Industry accepted statistics indicate that investment in designing a product typically computes to around 5% of the overall cost of each product sold. The irony here is that this product design process influences around 70% of the overall product cost to manufacture. That includes factors such as material selection, number of parts, choice of assembly processes, etcetera.
The actual materials, labour and overheads typically influence only 30% of the overall product cost to manufacture.
70% of the manufacture cost is defined by the design stage – An example:
A company decides that as a natural progression for their product line, they are going to design and manufacture an office printer. That decision alone has defined the approximate size of the product, the need for multiple plastic molds, the need for several component suppliers and the need for an assembly process.
Market research determines how long the ink should last between refills, what sizes of paper should be accommodated in the printer and many other features. Those decisions have further defined the size of the printer and the number of parts which relates directly to the amount of material and time to assemble.
All these decisions and their design engineer hasn’t even opened their CAD package yet.
30% of the manufacture cost defined through material costs, labour rates etc. – An example:
That printer is a new product line for the company. That means they will be starting with relatively small production volumes. That means they will likely miss out on better price breaks with their component suppliers or have higher relative tooling costs.
Also, let’s say the company is based in a remote location they therefore may have to pay higher than average rates to attract a labour force with the required skill level.
So what does that 70:30 ratio really mean for you? . . .
. . No matter how much time, effort and money you put into improving the efficiency of your production process or hammering down your supplier’s prices (targeting the 30%), if your design is inherently difficult to manufacture and carries a high risk of quality issues, the return on your efforts will always be limited.
In short, improvement effort carries more potential reward if directed at the design stage.
This improvement will still be trying to reduce the cost to manufacture your product but you will be putting more focus on that cost at the design stage.
Consider the printer example, if a lean design allowed two plastic components to be combined into one, there would (most likely) be a reduction in tooling cost, assembly time, and inventory costs etc. An improvement focus on the 30% (material cost, labour etc.) may shave a bit off the assembly time for the two components but a focus on the 70% (design stage) could eliminate one of the components and eliminate that assembly time altogether.
How are your design engineers going to respond to the need to improve?
Your design engineers are professionals who have invested a lot in their careers, generally they are not just trying to pass the week, waiting on a pay cheque. They take pride in their work and believe they are working to the best of their ability . . . and they more than likely are. The focus therefore should be to enhance their ability. I have yet to meet an engineer who didn’t want to further develop their skills.
Your design team are also very busy. The role of a design engineer is one of the most multi-skilled professions from the people skills and analytical skills of market research to the creativity and logic of innovation, the CAD skills and attention to detail of design to the practical and problem solving skills of prototyping to name but a few. The pressures of delivering a project on time are often further compounded by firefights when things don’t go to plan. It is important that your design engineers can free the time and mental capacity to learn and implement new skills.
Standardising and systemising the lower skilled and repetitive tasks they do can make your design engineers more efficient and putting out the fires at source for good, will reduce the pressure – that is where lean engineering comes in.
Lean is not just a production concept. It originated as a company culture and as such is just as relevant to the engineering department. Lean Engineering is about continuous improvement, growing your people, eliminating waste in your processes and sustaining success. Lean is not about getting rid of people or making them work harder.
So you have engineers who have bought into improving and who have become more efficient allowing them the capacity to learn and implement new skills. . . . What new skills do they need to enable them to reduce the production cost of their designs?
Design For Manufacturing encompasses a range of tools, techniques, methods and processes. But there is more to it than just learning to use a few tools.
Re-design is inefficient. It is a waste of time to create a design then review it, then change it.
To design right first time, however, requires a change in perspective.
In fact it requires the ability to concurrently design from several perspectives with the right balance. Design considering production cost, design considering customer satisfaction, design considering product lifecycle, design considering brand image etc. etc.
. . . so with all that in mind…
. . .is it time to go fishing?