Total cost of ownership (TCO) and total cost of management (TCM) represent a supply chain model that has been around for several decades. However, according to John Biagioni, VP of supply chain and operations for Dynisco, the concepts are an underdeveloped management science.
TCO and TCM can drive product development changes, while Design for Manufacture and Assembly (DFMA) represents one of the complementary tools that can help companies reduce their total costs to manufacture and determine whether to off-shore manufacturing, reshore manufacturing or keep it here from the start.
Labor has been one of the biggest perceived cost drivers in pushing OEMs to outsource to Asia. Yet rising labor rates are becoming a big issue in China as there are fewer agricultural workers migrating from the farms to the large cities, which is driving up factory wages. DFMA can eliminate labor from the equation - or at least make it less of a consideration - if companies would implement DFMA as a part of their TCM and TCO.
More and more contract designers mold manufacturers are being asked by their OEM customers to design for product simplification in order to reduce the number of components and the assembly complexity that wind up downstream in their supply chain. Part consolidation is a best-in-class principle, yet many companies shy away from using software to quantify the activity.
Reducing, avoiding costs
Dynisco is a client of Boothroyd Dewhurst Inc., a software developer specializing in DFMA. By using the DFMA software tools, Dynisco has been able to reduce - and even avoid - costs. "When principles of DFMA are simple - you can apply it as a thought process - but you have to crunch the numbers and be ruthless about using DFMA software if you want the big results," Biagioni told PlasticsToday. "That's why people need to do the math, not just the methodology. And that math has to be done on both the product structure and the supply chain."
Biagioni noted that the larger argument for reshoring is design optimization: "What features have ramifications on cost? Take measures to reduce or eliminate those."
Design engineering impacts the efficiency of everything that follows in the manufacturing process, and is the gateway to profits. "The design of new products can be used to clear the path to all the things that prevent my company from achieving higher gross margins," Biagioni said. "Using common part assemblies, DFMA, TCO and Lean thinking early on is how Dynisco plans to stay ahead."
Matt Miles, Dynisco's DFMA and value engineering manager, adds, "We're trying to start at the front end. Design for Assembly (DFA) is key. As we get that DFA mantra going across our sites - minimizing the number of parts - then Design for Manufacture (DFM) analysis comes into play. We still want products to be as cost effective as possible by minimizing our overall part count, yet we work equally as hard to get the per-part manufacturing cost as low as possible."
What makes sense, what doesn't
Nick Dewhurst, executive vice president for Boothroyd Dewhurst, helps manufacturing companies figure out what makes sense and what doesn't regarding product design attributes and their cost. Although not marketed as a reshoring program, his company's software helps clear the way for companies to determine how (and where) it is most effective to make a product.
"We're basically mechanical engineers who create software, and for 30 years we've produced software used to figure out product costs," says Dewhurst. "We have over 800 companies using our software tool, including Boeing and GE which have worldwide licenses."
DFMA is two complementary tools, explains Dewhurst. It can be a product simplification tool, facilitating the decision about whether parts should remain separate or combined into single, multifunctional components. Or it can do tradeoffs to quickly judge the cost of manufacturing the new design against the original product.
"Our production simplification tools are set up to evaluate design and cost, and look at alternatives," Dewhurst says. "Many OEMs are using this software to calculate part and mold cost, so that they don't approach suppliers completely unaware. The software quantifies the costs for them and allows someone who doesn't know injection molding to turn around quotes more quickly and knowledgeably."
Significant cost savings can be realized through Design for Assembly (DFA), and in fact it is the way product developers have generated the most cost savings. "Taking a design from 30 parts to just a few part means the rewards can be very significant," says Dewhurst.
Dewhurst notes that even if engineering understands DFA, the business leaders often do not understand it in the same way they understand supplier negotiations or leaning the production line. "They'll leverage Lean manufacturing first, at the backend of a problem and grab some quick, smaller savings," he said. "But DFMA is the long-term approach that allows the benefits of design efficiency to ripple through manufacturing all the way to the service and warrantee ledger. That's how design helps improve TCO."
Engineers as heroes
Engineers can be heroes on the factory floor sometimes, but business people have to understand how to harness the power of design. "You can't just focus on cost-cutting and late-stage fixes. You have to concentrate on how profits are generated and sustained," states Dewhurst.
For example, design for manufacturing software will reveal the cost impact of individual features such as ribs and radii and guide design engineers to the best process sequence. However, Dewhurst adds that he's seen "very frustrated manufacturing engineers" who know Lean and are allowed to "dabble" in but not implement DFMA. "The problem is there are still too many silos between design, manufacturing and management."
While engineers are using DFMA for redesigning and estimating parts, buyers are using the software as a manufacturing cost estimating tool. An estimate for a mold, for example, can be obtained by downloading a CAD file into the software or by simply describing the geometry of the part, then using that estimate as a negotiating tool with the supplier.
"The intent is that our product simplification tools are set up to evaluate design and cost, and look at alternatives," says Dewhurst. "Many OEMs are using this software to calculate part costs and the mold cost, so they don't approach suppliers completely unaware. Our software quantifies the costs for them and would allow someone who doesn't know about injection molding to evaluate the costs from the software and turn around quotes more quickly and effectively."
Understanding costs and alternative designs early in the process can be very beneficial to the moldmaker, the molder and the OEM. Dewhurst notes that he has seen the calculations used as an opportunity to go back and renegotiate on how a mold is made, and how larger costs-to-manufacture can be reduced.
"It offers everyone a better way to communicate the idea of combining parts, why and how," says Dewhurst. "There's no modeling involved, necessarily. It can start with a sketch on a napkin. The estimate of final project costs is more accurate if you have a detailed 3D model of the injection molded part to import. Using our software requires a 30-second effort in that scenario. Once the information is there it generates a summary very quickly, which provides value to mold makers who might be overestimating costs and not winning bids, or even underestimating costs and losing money on a project."
"Moldmakers are routinely asked to quote because the OEM is curious what the mold might cost," says Dewhurst. "This [DFM] could be an effective tool to help moldmakers get a quick estimate for the mold. They can also go beyond the default values in the software and populate certain data fields with custom processes."
Dewhurst comments that Boothroyd Dewhurst's software work is based on extensive studies and manufacturing science rather than on historical bids, which can still be the basis for decisions made by the OEM and small mold shops.
Best costs: offshore or onshore?
The molding science includes the calculations of cooling times, mold fill times, and mold reset times, based on the characteristics of both the material and the machine selected to do the molding. The injection, ejection and mold temperatures of a given material are used by the software, along with proprietary algorithms, to determine cycle times based on this science. The resulting cost profile can be taken as a whole or broken down into contributing elements for review.
"We create cost outputs that change by labor input, production volume, material selection and geometry," says Dewhurst. "The data is calibrated for all these things and is much different than rounding a bid to approximate historical in-house jobs. Decisions about where to manufacture should involve TCO and TCM analysis using the DFMA models. Run all these calculations. This can tell you where you'll get your best costs - offshore or onshore."