Shipulski On Design

Archive for the ‘Product Development’ Category

The chase for low cost labor is still alive and well. And it’s still a mistake. Low cost labor is fleeting. Open a plant in a low cost country and capitalism takes immediate hold. Workers see others getting rich off their hard work and demand to be compensated. It’s an inevitable death spiral to a living wage. Time to find the next low cost country.

The truth is labor costs are an extremely small portion of product cost. (The major cost, by far, is the material and the associated costs of moving it around the planet and managing its movement.) And when design engineers actively design out labor costs (50% reductions are commonplace) it becomes so small it should be ignored altogether. That’s right – ignored. No labor costs. Free labor. What would you do if labor was free?

Eliminate labor costs from the equation and it’s clear what to do. Make it where you can achieve the highest product quality, make it where you can run the smallest batches, and make it where you sell it. Design out labor and you’re on your way.

Design engineers are the key. Only they can design out labor. Management can’t do it without engineers, but engineers can do it without management.

A call to arms for design engineers: organize yourselves, design out labor, and force your company to do the right thing. Your kids and your economy will thank you.

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:

a

Make it where you sell it

a

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,

a

Engage the design community in lean.

Companies (and countries) are slowly learning that moving manufacturing to low cost countries is a big mistake, a mistake of economy-busting proportion. (More costly than any war.) With labor costs at 10% of product cost, saving 20% on labor yields a staggering 2% cost savings. 2%. Say that out loud. 2%. Are you kidding me? 2%? Really? Moving machines all over the planet for 2%? What about cost increases from longer supply chains, poor quality, and loss of control? Move manufacturing to a country with low cost labor? Are you kidding me? Who came up with that idea? Certainly not a knowledgeable manufacturing person. Don’t chase low cost labor, design it out.

(I feel silly writing this. This is so basic.  Blocking-and-tackling. Design 101. But we’ve lost our way, so I will write.)

Use Design for Assembly (DFA) and Design for Manufacturing (DFM) to design out 25-50% of the labor time and make product where you have control. The end. Do it. Do it now. But do it for the right reasons – throughput, and quality.  (And there’s that little thing about radical material cost reduction which yield cost savings of 20+%, but that’s for another time).

The real benefit of labor reduction is not dollars, it’s time. Less time, more throughput. Half the labor time, double the throughput. One factory performs like two. Bring it back. Fill your factories. Repeat the mantra and you’ll bring it back:

Half the labor and one factory performs like two.

QC stands for Quality Control. No control, no quality. Ever try to control things from 10 time zones in the past? It does not work. It has not worked. Bring it back. Bring back your manufacturing to improve quality. Your brand will thank you. Put the C back in QC – bring it back.

Forward this to your highest level Design Leaders. Tell them they can turn things around; tell them they’re the only ones who can pull it off; tell them we need; tell them we’re counting on them; tell them we’ll help; tell them to bring it back.

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%

I read a refreshing article in the Washington Post. Defense Secretary Robert M. Gates wants to save $20B per year on the Pentagon’s spend. I could kiss this guy!

Gates wants contracts scrutinized more closely for inefficiencies and unneeded overhead. He said the savings could be shifted to support U.S. troops around the globe. Pentagon officials said they’re looking for annual savings in the $400 billion spent on goods and services. They’re looking to save $20B, or 5%.

Gates has it right. The government must stop overpaying. But how? Gates suggests improved contract scrutiny to eliminate inefficiencies and unneeded overhead. He’s on the right track, but that’s not where the money is. Gates’ real target should be material cost – that’s where the money is. But, can material cost bring $20B savings? Yes.

Assume the Pentagon spends $100B on services and $300B on goods. The cost of those of goods falls into three buckets: labor, material, and overhead, where material cost makes up the lion’s share at 70%, or $210B. A 10% reduction in material cost brings $21B in savings, and gets Gates to his target. But how?

To get the savings, the Pentagon must drive the right behavior.  They must must make suppliers submit a “should cost” with all proposals. The should cost is an estimated cost based on part geometries, materials, manufacturing processes used to create the parts, prevailing wage rates and machine rates, and profit. From these parameters, a should cost can be created in the design phase, without actually making the parts. So, the Pentagon will know what they should pay before the product is made. This cost analysis is based on real data, real machines, and real material costs.  There is no escape for defense contractors.  The cash cow is no longer.

Should costing will drive the design engineers to create designs that work better and cost less, something the defense industry thinks is impossible. They’re wrong. Given the tools, time, and training, the defense industry’s design engineering community can design out at least 25% of material cost, resulting in $50B+ in savings, more than twice Gates’ goal. Someone just has to teach them how.

Mr. Secretary, the non-defense world is ready to help.  Just ask us. (But we’ll go after a 50% cost reduction.)

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

Pent up demand is everywhere.  After almost two years of cutting inventories and pushing out purchases, companies are ready to buy. And with credit coming back on line, they’re ready to buy in bulk.  Good news?  No, great news.  We’re back on our growth path. And that’s good because Wall Street now expects growth. But, together this wicked couple of pent up demand and Wall Street’s appetite for immediate growth has created a powder keg that’s ready to blow.

Companies want more new products to satisfy the pent up demand (and Wall Street).  Growth through new products is a theme heard around the globe; there’s a relentless push for more products – early and often. Resources be damned, best practices be damned, we’re going to launch more products. Were going to market and will fix it later. The battle cry – Don’t launch, don’t sell!. However, the real battle cry is more aptly – Ready, fire, aim!  We’re going too fast.

I’m all for productivity, but we’re heading for a cliff, a cliff some have already accelerated off of, albeit in an unintended way.

a

We’ve forgotten the golden rule – provide value to customers, or you’re hosed.

a

Customers value function, or “what it does”.  Function first. But in this need-for-speed environment that’s just what’s at risk. To reduce time to market, we eliminate tasks (best practices?) in our product development processes. All good unless we eliminate tasks that make the product function as intended.  All good unless we load our engineers so heavily they don’t have time to design in functionality.  We must be careful here.  If you’re first to market and your product doesn’t work, you should have waited.

I believe launching too early is worse than launching too late because a botched launch can damage your brand, the brand you’ve taken years to build. (Click this link to see a post on brand damaging.) As we know, word gets around when your product doesn’t work (or accelerates on its own).

Satisfying the siren of pent up demand can run you into the rocks if you’re not careful.  So block your ears to her song, and take the time to get your products right.

By reducing parts count and easing assembly, one plasma cutter maker explores customized manufacturing.

By Jean Thilmany, Associate Editor, Mechanical Engineering Magazine

Ask nearly any engineer or manufacturer about customized manufacturing and—to a person—they’ll all say the same thing: Have you heard the Dell story?

Dell is offered up again and again as the number one example of customized manufacturing done right and done successfully. Shortly after its founding in 1984, Dell began what it calls a configure-to-order approach to manufacturing. The computer company lets customers customize their own computers on the Dell Web site. Buyers select how much memory and disk space they desire and the resulting computer is manufactured and shipped to them.

The approach has helped the computer maker see skyrocket growth. Last year, it held the second-highest spot for desktops and laptops shipped, behind Hewlett Packard, according to market-share numbers from research firm International Data Corp. in Framingham, Mass.

Manufacturers—particularly electronics manufacturers—have long been taking notice. Many of them are investigating how the configure-to-order model could be put to use at their own companies. And some of them have implemented the method—along with the necessary software to get the job done—with great success.

Take Hypertherm Inc. of Hanover, N.H., maker of plasma metal cutting equipment. The company has recently started allowing customers to choose online from ten CNC Edge Pro product configurations, up from three configurations in the former product line, said John Sobr, head designer on the project.

Hypertherm recently redesigned its plasma metal cutting equipment to reduce part count by 27 percent while doubling the number of inputs available. Customers can now choose from ten product configurations.

Link to full article

Ask a company or team to do DFMA, and you get a great list of excuses on why DFMA is not applicable and won’t work. Product volumes are too low for DFMA, or too high; product costs are too low, or too high; production processes are too simple, or complex; production mix is too low, or too high.  That’s all crap – just excuses to get out of doing the work.  DFMA is applicable; it’s just a question of how to prioritize the work.

To prioritize the work, take a look at product volumes.  They’ll put you in the right ballpark. Here are three categories, low, medium, and high volume:

a Read the rest of this entry »

Design for Manufacture and Assembly is reported to improve CNC performance, modularity, durability, and serviceability

When Hypertherm (www.hypertherm.com) was getting ready to design its next generation of metal cutting CNCs, the engineering team’s goal was to make improvements. But the controllers, which automate the Hanover, New Hampshire-based company’s advanced cutting tools and systems, were already well-accepted in the marketplace and highly regarded in the industry. So why redesign? And how would they go about it?

See this link for the full article – Using DFMA to Control Controller Design

Five percent here, three percent there. I’m tired as hell of continuous improvement. Sure there’s a place for it, but it shouldn’t be the only type of work we do. But, unfortunately, that’s just what’s happened in manufacturing. To secure the balance sheet, the pendulum swung too far toward continuous improvement. Just look at what we’re writing about – the next low cost country, shorter lead times, how to be profitable where there’s no profit to be had. Those topics scream continuous improvement – take nickels and dimes out of processes to increase profits. But there’s a dark side to all this focus on continuous improvement.  It has created a big problem: it has come at the expense of discontinuous improvement.

Continuous improvement is a philosophy of minimization with a focus on cost and waste reduction, while discontinuous improvement is a philosophy of maximization with a focus on creation of new markets through product innovation. As of late, we’ve minimized waste at the expense of invention and innovation. I propose we flip this on its head and maximize through discontinuous improvement at the expense of continuous improvement. That’s right; I said do less lean and Six Sigma.

But we must ask ourselves if we’re capable of doing discontinuous improvement. Remember, we ignored or dismantled our innovation engines over the last years. And what about our big thinkers, our creative thinkers, our innovators? Do they still work for us, or have they just stopped talking about big ideas? I urge you to answer that question because your next actions depend on it.

If your innovative thinkers are gone, go out and hire the best you can find ASAP. If you were fortunate enough to retain your big thinkers, congratulations. Now it’s time to get the band back together, but first you’ve got to do some reconnaissance to ferret them out of their hiding places. Once you find them, invite them to a nice lunch – the nicer the better. Don’t push too hard at lunch, just start to  get reacquainted. In time you’ll get to talk about their ideas on new technologies and how to create new markets.

It will be difficult to get your company swing the pendulum away from continuous improvement, but you must try. Without discontinuous improvement your company will be destined to wrestle for nickels using lean and Six Sigma.