Shipulski On Design

Archive for the ‘CEO’ Category

I can’t believe everyone isn’t doing Design for Assembly (DFA), especially in these tough economic times. It’s almost like CEOs really don’t want to grow stock price. DFA, where the product design is changed to reduce the cost of putting things together, routinely achieves savings of 20-50% in material cost, and the same for labor cost. And the beauty of the material savings is that it falls right to the bottom line. For a product that costs $1000 with 60% material cost ($600) and 10% profit margin ($100), a 10% reduction in material cost increases bottom line contribution by 60% (from $100 to $160). That sounds pretty good to me. But, remember, DFA can reduce material cost by 50%. Do that math and, when you get up off the floor, read on.

Unfortunately for DFA, the savings are a problem – they’re too big to be believed. That’s right, I said too big. Here’s how it goes. An engineer (usually an older one who doesn’t mind getting fired, or a young one who doesn’t know any better) brings up DFA in a meeting and says something like, “There’s this crazy guy on the web writing about DFA who says we can design out 20-50% of our material cost. That’s just what we need.” A pained silence floods the room. One of the leaders says something like, “Listen, kid, the only part you got right is calling that guy crazy. We’re the world leaders in our field. Don’t you think we would have done that already if it was possible? We struggle to take out 2-3% material cost per year. Don’t talk about 20-50% because is not possible.” DFA is down for the count.

Also unfortunate is the name – DFA. You’ve got to admit DFA doesn’t roll off the tongue like six sigma which also happens to sound like sex sigma, where DFA does not. I think we should follow the lean sigma trend and glom some letters onto DFA so it can ride the coat tails of the better known methodologies. Here are some letters that could help:

Lean DFA; DFA Lean; Six Sigma DFA; Six DFA Sigma (this one doesn’t work for me); Lean DFA Sigma

Its pedigree is also a problem – it’s not from Toyota, so it can’t be worth a damn. Maybe we should make up a story that Deming brought it to Japan because no one in the west would listen to him, and it’s the real secret behind Toyota’s success. Or, we can call it Toyota DFA. That may work.

Though there is some truth to the previous paragraphs, the main reason no one is doing DFA is simple:

No one is asking the design community to do DFA.

Here is the rationalization: The design community is busy and behind schedule (late product launches). If we bother them with DFA, they may rebel and the product will never launch. If we leave them alone and cross our fingers, maybe things will be all right. That is a decision made in fear, which, by definition, is a mistake.

The design community needs greatness thrust upon them. It’s the only way.

Just as the manufacturing community was given no choice about doing six sigma and lean, so should the design community be given no choice about doing DFA.

No way around it, the first DFA effort is a leap of faith. The only way to get it off the ground is for a leader in the organization to stand up and say “I want to do DFA.” and then rally the troops to make it happen.

I urge you to think about DFA in the same light as six sigma or lean: If your company had a lean or six sigma project that would save you 20-50% on your product cost, would you do it? I think so.

Who in your organization is going to stand up and make it happen?

There are many definitions of product robustness and just as many formally trained specialists willing to argue about them. I get confused by all that complexity, I don’t like to argue, and I am not a specialist, I am a generalist. I like simplicity so I use operational definitions every chance I get. Here’s one for product robustness:

A customer walks up to your product, turns it on, and it works without breaking or getting in its own way.

Bad product robustness is bad for your brand. Very bad. Customers do not like when they pay money for a product and it doesn’t work, especially when they rely on those products to make money for themselves. And they remember the experience in a visceral way.

You can’t fix bad product robustness with great marketing; you can’t fix it with spin selling; you can’t tell customers you fixed it when you didn’t (since they use your product, they know the truth); and you can’t hide it because customers talk (so do competitors). There is no quick fix – it takes tools, time, training, and new thinking to improve product robustness. And when you do manage to fix it, customers won’t believe you until the see it for themselves. They don’t want to get burned again.

No product is infinitely robust, nor should it be. It doesn’t make financial sense. The product would be infinitely expensive and would take an infinite amount time to develop. But how much robustness is enough? An easier, and possibly more important, question to answer is – how much is too little? Or, stated another way, what is the minimum level of product robustness?

The specialists won’t agree with my assertion that there is a minimum threshold for product robustness, but I don’t care. I think there is one. I call this minimum value the brand-damaging threshold. Here’s an operational definition of product robustness that’s below the brand-damaging threshold:

Customers don’t buy your product because they know it breaks or gets in its own way and they go out of their way to tell others about it.

It is difficult to know when customers don’t buy, never mind know why they don’t. But there are some tell-tale signs that product robustness is below the brand-damaging threshold. Here are a few.

The CEO takes enough direct calls about products that don’t work to feel obligated to send you a thoughtfully-crafted, four word email saying something like “Fix that @#&% thing!” Customers have to be really pissed off to call the CEO directly, so the situation is bad. It’s also bad for a reason that’s closer to home – the CEO sent the email to you.

You get a little sick to your stomach when sales increase. You know you should be happy, but you’re not. Deep down you know you’ll see many of those products again because they’ll be sent back by angry customers, in pieces.

The volume of returns is so significant you create a refurbishment department. Or you create a new group to scavenge the reusable stuff off the piles of returned product. Not good signs.

Your product’s lack of robustness is the headline message in your customers’ marketing literature.

Now that the brand-damaging threshold is defined, the next logical topic is how to improve product robustness so it’s above the threshold. But that’s for another post.

Everyone laughs at the person who says “We don’t have problems, we have opportunities.”  Why do we say that?  We know that’s crap.  We have problems; problems are real; and it’s okay to call them by name.  In fact, it’s healthy.  Problems are good.  Problems focus our thinking.  There is a serious and important nature to the word problem, and it sets the right tone.  Everyone knows if the situation has risen to the level of a problem it’s important and action must be taken.  People feel good about organizing themselves around a problem – problems help rally the troops.

In a previous post on innovation, I talked about the tight linkage between problems and innovation.  In the pre-innovation state there is a problem; in the post-innovation state there is no problem.  The work in the middle is a good description of the thing we call innovation.  It could also be called problem solving.

Behind every successful product launch is a collection of solved problems.  The engineering team defines the problems, understands the physics, changed the design, and makes problems go away.  Behind every unsuccessful product launch is at least one unsolved problem.  These unsolved problems disrupt product launches – limiting product function, delaying launches, and cancelling others altogether.  All this can be caused by a single unsolved problem. Read the rest of this entry »

2009 is a tough year, especially for CEOs.

CEOs have a strong desire to do what it takes to deliver shareholder value, but that’s coupled with a deep concern that tough decisions may dismantle the company in the process.

Here is the state-of-affairs:

Sales are down and money is tight.  There is severe pressure to cut costs including those that are linked to sales – marketing budgets, sales budgets, travel – and things that directly impact customers – technical service, product manuals, translations, and warranty.

Pricing pressure is staggering.  Customers are exerting their buying power – since so few are buying they want to name their price (and can).  Suppliers, especially the big ones, are using their muscle to raise prices.

Capacity utilization is ultra-low, so the bounce-back of new equipment sales is a long way off.

Everyone wants to expand into new markets to increase sales, but this is a particularly daunting task with competitors hunkering down to retain market share, cuts in sales and marketing budgets, and hobbled product development engines.

There is a desire to improve factory efficiency to cut costs (rather than to increase throughput like in 2008), but no one wants to spend money to make money – payback must be measured in milliseconds.

So what’s a CEO to do?  Read the rest of this entry »