Product Packaging: What Is The Impact Of Design For Manufacturability?

March 30, 2011 by 6 Comments

DesignWhen designing for manufacturability one of the perceived downfalls is an increase in the cost of materials required for the design.  Consider a master carton.  Various designs of a master carton with similar dimensions, flute, and paperweight specifications have separate manufacturing costs.  One design may require more board and another may require a more complicated die cut. Often design is viewed from a minimization of board and die cutting, leading to a cost only perspective.

However, designing from a cost only perspective can present down-stream manufacturing problems including:

  • Product protection
  • Transportation costs
  • Extra handling

These manufacturing issues can actually increase product costs resulting from product damage, increased transportation costs and increased labor costs.  Imagine if the design required an increase in material cost, but decreased extra handling.

Design Option
Material Cost
Labor Cost
Total Cost
Low Cost Perspective
$4
$12
$16
Design for Manufacturability
$5
$9
$14

On the surface these numbers look inconsequential.  However, this graph below illustrates the saving achieved when designing your packaging for manufacturability.

Designing product packaging is not always easy.  Time horizons continue shrinking as the push for lead-time reduction and quick product launches is ever present in today’s dynamic economy.  However, the opportunity for return on investment makes it clear that manufacturability is a concept that must be incorporated into our design processes.

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Do Lean Manufacturing Principles Apply to New Product Launches?

February 24, 2011 by 1 Comment

Yes, yes and yes, lean manufacturing principles do apply to new product launches. In our journey to launch new products, how many times have we faced one or more of the seven wastes identified in Lean Manufacturing such as:

  • Transportation
  • Inventory
  • Motion
  • Waiting
  • Overproduction
  • Over Processing
  • Defects

An obvious waste to discuss in a new product launch situation is overproduction. A typical definition of overproduction is to produce products in excess of customer demand.

Often in a new product launch, orders for the new product are created from an anticipatory perspective with the use of forecasts instead of live customer orders. Using anticipated demand systems and structures increases the opportunity for over production because forecasting demand is frequently ambiguous. We can engage in rigorous research efforts and still have errors in our calculations, add into the equation volitile demand, inflexible manufacturing systems and supply chains, and it becomes clear why overproduction regularly occurs in new product launches.

Interestingly, both the goals of a new product launch and the goals of a lean factory are striking similar. For example, in a new product launch, the desired outcome is to get our products to market as quickly, efficiently and cost effectively as possible. Like wise, the goal of Lean is to reduce cycle times, eliminate waste and reduce total costs.

Incorporating lean strategies in new product launches has many benefits including:

  • Reduced total costs by eliminating over production
  • Accelerated time-to-market by reducing lead times
  • Meeting emerging customer needs by reducing process cycle times

The launch is a crucial stage in the product development process. Applying Lean principles to this stage can create tremendous opportunities to maximize returns on our new product development efforts.

What have your experiences been with lean launch strategies and methods?

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Process Improvement: it is not WHAT we do, it is HOW we do it

February 11, 2011 by Leave a comment

“A Corporation is a living organism; it has to continue to shed its skin. Methods have to change. Focus has to change. Values have to change. The sum total of those changes is transformation.”
- Andrew Grove, Intel Corporation

You know how it feels, being in the flow: completing tasks, checking items off the list, solving problems, producing our products and engaging in productive behaviors. Activities are moving fast and we believe, in this moment, there is no room and no reason for process improvements.

Except that nagging feeling –the one that emerges with stunning regularity. The inclination, that, completing these tasks again, checking this item off the list again, producing these products in the same tired ways and solving these same old problems again, may be a great waste of effort.

It is in this moment of dissonance, a great opportunity exists: to shift our focus from what we do, to how we do it. This pause, this small opening, gives rise to an occasion to ask bold, new questions:

  • Are the activities we perform adding value to our product? Or, are employees performing unnecessary tasks because of inadequate training, tradition, or inefficient work cell layout?
  • Is our throughput maximized and downtime minimized? Or, do our materials meet bottlenecks in processing that create limits on our ability to fulfill orders?
  • Can we find ways to improve quality so we do not need to spend excess time looking for and fixing defects? Are processes understood and reproducible to minimize the occurrence of defects?
  • Is our supply chain optimized to reduce costs? Is the movement of our product necessary or minimized to create the best cost to value received by the client?

While it may seem impossible to break out from the flow and find the time and courage to ask difficult questions, we need to ask difficult questions to develop competitive business processes and implement the correct changes to transform ourselves, our colleagues, and our businesses into 21st century success stories.

 

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Translating Hourly Labor into Product Costs For Process Improvements

January 13, 2011 by Leave a comment

There are a variety of costing systems and methods. Some of which include: standard costing, activity-based costing (ABC), theory of constraints and target cost management. With so many differing approaches, and disagreements regarding how methods should be applied, it is easy to understand how product costing is reprioritized, finding its way to the bottom of our task list.

However, with increasing competitive pressures, product costing is vital to our long-term success. With product costing playing such an important role in the health of our organizations, it is necessary to find techniques for costing that help us understand and make improvements to our processes and cost structures.

Creating simplistic spreadsheets is an easy method for developing basic product costing systems, enabling us to isolate and evaluate costing variables. Perhaps the most difficult and most important variable to incorporate into product costing is hourly labor costs.

There are several contributing factors leading to difficulties in translating hourly labor costs into a product costing format. First, we pay direct labor on an hourly basis; therefore, a typical labor cost is expressed as an hourly cost, not as a per unit cost. Next, it is necessary to track the actual time a laborer works on specific products. This can be difficult, as changing manufacturing schedules require workers to move from one task to another. Finally, product output needs to be measured and matched with the labor hours and hourly labor costs contributed to making the product.

Fortunately, once data collection points are established, entering data into a spreadsheet is the easy part of the process. The exciting part is watching these data sets become real information for process improvements, leading to reduced labor costs.

Click here to download your free basic product costing tool to start understanding your hourly labor costs in relationship to specific products/processes.  Get the information needed to start making incremental process improvements today!

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What You Should Know About the Basics of Prototyping

July 28, 2010 by Leave a comment

By David Clark, New Business Development Manager, the Malco Design & Deliver Group

When it comes to designing and preparing a prototype, the first questions we ask is, “What is the goal of the prototype?” The answer is not as obvious as you might think.

 

The design and production of prototypes in the product development process creates compelling opportunities for patenting, licensing, investor relations, market research, product refinement and ease of manufacturing. Deploying the right prototype at the right time for these uses saves time, saves money and enhances the end-user experience while increasing the chance of a successful new product launch.

In the product development life cycle, three basic varieties of prototypes build on one-another to reach the point of manufacturing. Increasing in sophistication and capital investment, these prototypes can be thought of as three distinct design processes.

  1. Conceptual Drawing and Virtual Prototypes
  2. Working Models
  3. Pre-Production Samples

Conceptual drawings and virtual prototypes are the most cost effective prototypes in the design process. Conceptual drawings and virtual prototypes are used the early stages of market research and to gather customer feedback. Additionally, they are used to gauge investor interest and for selling or licensing a patent.

Once market interest is solidified and investors commit, the working model prototype further refines the product to demonstrate the proof of concept, size, fit and functionality. Working model prototypes provide investors and the target market a hands-on working model for feedback and critique to further the design process.

Often confused, a working model prototype differs significantly from a mock-up. Mock-ups, while useful, are made in the earliest stage of product development using convenient materials at hand. Working models are prototypes made of materials that closely resemble and are consistent with design specifications. Working model prototyping creates a product ready for real life testing.

 

The pre-production sample is the most costly prototype to make. Therefore, it is produced only when the majority of design decisions have been made. Using the information gathered in the previous stages, the final stage of prototyping uses the pre-production sample to study and enhance the Design for Manufacturability (DFM) of the product. For more information read:Benefits of Design for Manufacturability.

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David Clark holds a BS degree from Minnesota State University, Mankato and an MBA from the University of St. Thomas. He has over 20 years of sales, marketing and product development experience. Dave has worked for Malco Products, Inc. for eight years.

 

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Lean Waste: Motion, Which Set-Up Yields Greatest Efficiencies?

July 16, 2010 by 1 Comment

Do you ever wonder if it really pays off to go through the sometimes-painful Lean Manufacturing exercises? Check out this video!

To view in higher resolution, click the YouTube logo and make your selection.

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Productivity: 99 Years of Scientific Management – Every Second Counts

June 16, 2010 by Leave a comment

Where to Begin?

Productivity – In macroeconomics productivity is measured by our nation’s Gross Domestic Product, and in microeconomics, productivity is measured by the output of production.  Calculating marginal cost and marginal revenue in an effort to maximize profits is probably the last thing on your mind when you walk into your production environment. Most likely workforce productivity, the amount of goods produced in a given amount of time, is near the top of your priorities. So we ask where to begin?

Stopwatches have been in use in manufacturing since Fredrick Taylor introduced his concept of scientific management.  Yet since that time, stopwatches have been the catalyst for labor disputes and management theory debates. Over the past century, names in the ranks of Deming and Ducker and movements from TQM and Six Sigma, owe their roots to the concept of scientifically managing manufacturing processes.  So on the eve of the centennial anniversary of Taylor’s publication, The Principles of Scientific Management (1911), we pay tribute to his thought leadership and explore how every second counts.

A Recap of Taylor’s 4 Principles

Here is a quick recap (with a new century’s bend) on Taylor’s four duties of scientific management, found in chapter 2 (pages 36, 37) of his publication.

  1. Develop a science for each element of work, which replaces the old rule-of-thumb method (heuristic).
  2. Select, train, and develop each person based on scientific study rather than leaving each person to train themselves.
  3. Collaborate with workers to scientifically develop work methods and to ensure the work being done follows the scientifically developed methods.
  4. Likewise, divide work most equally between managers and workers, so that managers plan work using scientific principles for the work they perform and the work planned for the workers.

In a previous blog, we discussed how to define and measure productivity in a three step process.  The next step is understanding how every second leads through to the income statement.  Just like you, we think time is money.

Productivity & Income Statements

For business owners, managers, and executives everywhere, the Income Statement or Profit and Loss Statement (P&L) is where the productivity of manufacturing processes are realized. Of course, controlling overhead is part of the overall picture, and the principles of the stopwatch can be applied to these necessary functions too.

Let’s get into the thick of it.  For our example, we’ll use a manufacturing process to make widget Z.  After defining the process and working with a workgroup to find the most efficient processing methods, data shows that it takes 6 minutes (360 seconds) to manufacture widget Z.  To simplify things we won’t factor in break times etc.

If we don’t use Taylor’s second rule when demand increases, and we don’t select, train and develop a person based on the scientific study, our second person, Worker B, produces widget Z in 6 minutes and 20 seconds (380 seconds).  That’s a 5.6% increase in time, meaning that person would produce approximately  ½ a part less an hour, 1.1 whole part less every 2 hours, 4.2 parts less over an entire day, and 1094.7 parts less in an entire year. (If you are running the numbers with us, those decimal points really added up in the long-run.)

Using this data, let’s compare the annual revenue generated by Worker A who is 100% productive based on our scientific method and Worker B who is 95% productive based on our scientific method. Let’s assume the market rate of $40 for widget Z.

Worker A Worker B
Annual Production $20,800 $19,705
Annual Revenue $832,000 $788,211

The difference in revenue produced by Worker B, from Worker A, is $43,789. Throughout this example the economic principle cēterīs paribus, Latin for all other things being equal or held constant, is employed.  We will set the wage of Worker A and Worker B at $25/hr., and just for fun (but it isn’t necessary) let’s assume there is $20 of materials in every unit produced.

Annual Wage $52,000 $52,000
Cost of Materials $416,000 $394,105
Cost of Goods Sold $468,000 $446,105
Gross Profit $364,000 $342,105

At the end of the year Worker A passes along $21,894 more to the bottom line than Worker B. Those 20 extra seconds add up to real dollars; even 5 extra seconds of processing time would add up to be a loss of opportunity equaling $5,698 annually.  This makes us wonder – what if scientific management wasn’t used in the first place. . .

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Good Enough? How Productive Is Your Organization?

April 22, 2010 by 1 Comment

In the next few blog posts, I will explore the impact productivity has on the many facets of an organization. Productivity impacts the release of new products and new product development, strategic planning, pricing strategies, operations and administrative functions.

Businesses, at their core, deliver services and products through complex systems and processes; each of these deliverables takes time to produce. Productivity is the measure of the efficiency of how the output is produced.

Creating a productivity measurement is a three-step process:
1. Process Definition
2. Standardization Study
3. Performance Study

Process definition requires the understanding of why the process exists, who performs the process, the process inputs and outputs, process sequencing, and the delineation of where a process starts and ends. Once these factors are known and documented, the process is measured in terms of time.

Through measuring defined processes in terms of time, we can create processing time trials. During processing time trials, the process is measured from start to finish by taking several samples. In turn, this data is calculated into a baseline of average processing time also known as a standard.

Once a standard processing time is known, we measure real world processing outputs and compare them to the standard processing time, thereby creating productivity measurements. For example, if the standard processing time to create an invoice is 2 minutes and then we measure output over a 1-hour period resulting in 25 units produced, the output productivity over the sample hour is a productivity rate of 83%.

It is important to note that the initial process definition & standardization captures variables that replicate the production environment.

The process of creating productivity measurements is a powerful business tool. Defining all business processes creates a better understanding of how a business performs. Process analysis enables process improvement efforts and tells us how efficiently we are performing specific processes.

Armed with this information, we can begin to answer questions such as:

  • What are our organizations points of strength?
  • How long will it take to build this new product and is this process time accounted for in the business case analysis?
  • How does our processing efficiency affect the Profit & Loss Statement?
  • How much does it cost to process an invoice?Where are the constraints in my manufacturing processes and how much do these constraints cost?

The ability to find the answers these multi-disciplined questions is essential to staying competitive in today’s business environment.

Stay tuned for my next blog articles where I explore how productivity measurements are used as a guide in answering these important questions.

 

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