How to Use Cost Modeling to Accelerate DFM (design for manufacturing) with Product Development
by Edward Pretzel, President Collaborative Supply Chains Posted on 2022-07-29
DFM is a process within the product development process where the goal is to find the lowest cost design by evaluating different designs and manufacturing technologies. The key is to perform this analysis up front to make important strategic design decisions with confidence and know that you are choosing the optimized materials and manufacturing technology.
The best in class product development organizations apply DFM (design for manufacturing) early in the product development process using cost models. Best in class product development organizations also get DFM feedback from their key suppliers are the manufacturing experts that will be manufacturing the components.
Cost Modeling is the best option for costing design alternatives based the following advantages:
2 Step Process DFM Process
The DFM process is a 2 step optimization process.
STEP 1 – Choosing the Materials and Manufacturing Technologies
Some examples of the Step 1 material and manufacturing technologies optimization include the following:
Step 1, choosing materials and manufacturing technologies typically does not have mature designs ready and available for suppliers to quote. These alternative are typically just ideas. Suppliers will not quote just ideas, they require prints and CAD. The process of costing ideas without mature designs can only be completed by cost engineers using cost models.
STEP 2 – Optimizing the Design for Ease of Manufacturing
Step 2 is focused on optimizing the design to make the part easy to produce with efficient raw material use. Examples of optimizing the design include the following:
Example of part design variables that can impact the list above include the following:
COSTING OF DESIGNS
There are two main ways of costing design alternatives:
GETTING QUOTES FROM SUPPLIERS FOR DESIGN ALTERNATIVES
The traditional method of costing designs is through quotes from suppliers who could produce the designed parts. Getting quotes from suppliers is the least efficient way to get costing feedback as it takes 2-3 weeks.
Supplier’s quotes are also inconsistent in their feedback as market pricing can differ significantly from supplier to supplier. The pricing from suppliers can range by 200% and therefore are not consistently reliable.
Suppliers require mature designs to be able to quote with confidence. Those mature design alternatives may not available. Sometimes design alternatives are only concepts in the mind of the product designer. Yet, we still need a way to cost alternatives, even if the designs are not mature using CAD (computer aided design).
COST MODEL APPLICATION TO DESIGN ALTERNATIVES
Cost Modeling is the most efficient way to get costing feedback as usually only takes a few hours or days.
Cost modeling also will be consistent in its costing feedback as it is not subject to market pricing fluctuations.
Cost Modeling can also perform what if scenarios such as regional costing alternatives such as USA, Mexico, India, Europe, China, etc.
Cost modeling does not require a mature design as a cost estimate can be developed with just a discussion with a product engineer and the cost engineer. Not requiring a mature design, yet still being able to cost a hypothetical design is a huge advantage. This allows the product engineer to get feedback on design alternatives without actually designing each alternative.
COLLABORATION with KEY STRATEGIC SUPPLIERS
The best product development organizations also apply DFM together with key strategic suppliers to get feedback from the production experts, the suppliers. Suppliers are the ones that are going to produce the parts and can provide the feedback on how to make changes to the design to allow for the production to be easier and more efficient.
Best in class companies’ work with their suppliers to develop agreed to cost models with their supplier’s approval. These pre-approved cost models can be applied to the design alternatives. Suppliers who have these cost models can also be pre-sourced by supply chain management to work with the product development organization. This early design collaboration with product development and the supplier is a best practice that is still rare in the business world.
Implementation of supplier pre-approved cost models generally require a strategic supplier program. Strategic supplier programs are generally administered through supply chain management organizations.
The results of using Cost Models together with suppliers feedback is the fastest and most productive product development and launch process that beats the competition in speed to market and lower cost designs. This drives more sales growth, stronger market share, higher quality, lower cost structures and more profit.
Product development organizations are much stronger when they get the feedback and influence of the suppliers that will eventually manufacture the designed products and parts. Suppliers have the knowledge of how to optimize designs to drive the most important and common improvements including the following:
But working with suppliers early on in the product development cycle generally require some type of commitment to the supplier to compensate the supplier for their engineering time and resources. The commitment comes in the form of an engineering payment or a pre-sourcing of the business to the supplier.
Pre-sourcing business to a supplier before any quotes or designs have been market tested is a scary scenario for supply chain management organizations. In pre-sourcing scenarios, supply chain management organizations can feel they are trapped with the supplier and will lose their leverage and ability to ensure a low price throughout the product development process and into the product launch.
The solution? An agreed to cost model with key strategic suppliers. Agreed to cost model must be tested to ensure that it is consistently competitive before an agreed cost model should be implemented. Agreed to cost models with suppliers ensure that the supplier will consistently be competitive no matter the design iteration. This is important as the product development process will have engineering changes that will need to be costing using the agreed to cost model.
Agreed to cost models with suppliers enables the pre-sourcing to occur where both parties are protected by the cost model. The supply chain management organization is essentially now sourcing based on a cost model vs the old business model of a quote (or price).
Once the agreed to cost model is in place with your key strategic supplier, now the product development organization can work up front with the supplier to optimize the design. And the supplier can invest engineering resources to help with the product design as the supplier knows that they are the source for the production of the parts.