Posts Tagged ‘Product Design’

Secret Sauce that Doubles Profits

Last month a group of engineers met secretly to reinvent the US economy one company at a time.  Here are some of the players, maybe you’ve heard of them:

Alcoa, BAE, Boeing, Bose, Covidien, EMC, GE Medical, GE Transportation, Grundfos, ITT, Medrad, Medtronic, Microsoft, Motorola, Pratt & Whitney, Raytheon, Samsung, Schneider Electric, Siemens, United Technologies, Westinghouse, Whirlpool.

Presenter after presenter the themes were the same: double profits, faster time to market, and better products – the triple crown of product development. Magic in a bottle, and still the best kept secret of the product development community. (No sense sharing the secret sauce when you can have it all for yourself.)

Microsoft used the secret sauce to increase profits of their hardware business by $75 million; Boeing recently elevated the secret methodology to the level of lean. Yet it’s still a secret.

What is this sauce that doubles profits without increasing sales?  (That’s right, doubles.) What is this magic that decreases time to market? That reduces engineering documentation? That reduces design work itself? What is this growth strategy?

When trying to spread it on your company there are some obstacles, but the benefits should be enough to carry the day.  First off, the secret sauce isn’t new, but double the profits should be enough to take a first bite.  Second, its name doesn’t roll off the tongue (there’s no sizzle), but decreased time to market should justify a taste test. Last, design engineering must change its behavior (we don’t like to do that), but improved product functionality should be enough to convince engineering to swallow.

There are also two mapping problems: First, the sauce has been mapped to the wrong organization – instead of engineering it’s mapped to manufacturing, a group that, by definition, cannot do the work. (Only engineering can change the design.) Second, the sauce is mapped to the wrong word – instead of profit it’s mapped to cost.  Engineering is praised for increased profits (higher function generates higher profits) and manufacturing is responsible for cost – those are the rules.

With double profits, reduced time to market, and improved product function, the name shouldn’t matter. But if you must know, its name is Design for Manufacturing and Assembly (DFMA), though I prefer to call it the secret sauce that doubles profits, reduces time to market, and improves product function.

It’s all about judgement.

It’s high tide for innovation – innovate, innovate, innovate. Do it now; bring together the experts; hold an off-site brainstorm session; generate 106 ideas. Fast and easy; anyone can do that. Now the hard part: choose the projects to work on. Say no to most and yes to a few. Choose and execute.

To choose we use processes to rank and prioritize; we assign scores 1-5 on multiple dimensions and multiply. Highest is best, pull the trigger, and go. Right? (Only if it was that easy.) Not how it goes.

After the first round of scoring we hold a never-ending series of debates over the rankings; we replace 5s with 3s and re-run the numbers; we replace 1s with 5s and re-re-run. We crank on Excel like the numbers are real, like 5 is really 5. Face it – the scores are arbitrary, dimensionless numbers, quasi-variables data based on judgment. Face it – we manipulate the numbers until the prioritization fits our judgment.

Clearly this is a game of judgment. There’s no data for new products, new technologies, and new markets (because they don’t exist), and the data you have doesn’t fit. (That’s why they call it new.) No market – the objective is to create it; no technology – same objective, yet we cloak our judgment in self-invented, quasi-variables data, and the masquerade doesn’t feel good. It would be a whole lot better if we openly acknowledged it’s judgment-based – smoother, faster, and more fun.

Instead of the 1-3-5 shuffle, try a story-based approach. Place the idea in the context of past, present, and future; tell a tale of evolution: the market used to be like this with a fundamental of that; it moved this way because of the other, I think. By natural extension (or better yet, unnatural), my judgment is the new market could be like this… (If you say will, that’s closeted 1-3-5 behavior.) While it’s the most probable market in my judgment, there is range of possible markets…

Tell a story through analogy: a similar technology started this way, which was based on a fundamental of that, and evolved to something like the other. By natural evolution (use TRIZ) my technical judgment is the technology could follow a similar line of evolution like this…. However, there are a range of possible evolutionary directions that it could follow, kind of like this or that.

And what’s the market size? As you know, we don’t sell any now. (No kidding we don’t sell any, we haven’t created the technology and the market does not exist. That’s what the project is about.) Some better questions: what could the market be? Judgment required. What could the technology be? Judgment. If the technology works, is the market sitting there under the dirt just waiting to be discovered? Judgment.

Like the archeologist, we must translate the hieroglyphs, analyze the old maps, and interpret the dead scrolls. We must use our instinct, experience, and judgment to choose where to dig.

Like it or not, it’s a judgment game, so make your best judgment, and dig like hell.

Improve the US economy, one company at a time.

I think we can turn around the US economy, one company at a time.  Here’s how:

To start, we must make a couple commitments to ourselves.  1. We will do what it takes to manufacture products in the US because it’s right for the country. 2. We will be more profitable because of it.

Next, we will set up a meeting with our engineering community, and we will tell them about the two commitments. (We will wear earplugs because the cheering will be overwhelming.) Then, we will throw down the gauntlet; we will tell them that, going forward, it’s no longer acceptable to design products as before, that going forward the mantra is: half the cost, half the parts, half the time. Then we will describe the plan.

On the next new product we will define cost, part count, and assembly time goals 50% less that the existing product; we will train the team on DFMA; we will tear apart the existing product and use the toolset; we will learn where the cost is (so we can design it out); we will learn where the parts are (so we can design them out); we will learn where the assembly time is (so we can design it out).

On the next new product we will front load the engineering work; we will spend the needed time to do the up-front thinking; we will analyze; we will examine; we will weigh options; we will understand our designs. This time we will not just talk about the right work, this time we will do it.

On the next new product we will use our design reviews to hold ourselves accountable to the 50% reductions, to the investment in DFMA tools, to the training plan, to the front-loaded engineering work, to our commitment to our profitability and our country.

On the next new product we will celebrate the success of improved product functionality, improved product robustness, a tighter, more predictable supply chain, increased sales, increased profits, and increased US manufacturing jobs.

On the next new product we will do what it takes to manufacture products in the US because it’s the right thing for the country, and we will be more profitable because of it.

If you’d like some help improving the US economy one company at a time, send me an email (mike@shipulski.com), and I’ll help you put a plan together.

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p.s. I’m holding a half-day workshop on how to implement systematic cost savings through product design on June 13 in Providence RI as part of the International Forum on DFMA — here’s the link. I hope to see you there.

I can name that tune in three notes.

More with more doesn’t cut it anymore, just not good enough.

The behavior we’re looking for can be nicely described by the old TV game show Name That Tune, where two contestants competed to guess the name of a song with the fewest notes. They were read a clue that described a song, and ratcheted down the notes needed to guess it. Here’s the nugget: they challenged themselves to do more with less, they were excited to do more with less, they were rewarded when they did more with less. The smartest, most knowledgeable contestants needed fewer notes. Let me say that again – the best contestants used the fewest notes.

In product design, the number of notes is analogous to part count, but the similarities end there. Those that use the fewest are not considered our best or our most knowledgeable, they’re not rewarded for their work, and our organizations don’t create excitement or a sense of challenge around using the fewest.

For other work, the number of notes is analogous to complexity. Acknowledge those that use the fewest, because their impact ripples through your company, and makes all your work easier.

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.

Your product costs are twice what they should be.

Your product costs are twice what they should be. That’s right. Twice.

You don’t believe me. But why? Here’s why:

If 50% cost reduction is possible, that would mean you’ve left a whole shitpot of money on the table year-on-year and that would be embarrassing. But for that kind of money don’t you think you could work through it?

If 50% cost reduction is possible, a successful company like yours would have already done it. No. In fact, it’s your success that’s in the way. It’s your success that’s kept you from looking critically at your product costs. It’s your success that’s allowed you to avoid the hard work of helping the design engineering community change its thinking. But for that kind of money don’t you think you could work through it?

Even if you don’t believe 50% cost reduction is possible, for that kind of money don’t you think it’s worth a try?

DoD’s Affordability Eyeball

The DoD wants to do the right thing. Secretary Gates wants to save $20B per year over the next five years and he’s tasked Dr. Ash Carter to get it done. In Carter’s September 14th memo titled: “Better Buying Power: Guidance for Obtaining Greater Efficiency and Productivity in Defense Spending” he writes strongly:

…we have a continuing responsibility to procure the critical goods and services our forces need in the years ahead, but we will not have ever-increasing budgets to pay for them.

And, we must

DO MORE WITHOUT MORE.

I like it.

Of the DoD’s $700B yearly spend, $200B is spent on weapons, electronics, fuel, facilities, etc. and $200B on services. Carter lays out themes to reduce both flavors. On services, he plainly states that the DoD must put in place systems and processes. They’re largely missing. On weapons, electronics, etc., he lays out some good themes:  rationalization of the portfolio, economical product rates, shorter program timelines, adjusted progress payments, and promotion of competition. I like those.  However, his Affordability Mandate misses the mark.

Though his Affordability Mandate is the right idea, it’s steeped in the wrong mindset, steeped in emotional constraints that will limit success. Take a look at his language. He will require an affordability target at program start (Milestone A)

to be treated like a Key Performance Parameter (KPP) such as speed or power – a design parameter not to be sacrificed or comprised without my specific authority.

Implicit in his language is an assumption that performance will decrease with decreasing cost. More than that, he expects to approve cost reductions that actually sacrifice performance. (Only he can approve those.) Sadly, he’s been conditioned to believe it’s impossible to increase performance while decreasing cost. And because he does not believe it, he won’t ask for it, nor get it. I’m sure he’d be pissed if he knew the real deal.

The reality: The stuff he buys is radically over-designed, radically over-complex, and radically cost-bloated.  Even without fancy engineering, significant cost reductions are possible. Figure out where the cost is and design it out. And the lower cost, lower complexity designs will work better (fewer things to break and fewer things to hose up in manufacturing). Couple that with strong engineering and improved analytical tools and cost reductions of 50% are likely. (Oh yes, and a nice side benefit of improved performance). That’s right, 50% cost reduction.

Look again at his language. At Milestone B, when a system’s detailed design is begun,

I will require a presentation of a systems engineering tradeoff analysis showing how cost varies as the major design parameters and time to complete are varied.  This analysis would allow decisions to be made about how the system could be made less expensive without the loss of important capability.

Even after Milestone A’s batch of sacrificed of capability, at Milestone B he still expects to trade off more capability (albeit the lesser important kind) for cost reduction. Wrong mindset. At Milestone B, when engineers better understand their designs, he should expect another step function increase in performance and another step function decrease of cost. But, since he’s been conditioned to believe otherwise, he won’t ask for it. He’ll be pissed when he realizes what he’s leaving on the table.

For generations, DoD has asked contractors to improve performance without the least consideration of cost. Guess what they got? Exactly what they asked for – ultra-high performance with ultra-ultra-high cost. It’s a target rich environment. And, sadly, DoD has conditioned itself to believe increased performance must come with increased cost.

Carter is a sharp guy. No doubt. Anyone smart enough to reduce nuclear weapons has my admiration.  (Thanks, Ash, for that work.) And if he’s smart enough to figure out the missile thing, he’s smart enough to figure out his contractors can increase performance and radically reduces costs at the same time. Just a matter of time.

There are two ways it could go: He could tell contractors how to do it or they could show him how it’s done. I know which one will feel better, but which will be better for business?

The design community has the biggest lever

In sourcing, out sourcing, off shoring, on shoring – the manufacturing debate rages. So what’s the big deal? Jobs – the foundation of an economy. Jobs pay for things, important things like food, schools, and healthcare. No jobs, no economy. The end.

What does lean, the most successful manufacturing business methodology, have to say about all this? Lean’s fundamental:

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Make it where you sell it

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because the shortest supply chains are least wasteful. Dig the ore in-country, make the steel in-country, forge it, machine it, and sell it in-country. With, of course, some qualifiers, some important ifs:

  • If in-country demand is high enough to warrant the investment
  • If your company is big enough to pull it off
  • If quality can be assured.

All good, but I’m discouraged by what lean does not say:

  • Regardless of the country, engage the design community to reduce material cost and waste
  • Regardless of the factory, engage design community to make your factory output like two
  • Regardless of the industry, engage design community to reduce part count.

We all agree the design community has the biggest influence on cost and waste, yet they’re not part of the lean equation. That’s wasteful. That violates a fundamental. That makes me sad.

Let’s put aside our where-to-make-it arguments for a bit, and, wherever you make product,

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Engage the design community in lean.

Don’t bankrupt your suppliers – get Design Engineers involved.

Cost Out, Cost Down, Cost Reduction, Should Costing – you’ve heard about these programs. But they’re not what they seem. Under the guise of reducing product costs they steal profit margin from suppliers. The customer company increases quarterly profits while the supplier company loses profits and goes bankrupt. I don’t like this. Not only is this irresponsible behavior, it’s bad business. The savings are less than the cost of qualifying a new supplier. Shortsighted. Stupid.

The real way to do it is to design out product cost, to reduce the cost signature. Margin is created and shared with suppliers. Suppliers make more money when it’s done right. That’s right, I said more money. More dollars per part, and not more from the promise of increased sales. (Suppliers know that’s bullshit just as well as you, and you lose credibility when you use that line.) The Design Engineering community are the only folks that can pull this off.

Only the Design Engineers can eliminate features that create cost while retaining features that control function. More function, less cost. More margin for all. The trick: how to get Design Engineers involved.

There is a belief that Design Engineers want nothing to do with cost. Not true. Design Engineers would love to design out cost, but our organization doesn’t let us, nor do they expect us to. Too busy; too many products to launch; designing out cost takes too long. Too busy to save 25% of your material cost? Really? Run the numbers – material cost times volume times 25%. Takes too long? No, it’s actually faster. Manufacturing issues are designed out so the product hits the floor in full stride so Design Engineers can actually move onto designing the next product. (No one believes this.)

Truth is Design Engineers would love to design products with low cost signatures, but we don’t know how. It’s not that it’s difficult, it’s that no one ever taught us. What the Design Engineers need is an investment in the four Ts – tools, training, time,  and a teacher.

Run the numbers.  It’s worth the investment.

Material cost x Volume x 25%

Cover Story IE Magazine – Resurrecting Manufacturing

Resurrecting Manufacturing Cover ImageFor too long we have praised financial enterprises for driving economic growth knowing full well that moving and repackaging financial vehicles does not create value and cannot provide sustainable growth. All the while, manufacturing as taken it on the chin with astronomical job losses, the thinnest capital investments and, most troubling, a general denigration of manufacturing as an institution and profession. However, we can get back to basics where sustainable economic growth is founded on the bedrock of value creation through manufacturing.

Continuing with the back-to-basics theme, manufacturing creates value when it combines raw materials and labor with thinking, which we call design, to create a product that sells for more than the cost to make it. The difference between cost (raw materials, labor) and price is profit. The market sets price and volume so manufacturing is left only with materials and labor to influence profit. At the most basic level, manufacturing must reduce materials and labor to increase profit. We can get no more basic than that. How do we use the simple fundamentals of reducing labor and material costs to resurrect U.S. manufacturing? We must change our designs to reduce costs using Design for Manufacturing and Assembly (DFMA).

The program is typically thought of as a well-defined toolbox used to design out product cost. However, this definition is too narrow. More broadly, DFMA is a methodology to change a design to reduce the cost of making parts while retaining product function. Systematic DFMA deployment is even broader; it is a business method that puts the business systems and infrastructures to deploy DFMA methods in place systematically across a company. In that way, it is similar to the better known business methodologies lean, Six Sigma and design for Six Sigma.

Click this link for the full story.

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Click this link for information on Mike’s upcoming workshop on Systematic DFMA Deployment

Who owns cost?

accountabilityI’ve heard product cost is designed in; I’ve heard it happens at the early stages of product development; And, I’ve heard, once designed in, cost is difficult get out. I’m sure you’ve heard this before. Nothing new here. But, is it true? Is cost really designed in? Why do I ask? Because we don’t behave like it’s true. Because was it was true, the Design community would be responsible for product costs. And they’re not.

Who gets flogged when the cost of new products are too high? Manufacturing. Who does not? Design. Who gets stuck running cost reduction projects when costs are too high? Manufacturing. Who does not? Design. Who gets the honor of running kaizens when value stream maps don’t have enough value? Manufacturing. Who designs out the value and designs in the cost? Design. (That’s why they’re called Design.) If Design designs it in, why is the cost albatross hung around Manufacturing’s neck?

It sucks to be a manufacturing engineer – all the responsibility to reduce cost without the authority to do it. The manufacturing engineers’ call to arms –

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Reduce cost, but don’t change anything!

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Say that out loud. Reduce the cost, but don’t change anything. How stupid is that? We’ll it’s pretty stupid, but it happens every day. And why constrain the manufacturing engineers like that? Because they don’t have the authority to change the product design – only Design can do that. So you’re saying Manufacturing is responsible for product cost, but they cannot change the very thing that creates all the cost? Yes.

What would life be like if we behaved as if Design was responsible for product cost? To start, Design would present product cost data at new product development gate reviews. Design would hang their heads when product costs were higher than the cost target, and they would be held accountable for redesigning the product and meeting the cost target.  (They would also be given the tools, time, and training to do the work.)

Going forward, Design would understand the elements of product that create the most cost. And how would they know this? First, they would spend some time on the production floor. (I know this is a little passé, but it still works.) Second, they would do Design for Assembly (DFA) in a hands-on, part-by-part, piece-by-piece way. No kidding, they would handle all the parts themselves, assemble them with production tooling, and score the design with DFA. That’s right, Design would do DFA. The D in DFA does not stand for Advanced Manufacturing, Operations, Supplier Quality, Purchasing, or Industrial Engineering. The D stands for Design.

I know your manufacturing engineers are in favor of rightly burdening Design with responsibility for product cost. But, your Lean Leaders should be the loudest advocates. Imagine if your Design organization designed new products with half the parts and half the material cost, and your Lean Leaders reduced value waste from there. Check that, Lean Leaders should not be the loudest advocates. Your stockholders should be.

Click this link for information on Mike’s upcoming workshop on Systematic DFMA Deployment

Mike Shipulski Mike Shipulski
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