Shipulski On Design

Archive for the ‘Product Development’ Category

I will be running a half-day workshop on Systematic DFMA Deployment on June 13 in Providence, RI.  The workshop will kick of BDI’s 2011 International Forum on Design for Manufacturing and Assembly and will focus on how to incorporate DFMA into your product development process.

The Forum (June 14, 15) is the yearly gathering of the world’s leading DFMA experts.  It is THE place to learn about DFMA and see examples and results from leading companies.

I urge the product development community to attend.

I am also presenting at the Forum and hope to finally meet you in person.

All projects are successful; it’s just a matter of choosing what to declare.  Here are some good choices:

• Success – We know when a project is too big. Going forward, let’s do smaller ones.

• Success – We know we can run too many projects concurrently. Going forward, let’s do fewer and get more done.

• Success – We know we can’t make that  in-house. Going forward, let’s find a suppler with world class capability.

• Success – We know the consequences of going too quickly. Going forward, let’s take our time and get it right.

• Success – We know what customers won’t buy. Going forward, let’s know if they’ll buy it before we make it.

• Success – We know the consequences of going too slowly. Going forward, let’s be more efficient and launch sooner.

• Success – We know when quality levels are too low. Going forward, let’s launch with higher quality.

• Success – We know we can’t outsource that. Going forward, let’s make it in-house.

• Success – We know the attributes of a bad project manager. Going forward, let’s hire one that knows how to run projects.

Celebrate the learning, incorporate it in your go-forward plan, and go forward. Success.

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?

The notion of a unifying theory is tantalizing – one idea that cuts across everything. Though there isn’t one in manufacturing, I think there’s something close: Design simplification through part count reduction. It cuts across everything – across-the-board simplification. It makes everything better. Take a look how even HR is simplified.

HR takes care of the people side of the business and fewer parts means fewer people – fewer manufacturing people to make the product, fewer people to maintain smaller factories, fewer people to maintain fewer machine tools, fewer resources to move fewer parts, fewer folks to develop and manage fewer suppliers, fewer quality professionals to check the fewer parts and create fewer quality plans, fewer people to create manufacturing documentation, fewer coordinators to process fewer engineering changes, fewer RMA technicians to handle fewer returned parts, fewer field service technicians to service more reliable products, fewer design engineers to design fewer parts, few reliability engineers to test fewer parts, fewer accountants to account for fewer line items, fewer managers to manage fewer people.

Before I catch hell for the fewer-people-across-the-board language, product simplification is not about reducing people. (Fewer, fewer, fewer was just a good way to make a point.) In fact, design simplification is a growth strategy – more output with the people you have, which creates a lower cost structure, more profits, and new hires.

A unifying theory? Really? Product simplification?

Your products fundamentally shape your organization. Don’t believe me? Take a look at your businesses – you’ll see your product families in your org structure. Take look at your teams – you’ll see your BOM structure in your org structure. Simplify your product to simplify your company across-the-board. Strange, but true. Give it a try. I dare you.

Some sobering facts: (figure and facts from Matt Slaughter)

• During the Great Recession, US job loss (peak to trough) was 8.4 million payroll jobs were lost (6.1%) and 8.5 million private-sector jobs (7.3%).
• In Sept. 2010 there were 108 million U.S. private-sector payroll jobs, about the same as in March 1999.
• It took 48 months to regain the lost 2.0% of jobs in the 2001 recession. At that rate, the U.S. would again reach 12/07 total payroll jobs around January 2020.

The US has a big problem. And I sure as hell hope we are willing do the hard work and make the hard sacrifices to turn things around.

To me it’s all about jobs.  To create jobs, real jobs, the US has got to become a more affordable place to invent, design, and manufacture products. Certainly modified tax policies will help and so will trade agreements to make it easier for smaller companies to export products. But those will take too long. We need something now.

To start, we need affordability through productivity. But not the traditional making stuff productivity, we need inventing and designing productivity.

Here’s the recipe: Invent technology in-country, design and develop desirable products in-country (products that offer real value, products that do something different, products that folks want to buy), make the products in-country, and sell them outside the country. It’s that straightforward.

To me invention/innovation is all about solving technical problems.  Solving them more productively creates much needed invention/innovation productivity. The result: more affordable invention/innovation.

To me design productivity is all about reducing product complexity through part count reduction. For the same engineering hours, there are few things to design, fewer things to analyze, fewer to transition to manufacturing. The result: more affordable design.

Though important, we can’t wait for new legislation and trade agreements.  To make ourselves  more affordable we need to increase productivity of our invention/innovation and design engines while we work on the longer term stuff.

If you’re an engineering leader who wants more about invention/innovation and or design productivity, send me an email at

mike@shipulski.com

and use the subject line to let me know which you’re interested in. (Your contact information will remain confidential and won’t be shared with anyone.  Ever.)

Together we can turn around the country’s economy.

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 14^th 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 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.)