Money out the wazoo

There’s a huge untapped source of profits out there – a virtual gold mine – with profit opportunities so large you can’t see them, and if you do see them, too large to believe. These profits larger than you’ve achieved with your traditional lean work. (Actually, what I’m talking about the next evolution of lean.) Want to see what I’m talking about? Go to your factory and watch. The gold mine will be hiding in plain sight – it’s your product.

Huge savings blah, blah, blah. How significant? Here’s the formula:

material cost x volume x 50%.

Now, for your highest volume product, do the calculation. Go ahead. Do it. Humor me. It’s worth it.

Go get your best pen, and calculate by hand. Write down the number. Go ahead. Write it down, but make sure you put the dollar sign in front, and, please, put in the commas. Don’t abbreviate thousands, millions, or billions (or trillions, Mr. Gates) – write the zeros.  All of them.

There. You did it. Not so hard. Now, sit quietly, and contemplate the number. Look at it for an hour. Don’t say anything, just sit with it.

Now, get bigger piece of paper, and re-run the calculation, but this time write big. Repeat with a poster board, and finish with your biggest whiteboard – big zeros, lot’s of them. (Don’t forget the commas.) Marinate for an hour. Don’t say anything, just sit.

Now that you appreciate the significance of the number, go make something happen.  If you’re a CEO, tell your engineering leader to do DFMA; if you’re the manufacturing leader, grab your engineering leader by the ear, and walk to the whiteboard; if you’re the engineering leader, do DFMA.

You likely don’t believe the number. I know. It’s okay. But, a number that big at least deserves a Google search: save 50% with DFMA.

2 Responses to “Money out the wazoo”

  • Tom Alexander:

    A great message! As some of us know, material costs are the largest percentage of cost for most products. In this world of diminishing resources, these savings are the only sustainable way to go, and will offset ever-increasing material costs. These savings can also help bring some off-shored manufacturing back to the U.S.A., where DFA with automation, control of quality and reduced shipping will provide additional savings.


  • Mike:

    Thanks for your comment, Tom. Good context.

    When companies demand price reduction from suppliers no value is created – a minimization; when companies design out cost value is created – a maximization. Let’s create value!

Leave a Reply

Mike Shipulski Mike Shipulski
Subscribe via Email

Enter your email address:

Delivered by FeedBurner