Question

Chapter 14 Case Study: Design for Supply Chain Programs

What is the relationship between design for manufacturing (DFM) and design for supply chain (DFSC)?

Design for Supply Chain Programs

Design for Supply Chain (DfSC) is a systematic method of ensuring the best fit between the design of a product throughout its life time and its supply chain members' resources and capabilities. Even something as simple as flattening the tops of soda cans, as beverage makers did in the 1950s, can revolutionize product development, transform transportation and inventory processes, and generate huge cost savings and increased customer satisfaction. Hewlett- Packard (HP) has been in the forefront of adopting DfSC principles, and IBM is another staunch proponent.

IBM developed a 1.hort list of DfSC principles that have helped it create products that are both competitive and supply-chain-efficient throughout their life cycles. Briefly stated, these principles are:

1. Integrate products parts and components as much as possible to reduce product assembly time.

2. Use industry-standard parts whenever possible to lower costs and simplify sourcing efforts.

3. Reduce lead times on critical components to avoid paying premium shipping fees on rush orders.

4. Design products for supply-chain friendliness throughout their life cycle, planning for and minimizing the cost and disruption of design and technology changes as products mature.

5. Build supply chains based on the company's strategic plan, not around the idiosyncratic requirements of specific products.

6. Use common components and modular design, thereby reducing product variability.

7. Minimize inventory costs and reduce the risk of obsolescence by building to order from common components and subassemblies, rather than building to stock.

8. Design products to give customers flexibility when ordering while keeping costs in line.

9. Use high quality parts and parts which can be quickly diagnosed to minimize warranty costs and improve after sales service.

HP similarly uses DfSC to consider the impact of its design decisions over product lifetimes, from pre-launch through production to end of life cycle, in all its business units and regions.

The DfSC strategy-essentially looking back in order to see ahead-helps improve HP's relationships with suppliers, manufacturers, logistics service firms, retailers, and consumers.

To use DISC, which it adopted 111 the early 1990s, HP first asks four questions about its products:

1. What makes the product a good fit for a particular supply chain?

2. Which design decisions produce that result? For example, does the product have unique parts?

3. When and why are design decisions being made, and who is making them?

4. How can the company deliver great products at higher profit margins?

Since adopting DfSC and successfully propagating its use throughout the company, HP has been able to introduce more new products faster and at lower cost. It has increased its revenues and kept customers happy. At the same time, the company has found ways to improve its inventory efficiency without offsetting risks onto its suppliers (which would damage its supply-chain relationships) or reducing the quality of product inputs (which would increase the cost of honoring product warranties as well as damaging customer relationships) .

HP's six DfSC techniques are:

l. Variety control. Having fewer SKUs allowed the company to reduce inventory 42% and increase product availability in its PC division.

2. Logistics enhancement. Making an InkJet printer 45% smaller saved more than $1 per unit in logistics costs.

3. Commonality and reuse. While unique parts make products distinctive, they increase inventory costs and, often, time to market.

4. Postponement. Designing products to remain generic as long as possible during the production process, until it's known how the end user wants to customize them, saves costs.

5. Tax and duty reduction. These costs can be higher or lower based on the country of origin.

6. Take-back facilitation. Design and packaging changes can reduce both manufacturing and environmental costs.

HP estimates that DfSC techniques have saved it about $200 million per year.

What is the relationship between design for manufacturability (DFM) and design for supply chain (DfSC)?

Answer 1

Design for Manufacturing is a systematic process of designing a product in according to the customers need without compromising in the company's strategic plan. It is the easiness in the integration of all the components of a design in such a way that the final design of product is cost efficient. Design for manufacturing focuses on these factors:

• focuses on minimizing the complexities
• reducing the overall part production cost.
• Integrate products parts and components in such a way that it reduce product assembly time.
• Use of standardized materials and components.
• Simplicity and flexibility.
• Form modular design that can be used life time and provide cost saving method.

Design for Manufacturing major motive revolves around the gaining modular design of product which is according to the customer need that will save time and cost to the company i.e.., achieving a design for product which is beneficial to both the company as well as the customer.

Design for Supply Chain (DFSC) is defined as process of integrating and matching the product design and the supply chain design.Design for Supply Chain (DfSC) is a systematic method of ensuring the best fit between the design of a product throughout its life time and its supply chain members' resources and capabilities.

Design for Supply Chain focuses on these factors:

• Reduce lead times on arranging and sourcing critical components.
• Build supply chains based on the company's strategic plan.
• supply-chain friendliness throughout product development life cycle.
• Minimize inventory costs by maintaining and establishing a good relationship with the suppliers.

Design for supply chain plays a major part in the delivering of a product to the end customers. Also supply chain plays a major role in procuring the resources to the company for the designing and developing product. Therefore supply chain act as a bridge between the customer and the company. It is a link from which the company transfer their product to the customer and the customer transfer the benefits or the payment to the company. Therefore supply chain design plays a major role in the successful establishment of a company.

Relationship between the design for supply chain and design for manufacturing:

Let us take an example of a furniture manufacturing company which need a raw material to manufacture furniture. The raw material that company needs include woods, glue, the binding agents ,nails and screw and finishing and furnishing materials etc. All these raw material are supplied to a company with the suppliers and if company want to be a successful and focuses on on- time delivery then company should possess effective Supply chain design.

A product is manufactured only when the supplier supply the raw material to the company and also a product is delivered to the customer only when supplier supplier it to the wholesalers or retailers. To attract large number of customer segment the company need to manufacture design for a product in such a way that it should be a cost efficient and attractive focuses on modularity and simplicity.

Commanality between the supply chain design and manufacturing design:

• focuses on integration and simplicity while maintaining standard.
• planning for and minimizing the cost while maintaining design of products and supply-chain friendliness throughout product life cycle.
• Build supply chain and manufacturing design based on the company's strategic plan.
• Both focuses on reducing assembly time.
• Design for Manufacture and Design for Supply Chain are integrated to each and tries to match their goals by saving cost.
• Both design focuses on standardization.

Supply chain design should be well developed and maintained because it is the source of procuring resources and raw material for designing and manufacturing product.