To be successful, great designs require cost effective manufacturing and a scalable supply chain solution that meets all of the right regulatory and quality standards. Discover how this can be achieved during product development.
Imagine the following scenario; you worked for 12 months to develop a product that meets market demand. When transitioning the product into manufacturing you discover that the raw material cost per unit is significantly more than your budget allows and the architecture isn’t possible in volume production without redesigns. These unexpected scenarios could delay your time-to-market, bring potential loss of product features, increase costs and reduce your overall profitability – to list a few - and result in very unhappy customers!
At Plexus, we understand it’s our responsibility to be your supply chain risk leader. Managing your supply chain while minimizing costs, mitigating risk and ensuring continuity of supply is expected, not preferred.
Our unique approach to mitigate supply chain risk includes early Design for Supply Chain (DfSC), where our supply chain experts work closely with our team of engineers to continuously identify opportunities for supply chain optimization during the design stage.
Early Design for Supply Chain engagement helps to proactively diminish the scenario described above and ensures delivery of each product to market occurs on time and at cost. David McIntosh, Senior Product Development Sourcing Manager (PDSM) based in Livingston, Scotland, explains the role that he and his colleagues have at Plexus.
The PDSM is here to bridge the gap between engineering and supply chain teams. To be successful, great designs require cost effective manufacturing and a scalable supply chain solution that meets all of the right regulatory and quality standards. There needs to be the right balance of quality, unit cost and time-to-market, whilst maintaining a reasonable margin of profit.
From a quality perspective, we design the supply chain to meet specific regulatory standards – considering such things as whether ISO13485 or AS9100 accreditation is required; will the final product be FDA certified or are there ATEX considerations.
Unit cost One critical role of the PDSM is to challenge the engineering team’s design and ensure innovative sourcing strategy is incorporated to reduce unit cost.
Design for Cost (DfC): optimizing the manufacturability of the part.
- For example, an aluminium frame extrusion for one product was too heavy and the design demanded extremely tight tolerances. Working through DfC resulted in a 22% decrease in weight and improved flatness of the extrusion, thereby optimizing quality, repeatability and achieving cost reductions.
- We may also consider if parts should be merged, resulting in fewer parts and/or processes and reducing cost or perhaps change the finish or tolerance to achieve lower costs
When looking at time-to-market, there are several areas that need to be considered:
- Supplier selection: It is important to ensure our suppliers are in the correct region of the world, can scale to required volumes and have the necessary accreditations. Sourcing new suppliers after production begins will cause delays and we may have to alter the design to change parts if a supplier didn’t meet required standards.
- Tooling: The tooling strategy must fit within the schedule guideline. Tool development decisions made early saves time and cost in the long term. Understanding full volume and product lifecycles are key decision inputs.
- Reduce manufacturing time: Intentionally consider “Make or Buy” decisions that will ultimately reduce product assembly. We recently saw a plastic ‘clam-shell’ design which required metal injection molding hinges, glued in situ, as well as incorporation of a number of other plastic components. Plexus decided to consolidate the clam-shell to one supplier that would pre-assemble all 9 components and supply the product as a sub-assembly. While this did increase the total material costs, the trade-off provided advantages including a reduction in assembly build time and reduced burden of ordering/processing/handling/stocking/receiving of multiple parts.
So what does all of this mean? Stephen Morris, Product Development Sourcing Manager, in Raleigh, NC talks us through an example that highlights how this works.
Our engineering team was designing a single-use device as part of a medical product development effort. The initial raw materials quote for the product was 56% higher than our customer’s budget. The customer didn’t wish to lose any of the functionality of the product, therefore Plexus identified a number of other ways to reduce the unit cost:
- Engage suppliers in low cost regions
- Negotiate supplier quotes
- Understand manufacturing pain points and suggest design changes to increase manufacturability
- Leverage volume purchase price breaks
- Conduct Design For Manufacturing (DFM) reviews
- Highlight new technologies and approaches with design engineers which can reduce time, risk and costs
- Build assembly process studies
- Hardware standardization and consolidation
Planning for an appropriate amount of time allowed this to be effective. All too often, not enough time is invested into the DFM effort to allow it to be successful. If we had cut the review short by two and a half months, the unit cost of the product would have still been 28% higher than the customer’s target. That 28% unit cost difference to the customer would have resulted in a $2M annual impact to their bottom line. The customer was extremely impressed with our perseverance and this example displays the real value that can be gained when engineering and supply chain collaboration occurs early in the product development cycle.
Developing the products that will build a better world isn’t always easy. At Plexus, we recognize that getting this right is vital to our customers’ success. The Product Development Sourcing Manager’s collaboration with Engineering ensures that we effectively bridge the gap and deliver each product to market on time and at cost.