concurrent Engineering when there are no manufacturing people around to be “concurrent” with. In many offshoring situations, people in engineering and manufacturing are not even working at the same time.  So launching a product stares with throwing a drawing package "over the ocean," which is followed by the Contract Manufacturer "building to print," whether the drawings are perfect, 100% complete, and completely unambiguous -- or not, which is the case in almost all offshoring.  Outsourcing, in general, also involves converting documentation for outsourcing; changing all parts to "local sources of supply; getting outsourcers up to speed; dealing with quality and delivery problems, and so forth and so on.

    In his travels, the author of this site, Dr. David M. Anderson, has encountered several companies that spend two-thirds of product development resources on the last three bullets, which really puts their future in doubt if that future depends on new product development. Ironically, these attempts thwart six of the eight Half-Cost strategies, for reasons presented at the beginning of the offshoring article.

After DFM training, one large company that has pioneered many of these, needed to launch an initiative called "DFM vs policy" to correct current counterproductive policies for their first product development team to utilize these new methodologies.

 

  • Don't  make  the  definition  of  product  cost  overwhelmingly  based  on   part  cost or that will cause serious problems in quality, product development, and block improvements in supply chains and lean production, which will then thwart most of the major cost reductions in the page on Designing Half Cost Products: affecting the following opportunities; 


Quality. Pressures to lower part cost results in cheap parts, which will raise quality costs more their anticipated savings, and that will have the following effect on NPD:

Product Development. Dealing with problems caused by cheap parts will:

  • increase resource demands to deal with quality problems,

  • introduce many variables, which compromise functionality, with change orders to make everything work again and fix new problems caused by all the changes

  • put pressure on teams to compensate for all the above cost increases

  •  delay the time to stable production.

Standardization will be thwarted by pressures to keep part cost down because most standard parts are “better” than a proliferation of the minimum spec parts, but the overall gain from standardization would be so great the material overhead four standard parts could be discounted to 1/10 of hard-to-get parts (see the first page of Chapter  4 on Standardization in the   DFM book).

Part availability improvements will be also thwarted because more available parts may raise a BOM (Bill Of Material) entry, but the overall cost savings will be enormous by avoiding the cost of obsolescence and supply chain spontaneity which is a key prerequisite to Lean Production.

Off-the-shelf parts, which can focus resources on what customers buy products for and lower overall cost, but this will be discouraged by BOM cost pressures because purchased part cost is the total cost , whereas BOM cost is only material cost. For instance, wires are very inexpensive (as they may be “expensed” and not even be listed on the BOM) but wiring generates enormous labor and quality costs to wire products "like a house." However, DFM solution to wiring problems and cost is standard off-the-shelf cables, which will all look like “new expenses”“ on the BOM.

Vendor/Partnerships can reduce many costs, reduce NPD resources, and reduce the time to stable production. However, they will not be an option if purchase cost pressures force teams into the sub-optimal practice of designing in isolation and then going out for the low bidder.

DFM guidelines,
like “Eliminate Right/Left Parts,” symmetrical parts, and part consolidation will be discouraged if “extra” processing (to make right and left parts the same) raises a BOM entry. In one company the VA team resisted the DFM team’s attempts combine eight different brackets into one by drilling all the holes for all brackets into one versatile version because it would add extra hole drilling to most of the versions! However, if the right and left parts were molded or cast parts, eliminating the extra mold would save tens of thousands of dollars in tooling costs.
                        
Concept breakthroughs. One category of concept breakthrough is for electronics, including higher levels of electronic integration, combining circuit boards, and simplifying inter-board wiring could be discouraged if (a) the status quo is using ‘free” wires and under-reported assembly labor and quality problems and (b) the solutions appear as expensive new BOM entries without quantifying all the cost and throughput benefits.

Inventory costs can easily exceed profits. Without standardization, all delivered parts will go into “raw materials” inventory, which will then be kitted for each production batch, thus creating a lot of Work-In-Process inventory, and then wait as Finished-Goods inventory until shipped. Inventory carrying cost actually costs a quarter of its value per year (see plot in the Mass  Production  article), and can be eliminated by designing for lean production and build-to-order, which will not be possible with all the above consequences of defining cost as primarily based on part cost.


Worst possible scenario:


The worst possible “cost reduction” scenario is to *(a) base “cost” primarily on parts and (b) pressure the design team for ambitious goals, like half the (parts) cost. That much pressure on parts cost will lead to desperate searches for the absolute cheapest cost which will:

- Compromise quality, raise quality costs, worsen reliability, and all the costs to deal with that, which will lengthen product development time.

- Thwart all real supply chain and lean production cost improvements such as standardization, designing for part availability, and off-the-shelf parts, which will be perceived as “raising” a BOM entry

- Discourage vendor/partnership
s if cost pressures on their parts drive the counterproductive practice of designin in isolation and send out for the low-bidder

- Discourage DFM improvements that combine parts and simplify any designs that may raise a BOM entry.
 

Ironically even a miraculous alignment of low-hanging fruit reduces parts cost in half (assuming it isn’t cancelled out by the above), , it would only cut in half mo more than a tenth of the selling price, which would only result in 1/20  of the selling price, instead of one half of selling price as is possible by the techniques at:
http://www.design4manufacturability.com/designing_half_cost_products.htm
 

Call Dr. Anderson at 1-805-924-0100 to discuss implementing these techniques or e-mail him at anderson@build-to-order-consulting.com with your name, title, company, phone, types of products, and needs/opportunities.

 

Dr. David M. Anderson, P.E., fASME, CMC
www.HalfCostProducts.com
phone: 1-805-924-0100
fax: 1-805-924-0200
e-mail: anderson@build-to-order-consulting.com

Copyright 2018 by David M. Anderson

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