FandMmag.com |

The most advanced companies are using Design for Manufacturability methodologies to develop products that are designed for manufacturability, cost, quality, and the fastest real time-to-market. The accomplish this by using Concurrent Engineering to work together in multifunctional teams to either concurrently design products for existing processing or concurrently design new processing or tooling.

However, what happens when the manufacture is outsourced to contract manufacturers and job shops? Unfortunately, in most cases, the part or subassembly (hereafter called part) is designed without any collaboration with the CM or job shop (hereafter called vendor) and thrown "over the wall" to the vendor. This at the most reactive end of the Concurrent Engineering Spectrum.

Unless the customer's engineers thoroughly understands the processes, which is rare, the design will not be optimized for manufacturability and, worse, it will be hard for the vendor to make changes to make it more manufacturable because (a) there is usually no calendar time for changes, (b) there is usually no budget for changes either at the customer or the vendor, and (c) by this point, most changes can not be attempted because designs have so much "cast in concrete" (see graph which shows that 80% of cost is committed by the design). Sound familiar?

VENDOR/PARTNERSHIPS

The solution to this dilemma is vendor/partnerships, in which vendors are early and active participants on its customer's product development team to co develop (concurrently engineer) the parts they will be building. As part of the team, vendor can help the team design the parts for the lowest total cost and the quickest delivery because:

• Vendors thoroughly understand the DFM rules and guidelines for their process, in general, and for their equipment, in particular.
• Vendors can help avoid arbitrary decisions, which unnecessarily raise cost, delay delivery, and compromise quality. One of the worst causes of arbitrary decisions is styling, especially when the designer throws a pretty shape over the wall to Engineering, which then throws it over another wall to Manufacturing, who then throws it over yet another wall to the vendor – so the tool maker is three walls away from the designer!
• Vendor/partners will provide the lowest total cost because interacting with the customer's team results in vendors:
  • thoroughly understanding the challenges and issues
  • making "what if" suggestions early that will maximize manufacturability
  • working with customers early to minimize total cost
• Vendor/partnerships benefit from learning relationships where the customer and vendor learn from each other, thus making each job better and faster.
  

PROBLEMS WITH BIDDING CUSTOM PARTS

For those who believe in Concurrent Engineering, this logic should be compelling. However, many companies have policies that discourage vendor/partnerships all based on the erroneous belief that they can save money by sending parts out for bid, after they are designed, and then selecting the low-bidder. However, this will not result in the lowest total cost, because:

• Vendors will not help design the part unless paid work will follow. They will need some assurance that they will get some work before they invest their effort to help customers design their parts. Thus, bidding misses out in the biggest opportunity to save cost – working together.
• Low-bidders may not understand the problem or may be cutting corners, which raises other costs such as quality, expediting, delayed launch, warranty costs, or the costs of recalls (which have been in the news a lot lately).
• Bidders often add a "cushion" to deal with unknown customers or incomplete information: "Suppliers often add a risk premium to their pricing (thus raising the customer's cost) to cover nondisclosed or unexplored customer requirements or design flaws that may require later adjustments."
• The customer's purchasing agents will not be able to help the team develop products, assure availability, and set up vendor/partnerships because they will be too busy managing running the bidding process. The Toyota Product Development System book sums up the cost of bidding as follows: "Searching the globe for the lowest cost means managing very large numbers of suppliers as well as introducing a steady stream of new suppliers into your system. These suppliers are unfamiliar with your requirements and demand a great deal of attention to get up and running. While administering complex contracts, managing global bidding wars, and overseeing the constant introduction of new suppliers into the process, U.S. automakers must maintain mammoth purchasing organization, deal with incredibly cumbersome and slow sourcing processes, and live with constant variation of supplier performance in the development process." - all to "save cost!"
• Finally, it takes a lot resources away from product development to support bidding (at both the customer and vendor), for instance, to update/change documentation, CAD files, materials, tooling, and processing; complete transfers; and deal with new or ongoing problems related to ramps, delivery, quality, or getting up the learning curve in general. All the above problems are much worse when off-shoring to another continent.

For a complete treatise on all the problems of bidding contrasted to the value of relationships, see www.HalfCostProducts.com/low-bidding.htm .