Product Simplification

Goal

Achieve cost reduction by reducing the prices you pay to suppliers

Strategy

Design the product to be easy to assemble

Product Costing is a product development strategy that allows companies to anticipate and influence manufacturing costs during the earliest stages of product development. Since it is widely accepted that over 70% of product cost is locked-in during the design phase, it is extremely important that designers and manufacturers collaborate to ensure total product cost goals will be met. The problem is that the typical product development team operates in a “toss it over the wall” fashion. That is to say that the design team is sitting on one side of a wall and the manufacturing team on the other. Once the design is finished, it gets tossed to the manufacturing team in a manner that doesn’t allow for any collaboration. A first-class product development team will instead implement Product Costing to avoid lengthy re-design efforts and missed cost reduction opportunities that result from the more typical approach.

Why should I care about assembly labor?

A common product cost reduction strategy is to design individual parts to be simpler, easier to manufacture and less expensive to produce. From the following chart, you can see why an engineer might put all their focus on part costs.The reality is that this strategy can actually lead to a higher total product cost relative to a strategy that focuses on minimizing assembly labor. How could this be? The answer lies in the fact that designing parts to be easy to manufacture tends to increase the total number of parts, while designing a product to be easy to assemble usually reduces the number of parts. Industry research has shown that thanks to modern manufacturing techniques, using fewer parts will frequently be less expensive than using a large number of inexpensive parts.

assembly-labor

The added advantages of a reduced part count are that the product becomes easier to service, usually has fewer defects to begin with, and is typically more reliable throughout its lifetime. Ultimately, Product Simplification ensures that more value is captured by both the manufacturer and the consumer.

How do I execute this strategy?

In theory, it seems easy enough for a good designer to simply avoid adding extra parts. Yet in practice, many finished designs are very inefficient because the product development team either didn’t have enough time or didn’t recognize which parts should be combined together. This is where the early use of DFMA software becomes critical. The DFA software component quantifies assembly efficiency and provides suggestions for re-design that in many cases also improve the product’s performance

Additionally, the theoretical minimum number of parts is calculated to help the user understand what the total potential for part consolidation might be. Once DFA re-designs are proposed, the should-cost of each iteration can quickly be compared with the DFM software component. By combining the use of DFA and DFM software a development team can capture the full benefits of Product Simplification.

Summary

Large, multi-departmental team – manufacturing, engineering, purchasing, marketing, management

Significant changes to processes, labor, product itself

Typical Savings of 50%

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