Home » Upstream Scrutiny Drives Downstream Savings
Any chemist will tell you that pollutants that find their way into a river can be invisible by the time they’ve filtered downstream, even though they’re still causing damage. A similar tenet holds true for products: Decisions about how products are designed can dictate unnecessary costs during production and beyond, often without the manufacturer even noticing.
John Biagioni has spent his career scrutinizing what happens upstream. Biagioni is vice president of supply chain and operations at Dynisco, a maker of extrusion measurement and control equipment for the plastics industry.
Biagioni’s interest in the implications of product design dates back to his days at Worcester Polytechnic Institute, where he conducted a design assessment of a popular cordless drill as part of his graduate work in manufacturing engineering. His revised design eliminated fasteners, added a plain sleeve bearing, and called for a snap-together case—lowering the product’s material and manufacturing costs. The suggested changes also dramatically altered the product’s waste stream and environmental impact. The manufacturer ultimately used the design.
“People who look only to the supply chain to get cost out of a product ignore the truth that design drives cost,” Biagioni says today.
Dynisco takes that philosophy to heart. The company grades its products—which include pressure and temperature sensors, control systems, and analytical instruments—based on total cost of ownership (TCO). TCO is a holistic discipline that begins with a cost assessment of each product’s piece parts. From there, Dynisco works to ascertain the product’s total landed cost, which can include capital spent on freight, insurance, fuel charges and customs duties. But only when the picture expands to yet another level, to cover items such as the cost of poor quality, inventory carrying costs, reverse logistics, and risk factors from wage inflation to intellectual property protection, does Dynisco consider the cost picture complete.
For a company that manufactures its products in both the United States and overseas locations, such as Malaysia, such insight can be invaluable in driving operational decisions.
“The TCO model is a time-and-point snapshot that helps us decide where to build and launch a product,” Biagioni says.
Design can have a significant impact on a product’s TCO. To illustrate the connection, Biagioni relates the story of an industrial design shop that Dynisco enlisted to create specs for a small analytical instrument. Unfamiliar with the design efficiency that Dynisco practices, the outside engineers concerned themselves mostly with aesthetics—not with the manufacturing implications of their design. Their plans called for 62 parts for the single cover and housing. Dynisco is now reworking the design to cast that constellation of components into one unified part, streamlining the product’s design and minimizing the effects on downstream production and cost.
“That part is currently being sourced short-term through the design house. If I were to bring that component fully on line here, with 62 parts, think of how many suppliers I would have to potentially get,” Biagioni says. “And think of the square footage I would have to reserve, and the assembly people, stocking locations, part numbers and tolerance issues.”
To help assess the TCO of its products, Dynisco benchmarks them against one another and against offerings from Dynisco’s competitors. Like the TCO methodology itself, the benchmarking process reaches far into the company, touching nearly every department.
The process begins with performance tests on Dynisco’s and competitors’ products. Next, a team led by Matt Miles, Dynisco’s DFMA and value engineering manager, tears down each of the competitive products, analyzing the design part by part to create a bill of materials.
When the benchmark analysis is complete, the team analyzes each product using the Design for Manufacture and Assembly (DFMA) methodology, which calculates the costs of the parts and the assembly processes Dynisco uses to turn them into products. DFMA is governed by two complementary software tools from Boothroyd Dewhurst Inc. The Design for Assembly application helps engineers assess the structural efficiency of their designs and consolidate parts to improve efficiency and cost. The Design for Manufacture tool suggests alternative material choices and process improvements to the original design.
“We wanted to analyze what types of material the competitors used, how much they used, and how much machining was involved, compared to ours, so we could capture that dollar value,” Miles explains. “We found some examples where eight pounds of raw material were used, and you’re machining away more than 75 percent of it.”
Dynisco left no stone unturned during the benchmarking exercise, even analyzing the way subassemblies were mated during production, determining how pieces were bonded and what kinds of soldering joints were used. “We looked at everything,” Miles says. “With the help of the software we could project the total assembled cost of a competitor’s unit.”
To validate the DFMA tool to their coworkers, Biagioni, Miles and the team recorded each product’s DFMA score, part count and related metrics in a spreadsheet. They then shared the data with the benchmarking team, which included vice presidents, product managers, operations personnel, supply chain practitioners and engineers. Miles says a large benchmarking team was necessary.
“The impacts of the cost of ownership are felt throughout the company,” he explains. “An engineer’s design decision will impact not only the design, but reparability out in the field, as well as the procurement of parts and cost. That’s why we brought in so many stakeholders.”
Dynisco gathered the team of 16 in a conference room for a day, scrutinizing each assembly, passing parts around, and reviewing the DFMA attributes and data. At the end of each product review, the team addressed such critical questions as “Where do we go from here, and how do we make our product better?”
The diversity of participants led to a cascade of ideas. The team considered new assembly techniques, methods of consolidating parts, and alternative materials that would streamline costs while maintaining quality and function.
“Getting people from the different departments all together in one room, you really open up communication,” Miles says. “The energy we created in that environment, it’s powerful. You come out of there and you have everybody in the room charged up about redesigning the product.”