Archive for the ‘Downstream Savings’ Category

Product Thinking

Product costs, without product thinking, drop 2% per year. With product thinking, product costs fall by 50%, and while your competitors’ profit margins drift downward, yours are too high to track by conventional methods. And your company is known for unending increases in stock price and long term investment in all the things that secure the future.

The supply chain, without product thinking, improves 3% per year. With product thinking, longest lead processes are eliminated, poorest yield processes are a thing of the past, problem suppliers are gone, and your distributers associate your brand with uninterrupted supply and on time delivery.

Product robustness, without product thinking, is the same year-on-year. Re-injecting long forgotten product thinking to simplify the product, product robustness jumps to unattainable levels and warranty costs plummet. And your brand is known for products that simply don’t break.

Rolled throughput yield is stalled at 90%. With product thinking, the product is simplified, opportunities for defects are reduced, and throughput skyrockets due to improved RTY. And your brand is known as a good value – providing good, repeatable functionality at a good price.

Lean, without product thinking has delivered wonderful results, but the low hanging fruit is gone and lean is moving into the back office. With product thinking, the design is changed and value-added work is eliminated along with its associated non-value added work (which is about 8 times bigger); manufacturing monuments with their long changeover times are ripped out and sold to your competitors; work from two factories is consolidated into one; new work is taken on to fill the emptied factories; and profit per square foot triples. And your brand is known for best-in-class quality, unbeatable on time delivery, world class performance, and pioneering the next generation of lean.

The sales argument is low price and good payment terms. With product thinking, the argument starts with product performance and ends with product reliability. The sales team is energized, and your brand is linked with solid products that just plain work.

The marketing approach is stickers and new packaging. With product thinking, it’s based on competitive advantage explained in terms of head-to-head performance data and a richer feature set. And your brand stands for winning technology and killer products.

Product thinking isn’t for everyone. But for those that try – your brand will thank you.

Lean and Supply Chain Sensitivity

At every turn, lean has increased profits in the factory. Its best trick is to look at the work through a time lens, see wasted time, and get rid of it.

Work is blocked by problems. You watch the work to spot blockages in the form of piles, otherwise known as inventory. When you find a pile, you know the problem is one operation downstream.

As lean works its magic, inventory is reduced, which decreases carrying costs. More importantly, however, it also reduces the time to see a problem. Whether the problem is related to quality, delivery or resources, everything stops immediately. It’s clear what to fix, and there’s incentive to fix it quickly because with lean, the factory is more sensitive to problems.

What works in the factory will also work in the supply chain, and that’s where lean is going.

Link to full article

Radically Simplify Your Value Stream – Change Your Design

The next level of factory simplification won’t come from your factory.  It will come from outside your factory.  The next level of simplification will come from upstream savings – your suppliers’ factories – and downstream savings – your distribution system.  And this next level of simplification will create radically shorter value streams (from raw materials to customer.)

To reinvent your value stream, traditional lean techniques – reduction of non-value added (NVA) time through process change – aren’t the best way.  The best way is to eliminate value added (VA) time through product redesign – product change.  Reduction of VA time generates a massive NVA savings multiple. (Value streams are mostly NVA with a little VA sprinkled in.) At first this seems like backward thinking (It is bit since lean focuses exclusively on NVA.), but NVA time exists only to enable VA time (VA work).  No VA time, no associated NVA time.

Value streams are all about parts (making them, counting them, measuring them, boxing them, moving them, and un-boxing them) and products (making, boxing, moving.)  The making – touch time, spindle time – is VA time and everything else is VA time.  Design out the parts themselves (VA time) and NVA time is designed out.  Massive multiple achieved.

But the design community is the only group that can design out the parts. How to get them involved? Not all parts are created equal. How to choose the ones that matter? Value streams cut across departments and companies. How to get everyone pulling together?

Watch the video: link to video.  (And embedded below.)

A Recipe for Unreasonable Profits

There’s an unnatural attraction to lean – a methodology to change the value stream to reduce waste.  And it’s the same with Design for Manufacturing (DFM) – a methodology to design out cost of your piece-parts. The real rain maker is Design for Assembly (DFA) which eliminates parts altogether (50% reductions are commonplace.) DFA is far more powerful.

The cost for a designed out part is zero.  Floor space for a designed out part is zero. Transportation cost for a designed out part is zero. (Can you say Green?) From a lean perspective, for a designed out part there is zero waste.  For a designed out part the seven wastes do not apply.

Here’s a recipe for unreasonable profits:

Design out half the parts with DFA.  For the ones that remain, choose the three highest cost parts and design out the cost.  Then, and only then, do lean on the manufacturing processes.

For a video version of the post, see this link: (Video embedded below.)

A Recipe for Unreasonable Profits.


Want to be green? Look to your product.

We’re starting to come to terms with the green revolution; we’re staring to realize that green is good for our planet and even better for our business. But how do we put greenwashing behind us and truly make a difference?

To improve recyling, find the non-recyclable stuff in your product and design it out.  Make a Pareto chart of non-recyclable stuff (by weight) by major subassembly, and focus the design effort on the biggest brown bars of the Pareto. (Consider packaging a major subassembly and give it its own bar.)

To improve carbon footprint of logistics, find the weight and volume of your product and design out the biggest and heaviest.  Make a Pareto chart of weight by major subassembly, and focus the design effort on the heaviest brown bars. Make a Pareto chart of volume by major subassembly, (Make cube around the subassembly and calculate volume in mm3.) and focus the design effort on the biggest bars. (Don’t forget the packaging.)

To improve energy efficiency of your factory, find electricity consumption and design it out.  Make a Pareto chart of electricity consumption by major process step then map it to the product – to the element of the product that creates the need for electricity, and focus the design effort on the biggest bars.

Going forward, here are some thoughts to help grow your business with green (and save the planet):

  • It’s easier to design out brown than to design in green.
  • To design out brown, you’ve got to know where it is.
  • The product creates brown – look to the product to eliminate it.

Missing Element of Lean – Assembly Magazine article

With its strong focus on waste reduction of processes, lean has been a savior for those who’ve made it out of the great recession.  But what’s next?  I argue the next level of savings will come from adding a product focus to lean’s well-developed process focus.  For the complete Assembly Magazine article (one page), click here.

Too afraid to make money and create jobs.

What if you could double your factory throughput without adding people?

What if you could reduce your product costs by 50%?

How much money would you make?

How many jobs would you create?

Why aren’t you doing it?

What are you afraid of?

Back to Basics with DFMA

About eight years ago, Hypertherm embarked on a mission to revamp the way it designed products. Despite the fact its plasma metal-cutting technology was highly regarded and the market leader in the field, the internal consensus was that product complexity could be reduced and thus made more consistently reliable, and there was an across-the-board campaign to reduce product development and manufacturing costs. Instead of entailing novel engineering tactics or state-of-the-art process change, it was a back-to-basics strategy around design for manufacture and assembly (DFMA) that propelled Hypertherm to meet its goals.

The first step in the redesign program was determining what needed to change. A steering committee with representation from engineering, manufacturing, marketing, and business leadership spent weeks trying to determine what was required from a product standpoint to deliver radical improvements in both product performance and product economics. As a result of that collaboration, the team established aggressive new targets around robustness and reliability in addition to the goal of cutting the parts count and labor costs nearly in half.

See link for entire article

Leading manufacturers cite upfront design creates significant downstream savings

Results from a new survey show that upfront design using DFMA methods creates significant savings in operational cost — downstream savings.

An exerpt from the survey:

Sixty-eight percent of a survey group, including Fortune 400 companies, measured an increase in production throughput, and 47 percent an increase in profit per unit of factory floor space, after applying Design for Manufacture and Assembly (DFMA®) techniques to their organizations’ supply chains. A roundtable discussion of these and other results from the questionnaire, conducted by Boothroyd Dewhurst, Inc., is now available.

Respondents included Dell, Motorola, TRW Automotive, Raytheon, MDS Analytical Technologies, Magna Intier Automotive Seating and other leading North American manufacturers. Some participants also contributed to a candid roundtable discussion about applying design simplification and early costing to Lean and Six Sigma programs, along with the opportunities missed by industry in measuring financial best practices.

Mike Shipulski Mike Shipulski
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