Shipulski On Design

Archive for April, 2025

We all want to increase top-line revenue by selling more.  But we’ve been selling our existing products into the same old applications for a long time now, and we’ve reached a hard limit – when we add more effort, we get little in return.  Developing an entirely new product will take a long time, so we will try to sell our existing products into new applications.  We will have to change our product slightly to make it work in the new applications, but we can do that quickly.  We have a good plan.

We search the globe for these new applications and find a winner.  It’s a new application in which our product has a technological advantage over the existing products.  The new value is clear to the customer, and they want to get rid of their existing products and replace them with our flagship product. Our product requires minimal changes, which we’ve already implemented.  Our product is ready to sell!  Let’s go!  Let’s get after it.  Not so fast.

As it turns out, the customers don’t know how to use our product, they don’t know how to install it, and they don’t have a way to buy the consumables and maintenance parts.  Before we can sell, we must figure out a way to get the products installed, to train the operators, to find a way to sell the wear parts and consumables, and to service the product.  As it turns out, with this new application, there are a lot of missing elements to the go-to-market system.

When selling into new applications, it’s not all about the product.  It’s all about the partners. It’s about finding and developing partners familiar with the industry, the application, and the customers.  But it’s tricky.  You are unfamiliar with the application and don’t know how to find these partners.  Once you identify them, they are unfamiliar with your product, how it’s installed, how it’s operated, and how it’s serviced.

It takes time and effort to educate, train, and develop a new partner.  They may know the customer, but they don’t know the ins and outs of your product.  And they need to educate, train, and develop you.  You may know your product, but you don’t know the customers and the ins and outs of the application.

These new applications can create incremental revenue for you and your new partners, and that’s exciting.  But at the early stages of development, these new applications require more time and investment than we’re used to.  The profitability equation will take some time to realize its full potential.  And to realize that full potential, be sure to create a go-to-market model that is profitable for your partner.  An unprofitable partner can’t afford to be a good partner.  And you need good partners.

Image credit — TMAB2003

Supply chains have taken it on the chin, first from COVID-19 and now from tariffs (or the threat of them).  For the second time in several years, we have objective evidence there is more to a supply chain than implementing the lowest-cost way to meet predictable demand. Tariffs have highlighted the cost of an inflexible supply chain because we can quantify the savings from moving parts to countries with lower tariffs.

With tariffs, Lean’s mantra of “make it where you sell it” has sharper teeth.

At the most fundamental level, supply chains are governed by the parts.  Big parts, big factories; small parts, small machines; high part volume, high volume processes; low part volume, low volume processes; specialized coatings on the parts, specialized suppliers; parts with proprietary materials, sole source supplier.  The supply chain is defined by its parts.  And when you try to move the manufacture of parts from one country to another, these part-based constraints are the very thing that creates supply chain inflexibility.  Said another way, if you want to improve a supply chain’s flexibility, you’ve got to start with the parts.  If you want to reduce the tariffs of your supply chain, start with the parts.

All the parts in the supply chain are important but with tariffs, some parts are more important than others.  You can make significant improvements in your supply chain’s tariff signature if you know the handful of parts that will deliver the largest tariff reduction.  For each part within your supply chain calculate

(material cost x volume x tariff percentage)

and sort the product from largest to smallest.  For the top ten parts assess the part-specific constraints that governed the original decision of the supplier and country.  For each part identify a country with lower tariffs and pair it with the part-specific constraints.  You now have a list of the top ten opportunities to reduce the tariff signature, what must change in the design to move to a lower tariff location, and the entitlement savings.  The DFM-based tariff savings for each part is

(part cost x volume x difference in tariff percentage).

Take your top ten list to the product owner and show them the potential savings and ask to meet with the design community so you can explain how each part must change so it can move to a lower tariff country.  And tell them how much the company will save if those constraints are overcome.  This is like classic Design for Manufacturing (DFM) where the part is changed to reduce the cost to make the part, but, instead, the part is changed to reduce the cost of tariffs.

You now have a playbook for the top ten parts, the estimated tariff savings, and the work required to realize those savings.  You don’t have to implement the playbook, but you can.  And you can repeat the process for the next ten most important parts (11-20).  Now you have a playbook for twenty parts and the estimated savings.  You can continue the process as needed and step through the list ten parts at a time.

The process I describe is a good way to reduce the cost of tariffs. But to make a dent in the universe, there’s a much better way.  It’s called Design For Assembly, or DFA, which is all about product simplification through part elimination.  35% reductions in the number of parts are typical.  With DFA, high-tariff parts aren’t changed, they’re eliminated.  But where classic DFA prioritizes eliminating the highest-cost parts, tariff-based DFA prioritizes eliminating parts with the highest tariff costs.  The calculations to prioritize DFA-based tariff reduction are similar to those for DFM, but the savings are far more severe – the entire tariff and the part cost are saved.  The DFA savings are

(part cost x volume x tariff percentage) + (part cost x volume)

Run the calculation for the parts in your supply chain and sort the results from largest to smallest.  Take the list of the top ten to the design community and show them how much they can save if they eliminate the parts.  Tell them they’ll be the Heros of the Company if they pull it off.  Tell them you help them get the tools and training they’ll need.  Repeat for the second group of the ten most important parts (11-20).

DFM and DFA are wildly profitable and with the added savings of tariffs, the savings are beyond wild.  If there was ever a time to do DFM and DFA, it’s is now.

Image credit — Derell Licht

Clarity.  People will know why they dislike (or like) your position, have good ideas on improving it, and appreciate your clarity.  Well, at least they’ll recognize you’re communicating differently.

Brevity.  Make it short.

Visual.  When you draw a picture of the situation, people will understand the main system elements and how they interact.  Use arrows to describe how the system changes over time.  Even better, create a series of snapshots in a time series so you can decide to solve the problem before, during, or after. Words constrict. Use images to create space for divergent perspectives.

Distilled.  When you converge on the most important theme, the discussion is focused on the most important thing.  And when it strays it’s easy to recognize and put it back to importance. To distill, limit yourself to one page and limit the number of words to twelve.  This is unnatural and requires confidence through practice.

Know what you want to communicate.  Use fewer and simpler words.  Decide what to leave out. Use images and cartoons. Make it clean.

Less is more.

Image credit —  Charlie Wales