What Questions regarding new product development or manufacturing do you all have?

[Niptuck MD]

This is a new thread I am shedding light and expertise on for you all to benefit from. I hope some of the principles can be applied to your innovations, thoughts, ideas etc. Within the realms of commercialization, design, planning, control and organization are all simultaneously embedded as part of the process in making your product(s) come to fruition.

Design for manufacturability (DFM) is the process of proactively designing products to (1) optimize all the manufacturing functions: fabrication, assembly, test, procurement, shipping, delivery, service, and repair, and (2) assure the best cost, quality, reliability, regulatory compliance, safety, time-to-market, and customer satisfaction.

Concurrent Engineering is the practice of concurrently developing products and their manufacturing processes.
If existing processes are to be utilized, then the product must be design for these processes.
If new processes are to be utilized, then the product and the process must be developed concurrently.

Design for Manufacturability and Concurrent Engineering are proven design methodologies that work for any size company. Early consideration of manufacturing issues shortens product development time, minimizes development cost, and ensures a smooth transition into production for quick time to market. These techniques can be used to commercialize prototypes and research.

HOW TO DEVELOP COMMERCIALIZED PRODUCTS BY DESIGN
The ideal way to commercialize products and production systems would be to design them "right the first time" for the most optimal manufacturability, cost, quality, time, as well as functionality. Commercialization of research should include with following:

• valuable resources and time should be focused on the identified "mainstays"

• everything else can then be optimized for manufacturability, quality, reliability, part availability, and fast ramps to stable production.

• and much of that can be procured off-the-shelf, thus freeing more resources to focus on the "mainstays"/cash cows

ONE OF THE BIGGEST MISCONCEPTIONS IS HOW FEW STARTUPS/NEW PRODUCT DEVELOPERS/CREATORS ANALYZE INITIAL COSTING OF THEIR VENTURES.
For this the firm/individual etc must,

• Quantify Total Cost. The more important cost is, the more important it is to measure it properly. For ambitious cost goals, cost measurements absolutely must quantify all costs that contribute to the selling price. Until company-wide total cost measurements are implemented, the design team needs to make cost decisions on the basis of total cost thinking, or for important decisions, manually gather all the costs. Since a large portion of cost savings will be in overhead, the costing must ensure that new products are not burdened with the averaged overhead charges of other products, but only the specific overhead charges that are appropriate for the innovative product.

COST DRIVERS

In any change process, there is always some “low-hanging fruit” – those opportunities to show significant gains without expending a great deal of effort. Agents of change should always look for these opportunities as success in these high-leverage areas can generate interest and support for more ambitious efforts. They also provide a good way to get the change process started in cases where there is a lack of widespread support.

In implementing activity-based costing, low-hanging fruit can often be found by identifying and measuring the cost of the organization’s major cost drivers. Cost drivers are defined as the root causes of a cost – the things that “drive” costs. Associating costs with their drivers makes cost information more accurate and relevant and encourages behavior to lower or eliminate costs.

The cost of major cost drivers can usually be found “lumped together” with the costs from a wide variety of other, unrelated cost drivers in a single pool of costs known as overhead. This pool of overhead contains all costs that cannot be defined as either direct material or direct labor. They are blended together like peanut butter, incorrectly treated as a homogeneous pool of costs, and, like peanut butter, spread around to products and customers, usually using direct labor as a knife.

This overhead pool is almost always greater that the direct labor it follows and is often greater than the direct material portion of a company’s costs. It contains costs that relate to some of the company’s most important cost drivers. Without being linked to their causes, however, these costs are very difficult to understand and manage. For example, overhead pools usually contain the cost of activities related to:

-Engineering Change Orders
-Purchasing, receiving, testing, and storing raw materials and purchased components
-Quality, scrap, rework, and other non-value-adding activities
-Moving and storing in-process inventory
-Setting up or changing over equipment
-Handling and storage of finished goods
-Picking and shipping releases and orders

Yet few companies know the cost of an ECO, the “material overhead” related to the various types of direct items they purchase, the cost of an in-process move, the cost of setting up or changing over a piece of equipment, or the cost of post-manufacturing work (like storage and fulfillment) required to meet the demands of its various customers.

The key is to identify the major cost drivers and then develop the best estimates practical to measure the costs related to the driver and quantify the driver itself.

Although accountants might not be able to identify an organization’s cost drivers, they should be intuitively obvious to the company’s experienced managers once they understand the concept. Of the short list of seven drivers noted above, at least one should be a significant issue at any manager’s manufacturing firm. By selecting the one that appears most significant and estimating “the numbers,” insights should be gained that can significantly impact the company’s thinking.

Once the connection is made between costs and their drivers, managers will be able to see the linkage between the characteristics and behavior of a product or customer and its total cost to the organization. This includes the impact of:

-Volume: high volume or low volume
-Degree of customization: standard or custom
-Part standardization: approved or preferred
-Part destination: production parts or spare parts for products that are out of production
-Distribution costs: direct or through channels
-Product age: launching or stabilized or aging (experiencing processing incompatibilities with -newer products and/or availability challenges for parts and raw materials)
-Market niches: commercial, OEM, military, medical, or nuclear (different markets have varying demands for quality, paperwork, proposals, reports, certifications, traceability, etc.).

 

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[Niptuck MD]

The Thorough Up-Front Work

As both innovators and sourcers realize the importance of thorough up-front work, they ask what more should be done in the higher proportion of work in the conceptualization phase and how this can actually reduce the end of the time-line so much. The key elements of an optimal architecture phase are the following:

• A solid product definition defines what customers really want and minimizes the chance that may result in change orders to reflect the “new” customer needs that should have been understood and anticipated in the beginning.

• Validate (and verify) assumptions. Evaluate, challenge, and dissect assumptions (thoroughly), especially those that will commit the project to a certain path.

• Diverse opinions are sorted out early with respect to diverse data about customer needs and and project assumptions.

• Regulatory compliance; Develop compliance plans for current/known regulations and identify likely scenarios regarding potential regulatory changes, commissioning research as necessary. Categorize changes that would force a requalification, especially customer-induced changes and changes needed for manufacturability. Based on that, formulate plans to minimize customer changes in the first bullet above and use Concurrent Engineering to design the product for manufacturability.

• Issues raised and resolved before proceeding further, thus minimizing:

(a) requiring expensive, risky, and time-consuming work-arounds on every build, or

(b) the chances that these issues will have to be resolved later when changes are expensive, hard to implement, and may, in turn, induce yet more changes.


• The architecture should be optimized for the minimum total cost, for designed-in quality and reliability, for manufacturability, serviceability, and for flexibility and customizability. The architecture may need to be optimized for product families, variety, extensions, next generations, contingencies, and growth.

The Design Phase Considerations and Methodologies

With the thorough up-front work done right, the actual design phase can proceed quickly and smoothly....

• Vendor/Partnerships should be arranged to predetermine vendor/partners.

Vendor/partnerships are the most efficient way to ensure the manufacturability of custom parts with concurrently designing tooling, thus minimizing ramp delays. They effectively expand the size of the team without hiring any more employees or reassigning them from other projects. This also avoids losing your scarce resources to deal with problems cause by low-bid vendors or vendors who just build-to-print whatever your sent them in a request-for-quotation.
And, contrary to common beliefs and policies, vendor/partnerships will actually lead to a lower net costs. Plain and simple.

• Tooling and processing development should be started early in which all potential concepts have enough concurrent engineering to vet potential production approaches for feasibility and assure adequate production and supply chain capacity will be achieved without delays for tooling problems. Don’t wait until the part is designed to start thinking about fixtures and tooling concepts.

• Part and Material availability can be assured by selecting them for availability, not just function.
Basing production designs on hard-to-get parts, which may have been selected for a proof-of-principle, may compromise order fulfillment and ultimately limit growth. Selecting parts for available needs to be done all along because availability problems are hard to remedy after qualification.

• Tolerances are appropriately tight and consistently achievable at low cost and fastest throughput. Avoid basing research on excessively tight tolerances that carries into production and gets locked in by qualifications
• Skill Demands. Never exceed the capability of production-line workers in your plant or contract manufacturers. Avoid building proofs-of-concept that can only be built by highly skilled scientists, engineers, or prototype technicians because once approved, qualified, and put into production, high skill production-line workers will be needed, who may be hard to find, train, and retain, and may limit growth. Further, if not managed really well, dependence on skilled labor may cause quality vulnerabilities. raise cost, and delay the launch.

• Off-the-shelf parts; as part of the design phase, you should focus valuable resources on the mainstay(s), which are what customers will buy your products for – and get the rest, as off-the-shelf, whenever possible. For example:

Customers buy electronic products for the unique, innovative features and functions they accomplish, not routine computations, controls, communications, and power supplies that are just expected to work reliably.

Customers buy mechanical products for the unique, innovative structures or motions they do, not routine motions, controls, enclosures, and structures that support the mainstays and work reliability.

What is needed from these routine support parts is adequate functionality, assured availability at any volumes, no risk, and high quality and reliability. Proven off-the-shelf parts can quantitatively assure all of these from their “track-records” which is not the case from custom-designed parts that introduce many variables, unknowns, and risks.
But, despite these opportunities, most design teams do not even consider off-the-shelf parts because of the following inhibitions that can be set straight by these principles:

• Just because a product is leading-edge doesn’t mean all the parts have to be custom. In fact, the product will be better if everyone focuses on what is really leading-edge.

• Some teams may not do a thorough enough search or not even look for “better” OTS (off the shelf) parts, assuming they will cost more. However, the total cost may be less because of the all the costs of developing and debugging the “just right size” version. If “better” is larger or heavier, this may be a consideration in specific industries, but may not be a factor for miniaturized parts like electronics.

• OTS parts may appear to cost more than in-house built parts because OEMs pay total cost for them, but in-house parts don’t include all the overhead costs because they are rarely quantified.


Bottom line: if OTS parts are not considered early enough, then arbitrary decisions preclude their use – for example, if circuitry is designed with too many voltages, that may preclude reliable off-the-shelf power supplies.


The paradox of off-the-shelf parts is that designers may have to first choose the best off-the-shelf parts and then literally design the product around them. But it may be worth it to focus finite resources and time on your key mainstays.

- Standardization. Until a company or division effort establishes standard parts lists, the project should standardize on key parts for the product, at least for the following categories before detailed design starts:

• Fasteners, which usually proliferate wildly if designers specify the just-what-is-needed size for all needs. To curtail this proliferation before it starts, you should select a baseline list of standard fasteners for the needed sizes, loads, and environments, for instance: “small, medium, and large, and maybe one or two in between.” As in all standardization, most applications will get a “better” part than needed, but no one should resist standardization because it raises a BOM (bill of materials) entry slightly because the total cost savings will be much greater.
For instance, all bolts should be standardized on the strongest grade. This provides automatic mistake-proofing benefit by preventing a weaker bolt accidentally being used where a stronger bolt should have been used
For small parts, like fasteners and integrated circuits, there would be minimal, if any, weight penalty for such standardization.

• Expensive or hard-to-get parts. Standardizing on expensive parts is one of the solutions to eliminating long-lead-time part problems, which can enable steady flows of parts that will be used one way or another, borrowing from others users in emergencies, and even stocking the standard versions, none of which would be possible for a plethora of just-the-right-size versions. More advanced or higher capacity parts may weight more or take up more space, but that may be cancelled out if the more advanced part combines parts that would otherwise be many discreet parts.

The bottom line is that standardization will:

(a) help ensure part availability by design for peaks in demand, and for growth.

(b) greatly improve serviceability, repair, and maintenance while minimizing the cost and maximizing the usefulness of spare parts kits..

(c) all of these benefits will result in net total cost savings to justify some applications betting a “better” part than needed.

 

[Niptuck MD]

Why Cost Is Hard to Remove After Design

Cost is very difficult to remove after the product is designed. 80% of the cost is designed into the product and is very difficult to remove later. Attempting cost reduction by changing the design encounters the following very common obstacles:

• There is always the common possibility that one change may force other changes.

• Trying to significantly lower cost after production release is usually futile because of many early decisions, which severly limit opportunities.

• Finally, the total cost of doing the change may not be paid back by the cost savings within the expected life of the product. Few companies really keep track of the total costs of changing designs.

Cost Reduction Problems of Focusing Only on Parts and Labor

All “costs” initiated should be suspect unless they are based on total cost. Only measuring parts and labor puts the whole cost focus there instead of the total cost which includes many more costs normally lumped together in “overhead.” And contrary to popular myth, overhead is not fixed. If companies implement, and design products for, lean production, floor space needs – normally a “fixed” cost – can be drastically reduced.

Counterproductive effects. Focusing only on parts & labor can lead to seriously counterproductive effects. Truly low-cost products do not come from cheap parts, which are often chosen because they appear to lower the reported material costs. And to make matters worse, the internet now offers on-line part “auctions” that effectively steer manufacturers to the lowest bidder. However, cheap parts will usually explode other costs: for quality, service, operations, and other overhead costs.
Low-cost products do not result from “saving” cost by cutting product development and continuous improvement efforts. This may not be a stated policy per se but product development budgets can be impacted by corporate directives like, “all departments will reduce their budgets by 15%.”

Low Labor Rate May Not Lower Labor Cost. Moving production to “low labor rate” countries is another cost reduction mishap. Lower labor efficiency alone might cancel out anticipated labor rate savings, for instance if labor cost is one third but labor productivity is also one third. And cheap labor rarely stays that way.

Many Designs Are Needlessly Labor-Intensive. Many decisions to move to production to low-labor-rate are based on labor-intensive designs. However, effective DFM can reduce labor content to the point where moving to low-labor-rate areas can no longer be justified.

Cheap Parts and Cheap Labor Compromises Quality. Quality may suffer if the cheapest labor plant has not established an effective quality culture. Quality may also suffer if recurring defects are produced overseas and not detected until hundreds of defective products are discovered at the end of the long transoceanic journey. Overseas production also slows delivery, thus making it hard to implement build-to-order (JUST in TIME)

Cutting Corners is No Way to Cut Cost

Similarly, “cutting corners” in any manner will probably end up costing much more later, for instance for quality costs. Omitting features and cheapening the products is an unwise strategy to reduce cost. Sure, the stripped-down product may cost less, but it could ruin the company’s reputation.