When Engineers Take Responsibility for Cost, Good Things Happen
ValueThe image shows a DFM cost analysis for making the cylinder base pictured at the left. In the analysis window open behind it, the engineer estimates costs for alternative processes. The front right of the analysis shows a chart comparing the different costs per piece part of machining the part with multiple set-ups, machining on a single machine, and casting the part--all at a set life volume. The bar chart shows the estimated cost per part, broken down into material, setup, process, rejects, and tooling costs.
Image courtesy of Boothroyd Dewhurst, Inc
By enabling a higher level of engineering, a design toolkit makes high-quality U.S. manufacturing a viable option.
Many product manufacturers have gotten used to trading part cost reductions for less control over quality. But if design engineers could get an accurate picture of where costs occur in their products, and then design out a hefty portion of those costs while preserving product function, they might start closing the door on the risks of this unsettling trade-off.
A software package from Boothroyd Dewhurst, Inc. (www.dfma.com) helps engineers see a new range of options--including manufacturing in what have traditionally been viewed as higher-cost factories with better quality control--by enabling them to design out costs that were previously hidden. The company's Design for Manufacture and Assembly (DFMATM) software is a product costing and simplification package that can achieve substantial cost savings and throughput improvements through what one of its advocates calls "a higher level of engineering."
"We refer to what we do as DFMA product costing and simplification," said Nick Dewhurst, executive vice president of Boothroyd Dewhurst, Inc. (BDI), in a phone interview. "Essentially, the DFM tools are the product costing piece, and the DFA tools are the product simplification piece."
Design for Assembly (DFA) software is a product simplification "toolbox" that allows engineers to identify and eliminate unnecessary parts while maintaining all of the product's functionality. The Design for Manufacture (DFM) software is a product costing module that enables engineers to accurately estimate part and tooling costs for new designs, using alternative manufacturing processes and materials. In addition to reviewing evolving designs for cost efficiency, engineers can use the software to redesign products for higher quality and manufacturability while meeting cost targets.
One way to reduce assembly cost is to simplify the product by consolidating multiple parts into single-part, multi-functional designs where possible. Design for Assembly software helps designers establish a "theoretical minimum" part count, instrumental in identifying design concepts that reduce unnecessary complexity and cost of a product. Engineers can rate a product design by difficulty of assembly, taking into account how each part is grasped, oriented, and moved for insertion. Ease of inserting or fastening a part can also be scored. Product designs can then be benchmarked using the DFA index, a measure of assembly efficiency that serves as a basis for quantitative comparison of design alternatives.
"If you look at how Design for Manufacturing and Assembly--the philosophy--works, one of the most powerful pieces of it is the theoretical minimum part count, which gives you a target of how many parts, theoretically, a particular product could have in it," said Dave Meeker, a product development consultant with Neoteric Product Development and a lab instructor for a senior engineering mechanical design course at MIT. "It gives you some hints and ideas of how to get there, but this is where the benchmarking and brainstorming and creativity come in to actually figure out how to hit that theoretical minimum. I think it serves as a good benchmark point for what you could do to reduce the material costs in a product and still meet all of the product specifications."
Meeker says that when engineers clearly reduce their material cost by eliminating parts and getting closer to the theoretical minimum part count for a product, they are validating the message of DFA advocate Bill Sprague (formerly senior manufacturing engineer at NCR, known for his work on the NCR 2760 Retail Terminal/ electronic cash register), who claimed "the best part is no part at all."
"You don't have to buy it (the part), stock it, ship it, kit it, or inspect it," said Meeker. "You don't have to do anything to it, and there's no labor associated with putting it into the product because it no longer exists."
Companies use DFMA software in different ways, according to Nick Dewhurst, who says that using both DFA and DFM--simplification and costing--yields the best results. "You would take a concept design, put it into our Design for Assembly software, and understand the opportunity for simplifying the product structure by reducing part counts. You would then use the product costing piece of what we do, the DFM tools, to understand what the cost of each of those parts in the product is likely to be, to roll up a total. That information in the hands of a design team, ideally early in the product development process, can help you then with whether or not you're going to meet cost targets."
Mike Shipulski, director of advanced development at Hypertherm, Inc., started using DFMA software several years ago when he was director of engineering at the Hanover, N.H.-based supplier of advanced high-temperature metal cutting technology. At the time, Shipulski was part of a company leadership team that had evaluated Hypertherm's existing product portfolio and decided that the new product line would have to "work better and cost less." The team came up with some ambitious goals for a new plasma cutting machine, including a 35 percent reduction in material costs and a 30 percent performance increase in cutting speed.
"The marketing and business leader looked at me and said, 'Can you do that?' and I said, 'I think I can, and here's how I think I can do it,' and it was the process of Design for Manufacturing and Assembly, and then ultimately, the software tool," said Shipulski. "But what folks don't understand is that Design for Manufacture and Assembly software is a tool box, and there has to be a mindset change that this is the way you want to go about designing products: with the fewest parts, with the fewest processes, embracing 'do more with less' and the idea that engineering is responsible for product cost."
Led by Shipulski, Hypertherm's engineering team used DFMA software to redesign its HyPerformance Plasma HPR 130 plasma cutter. By combining the use of DFMA with Lean Manufacturing, the company was able to reduce labor tasks by 50 percent and cut warranty and service costs by 70 percent. The company also reportedly generated a 600 percent increase in profit per square foot of floor space. Shipulski described the achievement as a kind of "perfect storm of things coming together," starting with a robust, low-waste design achieved through DFMA.
"Typically, Lean is a manufacturing process-focused effort," said Shipulski. "We used Design for Manufacture and Assembly to create a 'least wasteful' design, meaning we designed the factory waste out by simplifying the product. Then we delivered that to the Lean Manufacturing community, who from there reduced the waste. So really it was a coming together of product simplification through Design for Manufacture and Assembly, waste reduction on the factory floor through Lean, and product functional improvement with robust design techniques. These numbers are remarkable, and you won't get them with just DFMA and you won't get them with just Lean."
The idea that engineering is responsible for cost is a contrarian view, Shipulski says, because we've traditionally thought of manufacturing as being solely responsible for reducing cost, largely through programs such as Lean Manufacturing. But although cost is realized in manufacturing, his point is that it's actually created in the design phase.
"Design engineering puts as little cost in as they can to enable product function, so it's not wasteful cost," says Shipulski. "It's 'these are the materials, these are the things I need to enable product function.' But typically, we think that manufacturing is the only one that can actually reduce cost. Engineering is typically measured on what marketing sells--the product function. But what engineers need to realize is that we're the only ones that can make these radical cost reductions. Manufacturing cannot do it, and if design engineering chooses not to do it, it's not going to happen."
Shipulski believes the design engineering community is more likely to accept ownership of product cost if they see it not as an obligation that they don't want, but as an opportunity to reduce costs in a way that no one else can. It's not about discounting what engineers have done in the past, he explains, because companies have succeeded as a result of their work. Rather than saying, "we're designing in 50 percent more cost than we need to," he says, it's more a matter of "we've been successful, and we can be far more successful and more profitable if we use these tools to design out costs. Instead of saying 'we left too much in,' we're saying 'there's an opportunity to take more out.'
"It's not remedial engineering," he continues. "It's actually higher level engineering because designing with fewer parts and designing with less cost is actually more difficult."
Probably the biggest benefit of DFMA software, Shipulski says, is that it helps a company understand what costs--both material and labor--are in its product. And by enabling engineers to do "what if" analyses ("what if I reduced this material cost by half," or "what if I reduced the labor by half?"), it opens up new options. "The biggest thing is that it enables profitability," he says. "You can make a product profitably in a factory where you have quality control, and that's the winning combination."
Shipulski says the biggest cost savings can be achieved with Design for Assembly, which helps reduce the cost of putting things together through part count reduction, among other things. "This is where 50 percent touch time can be had, so you're doubling throughput. And that, to me, should be used first. For the 50 percent of the parts that remain, Design for Manufacture should be used to reduce the cost of the highest-cost piece part. So it's Design for Assembly first, to design out the parts, and then for those highest cost parts that remain, digging in with Design for Manufacture to reduce the cost of those piece parts themselves.
"That's how I've used it," he continues, and it's backward to how a lot of people have used it. Some start with Design for Manufacturing because they think they can work directly with the suppliers and not require engineering resources. But that's not where the money is."
Redesign Leads to Reshoring
Published reports of American companies returning their manufacturing to the U.S. have brought their reasons for re-shoring--including needs for shorter lead times, better quality parts, and lower total cost--out into the open. And as the re-shoring movement gains steam, companies now have a growing number of tools at their disposal--including TCO EstimatorTM and DFMA®--to help them decide how and where to manufacture their products most cost-effectively while meeting quality requirements. While one tool, such as TCO Estimator, might show why it makes sense to manufacture certain products in the U.S., another tool, or simply the desire for a product to be "Made in America," might be instrumental in bringing other products back.
"But when you add product redesign to the mix, it increases the number of products, or the fraction of products, that make sense to manufacture in places where you have good [quality] control," said Shipulski. He mentioned one situation where a company was able to bring its manufacturing work back to the U.S. from Mexico after redesigning the product.
"The product was redesigned to design out material costs and design out labor time," he said. "Then, and only then, was it cost effective to bring it back to the U.S. and benefit from the added control. So without the product redesign, it was not going to come back. The redesign enabled the lower cost structure, which allowed for a U.S. facility to make it, enabling the client to enjoy the added quality control and predictability and delivery that the U.S. operation could give. But without redesigning the product, it's not happening."
Because it can help design engineers identify and eliminate costs that are unnecessary to a product's function, Shipulski believes that DFMA software can play an important role in companies' decisions on whether to manufacture offshore or in America. One of the key ways that it can assist in the decision is by giving companies a handle on how much labor time is actually in their product.
"What I have found is that if you use the tool to understand the product that you're making today, you learn there isn't nearly as much labor time in the product as you think. Dollars per hour of the people building the product is far less important--a far smaller slice of the pie than we think, and the tool can help you understand that.
"The second thing is, once you understand where the labor is, you can actually see how you can halve that labor. So you're halving the overhead burden, but you don't take it in terms of cost; you actually take it in a throughput improvement in your factory. For the same factory, the same floor space in whatever country you're in, you're doubling the throughput. It changes the game in terms of the overhead, and allows you to see higher cost, higher overhead factories as more viable.
"Typically, companies have traded improved costs for reduced quality control," he continues. "We've heard of the stories of toys with lead paint, kind of thing. That's dramatic, but probably more problematic is actually poor quality from a variability standpoint--poor control on how the product is made, day in and day out. So when you can see where your costs are, and actually see that you can design them out, factories with more control now become cost effective. They become viable, and that's where I see it (the software) being used."
Neoteric Product Development's Dave Meeker believes manufacturers would benefit by taking a close look at the value to be achieved through product design practices, before deciding to outsource overseas. Meeker is co-author, along with Jay Mortensen, of "Outsourcing to China -- A Case Study Revisited Seven Years Later." The paper evaluates current trends in outsourcing and examines what has occurred in the global market since he co-wrote, with Nicholas Dewhurst in 2004, the paper "Improved Product Design Practices Would Make U.S. Manufacturing More Cost Effective: A Case to Consider Before Outsourcing to China."
"I definitely think applying Design for Manufacturing and Assembly is one of the key ones (product design practices)," he said in a phone interview. "If you look at case studies of products that have used that philosophy and methodology, the savings in material and labor and overhead are usually quite substantial."
The DFMA software also includes a design-for-environment module that allows engineers to assess the environmental impact of their products. "It's an attempt to show the environmental impact of a product's design through a couple of different metrics," says Nick Dewhurst. "There's an eco-indicator and MET (material, energy, and toxicity) points, and it was added really to be another data point in the product design process."
Boothroyd & Dewhurst first developed the design-for environment tools "probably 15 years ago, maybe more," Dewhurst continues. At the time, there wasn't much of a market for it. "It was ahead of its time, and I think you're starting to see a move towards that now," he says. "Understanding the environmental impact of a product is becoming a bigger and bigger piece of what companies are trying to accomplish. GE, for example, is big in Ecomagination. So having something like that that can assess the environmental impact early, like Design for Environment, is going to become more and more important."
According to Boothroyd & Dewhurst President John Gilligan, the design-for-environment tools support the company's emphasis on product simplification and ease of assembly. "If a product has fewer parts and doesn't have a lot of fasteners and screws, nuts, bolts, holding it all together, its environmental impact at the end of its life is reduced," he says. "The product is easier to take apart and therefore, obtain the parts that can be re-used or recycled at less cost. So it can make environmental disassembly at end of life more economical."
The Truth about Product Design, Part Count, and Where Costs Reside
Design-2-Part Magazine caught up with Nicholas Dewhurst, executive vice president of Boothroyd & Dewhurst, Inc., to hear his insights on product design and the role that a product simplification strategy could play in a company's decision on where to manufacture. Here's what he told us:
D2P: Total cost is an issue that more and more product manufacturers are evaluating these days. Nick, in your paper, "DFMA the Product--Then Lean the Process," you make a strong statement about the impact that product design has on total cost. You write that "product design has a more significant impact on cost than anything that can be done to improve efficiency once the product is in production." Can you tell us more about that?
ND: My point was that we go out of our way as a country, it seems to me, to spend untold millions and millions of dollars on process improvement techniques like Lean Manufacturing, hosting Kaizen events, and all kinds of [techniques] that stem from Six Sigma, Green Belt, and Black Belt programs. All of them are focused on taking a product design that's sort of accepted, and trying to figure out what you can do with it in the process or the operations side of the business to take cost out of it or make it easier to assemble or manufacture. My point was that design shouldn't be something that's accepted as "complete." There are a host of things that can be done--and, obviously, our Design for Assembly tools and methodology play right into this idea--to the design of the product itself, to help you then be more successful in the operations side of the business.
I've got some examples in that paper that show a product design that has, let's say, 30 parts in it, and a redesign of it employing DFA techniques that has 15 parts in it. Which one of these would you rather move a million of through a factory--the one that has 30 parts or the one that has 15? And so in an overly simplistic sense, that's where my thinking was--that we ought to give some thought and put some effort into designing, I'll call it "correctly," the thing that is going to be later Lean Manufactured and Six Sigma Black Belted.
In a sense, if you want to stretch it to the extreme, why not develop a product that has no opportunity for process improvement because it's as simple as it can possibly be, right out of the chute?
D2P: A big reason that product manufacturers often cite for manufacturing overseas is the lower cost of overseas labor. Yet you maintain in the paper that about 72 percent of the cost of most products is tied up in part costs (75 percent of which resides in material costs), with about 4 percent tied to assembly labor and 24 percent to overhead. What are the implications of this cost distribution for product design and for re-shoring?
ND: I've shown that pie chart to literally thousands of people, and I don't think I've had an argument from anyone yet that the cost distribution of their products falls well outside that 70-30 split between piece part costs and labor and overhead. Some are 60-40 and some are 80-20, but in general, that's what they look like. And for a lot of people, that's a big eye opener.
Our contention has always been that the cost isn't in the labor. The real key to understanding the opportunities to reduce the cost and complexity of products is in reducing the numbers of parts in the things that are produced, and attacking that 70 percent piece of the pie that you're looking at in that graph.
In our world, there are two things you can do about that. You can take a design and understand what the cost of each of the parts should be, and use that to understand whether you're getting good prices for that 70 percent piece of the pie. There's some cost reduction opportunity there. And the next step is, "Let's employ some product simplification techniques and come up with ways to reduce the part count and simply have fewer of them that we have to buy, and, therefore, reduce the cost."
D2P: And by reducing the part count, that's also reducing any resulting labor costs.
ND: Absolutely. The overly simplistic example I give people is that if you've got three pieces of sheet metal that are riveted together, you could replace that with a casting or an injection molding or something that is a single piece, right? Now, I don't have to handle the three sheet metal parts, I don't have to put them in a fixture to align them with one another, I don't have to handle and insert and perform the riveting operation. I don't have the opportunity to do that incorrectly and not fasten them together correctly. As opposed to, the mold or the die opens, the part falls out, and it's finished.
People spend lots of time trying to figure out how they can rearrange the factory to have those press brakes be close to the assembly station where those parts are being riveted together. And from my perspective, they miss the point because maybe that thing shouldn't even be three pieces of sheet metal riveted together in the first place.
D2P: If design engineers had a better understanding of DFMA software's impact on product cost, how might that affect their company's decision on whether to offshore or bring their manufacturing back home?
ND: Right off the bat, it highlights where the cost in the product is. So you would see, by doing an analysis using DFMA, that "4 percent of the cost of our product is labor, and so if we're chasing a 75 percent reduction in labor costs, we're going to see something like a 3 percent reduction in the total cost of the product." Whereas, we could focus on doing a better job in our supply chain management of purchasing these parts that are in the product at lower prices from different sources, or we could redesign it and employ DFA techniques to come up with ways to reduce those part counts, and again, attack that 70 percent of the cost that's locked up in the cost of the parts.
So that insight into where the cost really is in the product can then help you make better decisions about whether to offshore, re-shore, make it in Chicago, make it in California, or make it in Florida. Because you know what the cost drivers are in the product. Basing your decision solely on, "It's $100 an hour to put things together here, versus $3 in India, versus $1 in China" is short sighted thinking, really.
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