TECHNOLOGY
PERSPECTIVES

        One of the best ways to achieve "balanced excellence" in product design is to focus on the elimination of non-value-added waste in both the process of development and in the design of the products themselves. To achieve this waste-slashing capability, we have adapted one of the most powerful and successful improvement philosophies of the last decade. The principles of "lean thinking" have been strikingly successful to date at reducing waste in the manufacturing arena. Techniques such as Just-in-Time (JIT) materials management, pull systems, and batch-size reduction have enabled firms worldwide to achieve unprecedented production efficiencies. Unfortunately, a lean factory can only manufacture what it is given; if a "fat" product is handed off to the factory, all the lean manufacturing in the world won't get all of the waste out. This is where the methods of lean 3P and lean product development take center stage.
        We have therefore divided our training materials into two focus areas. Together, they enable the elimination of waste and the enhancement of value in all aspects of product design and development. These areas are:

Lean Cost Reduction / Lean 3P -
        A powerful, integrated set of team-friendly tools to slash manufacturing cost at all levels,         from individual products to entire product lines.

Lean Product Development -
        A practical approach to accelerating time-to-market through aggressive waste elimination         in planning, resource management, design control, and interdisciplinary communication.

What is Lean Cost Reduction / Lean 3P?

        So where do you start? Naturally, your highest priorities for improvement will greatly depend on the nature of your specific market situation, but in general, cost reduction (the dimension we are calling Lean 3P) is the most logical starting point. Why? Depending on your business environment, it might be that slashing time-to-market or driving toward higher levels of innovation will give you greater overall benefit. However, reducing manufacturing cost is the fastest and surest way to achieve a measurable increase in profits. Speeding up the development process often requires disruptive changes in how a firm operates, and those changes may impact virtually everyone in the company. Moreover, the benefits won’t be felt for months or years, depending on your typical development cycle-time. Cost reduction, on the other hand, can be applied to both new product ideas and existing successful products, requires minimal organizational change, and can yield immediate bottom-line results. Therefore, slashing costs is a great place to begin your journey toward lean product design excellence.
        There are numerous opportunities to slash manufacturing cost during the design cycle, including:

Reduce Direct Material Cost -
        Common parts, common raw materials, parts-count reduction, design simplification, reduction         of scrap and quality defects, elimination of batch processes, etc.

Reduce Direct Labor Cost -
        Design simplification, design for lean manufacture and assembly, parts count reduction,         matching product tolerances to process capabilities, standardizing processes, etc.

Reduce Operational Overhead -
         Minimize impact on factory layout, capture cross-product-line synergies (e.g. a modular design/         mass-customization strategy), improve utilization of shared capital equipment, etc.

Minimize Non-Recurring Design Cost -
         Platform design strategies, parts standardization, lean QFD/voice-of-the-customer, Six-Sigma         Methods, Design of Experiment, Value Engineering, Production Preparation (3P) Process, etc.

Minimize Product-Specific Capital Investment -
        Production Preparation (3P) Process, matching product tolerances to process capabilities,         Value Engineering / design simplification, design for one-piece flow, standardization of parts, etc.

        To positively impact these five critical factors in product cost, we've assembled a suite of eighteen "Lean Cost Reduction / Lean 3P tools" that address all aspects of cost reduction, from capturing early "voice-of-the-customer" inputs to ensuring a smooth and successful transition to a lean manufacturing environment. This "toolbox" approach offers tremendous flexibility, allowing firms to easily create their own customized cost-reduction strategy. To make implementation even more effective, we propose an integrated process for cost improvement (shown in the figure below) that will work for essentially any product type. Once a new product idea has been approved for development, a feedback process is initiated that begins with the definition of a target cost, and continuously compares the current best estimate of "actual cost" to that initial target. If costs are too high (as they almost always are), a cost-reduction loop is launched that guides the design team toward the appropriate lean 3P tools, and provides a semi-quantitative estimate of cost improvement (the "20 Cost Levers" mentioned in the figure). This integrated approach to cost reduction will fit neatly within any existing product development process, and can be scaled to the complexity of the product being developed; minor product-line extensions can receive a minimalist application of the toolset, while an entirely new and strategic product line would get the full-scale treatment.
        For more information about the eighteen tools and some examples of how they work, please visit "A Sampling of Tools and Methods," and to read several articles on Lean Cost Reduction / Lean 3P, please visit our "Articles" page.

                                                                                       

Slash Manufacturing Cost Through
Lean 3P

 

 

 

 

 

 

 

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TECHNOLOGY PERSPECTIVES