July 2010 - Symbiotic Supply Chain Design Strategies

July 2010 - Symbiotic Supply Chain Design Strategies

Pro Tips eNewsletter- July 2010

--Design tips to reduce machining costs-- See the online version Here Pro CNC Inc. - Machining, Assembly, ISO 9001 and AS9100 Certified

Pro Tips - July 2010

Symbiotic Supply Chain Design Strategies

Last month's newsletter discussed optimal corner radii. This month we have a guest writer who will cover a broad overview of DFMA (Design For Manufacturability & Assembly) from a strategic supply chain perspective. Jon Edwards works in the sales department here at Pro CNC. This is a summary for a white paper which can be found on our website here.

This past spring, I wrote a whitepaper as course work for an English class. I was fortunate enough to be able to select a topic. Although Pro CNC is at the forefront of DFMA, it is easy to lose sight of the fact that other organizations are not as familiar with DFMA practices. It was my goal to uncover what research had already been done in academia about design waste and what common attitudes exist among you and your peers about DFMA and how suppliers can help.

It turns out that despite some anecdotal trade magazine stories and some unpublished articles from a DFMA consultant, there is not a great deal of related research in academia. I have speculated on the reasons for this; it could be a lack of interest or a lack of knowledge, but I believe that this is a “Freakonomics”- type problem bridging distinct fields (engineering management, supply chain management, and Lean process improvement). Regardless of the reason, I found a need to collect more data because it seemed there was a great deal of savings to be had. I designed and administered a survey to collect data about DFMA, purchasing habits, and internal collaboration.

As part of my research proposal, I came up with a list of six expected results. What follows is a comparison with my expectations and what I discovered.

I had expected to find that buyers had recently reduced their supplier base. Only 41.5% of respondents reported having reduced their supplier bases recently. I decided not to ask as part of the survey if respondents would like to spend less on their parts if it meant there would be no compromises to quality or delivery; this seemed obvious on its face. Manufacturing buyers rely on their suppliers, first and foremost, for quality, followed by price, delivery, and lastly specialized knowledge; this was not unforeseen.

The second premise I developed was that when buying companies have design authority, fit, form and function are much more important than conformance to part documentation. This was validated by the survey instrument; 63.4% of respondents reported this to be the case. Further, a full 80% reported that having design authority generally reduced the quality requirements passed down to suppliers. Only a small margin, 52.6%, reported that having design authority increased the likelihood that they have customer-delegated MRB (Material Review Board) authority.

I felt sure I would find that companies that have design authority are going to be more likely to have integrated their supply chain. Indeed, respondents that had design authority “all of the time” rated their supply chain integration effectiveness as slightly higher than those that reported having design authority “some of the time”. There was one respondent that reported having design authority “never” said their supply chain integration was “very effective”. I cannot say the connection is conclusive between integration and design authority but there is at least a weak correlation.

Do companies believe that their suppliers can provide information and design assistance, such as DFMA, that will save them money? In hindsight, I did not ask questions that were direct enough in this regard. Despite that, we know that respondents strongly believe that DFMA can reduce their part and assembly costs (97.4% of respondents). Half the respondents attributed their organization’s savings from DFMA to suppliers. Further, 11.8% of respondents rely on suppliers completely due to their specialized knowledge, and 41.2% heavily rely on their supplier. Only 23.5% of respondents barely rely or do not rely at all on their suppliers for “specialized knowledge”. Unfortunately, this is not conclusive as the “specialized knowledge” may or may not be DFMA support. But the implication is strong that companies believe that suppliers know how to help reduce costs.

In terms of functional integration, I believed that I would find that procurement and engineering, quality and procurement, and engineering and quality already work together some of the time. When I designed the survey, I narrowed the focus to procurement’s functional integration with the other functions, leaving the question about engineering and quality’s integration unasked. However, concerning procurement and engineering, 89.7% of respondents reported that they collaborate at least some of the time on NPI (New Product Introduction) and 81.6% of respondents reported that they collaborate at least some of the time on strategic supplier initiatives. Procurement and quality had similar levels of collaboration, with 92.1% of respondents reporting collaboration at least some of the time on NPI and 91.8% reporting collaboration at least some of the time on strategic supplier initiatives. There is no doubt about the functional integration between engineering and procurement and quality and procurement, at least in the areas of NPI and strategic supplier initiatives.

Finally but most importantly, I thought I would find that suppliers are not as integrated with buying organizations as buying organizations feel they should be (i.e. suppliers are underutilized). Only 12.5% of respondents reported that their supply chain integration is “very effective”, 65.0% “somewhat effective”, and 22.5% “somewhat ineffective”. As far as the degree of integration of suppliers into their organization’s operations, only 47.4% were satisfied. From the survey data, there is room for improvement in supplier integration.

I concluded that upper management needs to be further convinced of the importance of DFMA. Engineers that are protective of their territory may have simultaneously understated how much improvement is possible and overstated how much of it they do to representatives of upper management. On the other hand, buyers realize the value that suppliers bring to reducing design waste. Whether it is ego, as suggested by one survey respondent, or a lack of time to do things right the first time, the waste must be reduced. Buyers and confident engineers need to heed the battle call and change their organizations. As Albert Einstein once said, “in the middle of difficulty lies opportunity.” Most of you cannot afford to outright hire the expertise that your suppliers offer in their specialty areas; on the other hand, your suppliers cannot know how they can help you unless you ask.

The bottom line is that based on the number of US manufacturers (14,000) and the sample I surveyed, there is a minimum of $7 billion to be saved through reducing design waste. To put that in perspective, $7 billion is about what will be spent on 3D CAD software this year. That’s an amount worth saving and I hope you will all continue to fight the good fight against design waste.

Machined Parts gallery

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Part of the Month:

Every month we feature a really cool part that we have made. July's Part of the Month is a test assembly that we recently machined and assembled. With some 4 axis indexing features on the main body, and some tight positional tolerances, it was a fun and interesting project.

Test Assembly

See more cool parts here. >>

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