Manufacturing Part Cost Analysis Help Pages

Classification - Benefits Overview

One of the most satisfying and cost effective programmes that a chief executive can approve is part variety reduction.
With the pressure to get new products to market many companies are overlooking one of the most basic ways to reduce product costs.
The variety reduction process requires a procedural discipline that seems out of place in the creative world of new product design.
However lack of attention to this fundamental area can have a huge cost knock-on effect in manufacturing and the supply base.

Cost of doing nothing

When designing new products there is a tendency to think that no-one has done this before or the “new product” is totally unique. Hopefully where a comparison with competitors is concerned this is true. But inside our organisations this tends not to be the case. We have one group or generation of engineers solving problems that predecessors have already tackled in a variety of ways. Similar problems inevitably produce similar answers. We need to tap into that hard won experience and try not to “re-invent the wheel.”

William Hyde, one of the pioneers in variety reduction, estimated in 1984 that the level of duplication in design operations with un-controlled design re-use was about 20%. It seems that now even with CAD and PLM that nothing has changed for some companies. In a recent study at one medium sized manufacturing company it was found that in a population of about 40,000 parts, 7,500 were exact duplicates and 4,000 were near duplicates.

How much does it cost to create a new part?

When we consider that the cost to get a part ready for production varies from £10k to £50k depending on the industry, this means that at minimum this company had spent, over time, about £75M designing and planning for stuff it already had available for immediate use – an inexcusable waste of design time and effort!

The classic way to stop that is to implement a variety reduction programme by classifying, rationalising and standardising the parts database. However, with traditional methods this can take a period of many months just to identify the whole population of parts and then design and implement a suitable classification system.

The classification process can be defined as "bringing together parts by virtue of their similarities and then identifying their essential differences."
William Hyde (1984)

Effort is required

The biggest effort will be in the area that Hyde described as “bringing together parts by virtue of their similarities and then identifying their essential differences.” Basically this is the classification process.

Instinctively we know this to be the “right thing” to do to save money and reduce costs. However, classification, coding, rationalisation and standardisation are not the kind of activities engineers signed-up to when they started their careers. They want to do something more exciting than that. They want to be responsible for something new, creative and exciting – classification and coding of someone else’s work does not fill that need!

Many classification projects fail at this first hurdle because of the time required for engineers to do the actual classification. It was thought that PLM systems with suitable classification systems would take care of the problem. But it seems that the same issue of scarce trained engineering personnel to conduct this work is still relevant and holding up this essential work in many companies.

Why not just deploy PLM Software?

The PLM systems classification sub-functions usually force a classification based on attributes and users of PLM systems have a tendency to resort to an attribute based classification system using the PLM’s underlying retrieval system – usually SQL. This implies a lot of hard work in the classifying effort and dealing with the conflicting requirements of the various users in addition to dealing with the design of the classification system.

What is needed is a quick way to retrieve items for classifying. That “bringing together part by virtue of their similarities” can now be accomplished by graphical means. The new graphical part browser products allows users to find things in a 3D CAD database via searches based on a “shape signature.”

This is a huge step forward in assisting the rapid deployment of meaningful classification systems and gaining early benefits of doing so. What was once a daunting administration task is now made easy by use of a technology readily accepted by engineers who are naturally spatially aware!

Help available for your part cost reduction project

The second part of the classification process “separate by essential differences” now becomes relatively easy by inspection and tagging key attributes and capturing their values for items in that family. This new capability significantly changes the Return on Investment (ROI) profile for a part classification project in both money saved and the time to achieve those savings.

If we add to the variety savings, the additional savings, of up to 10%, that can be achieved by conducting a spend analysis programme which determines the “Should Cost” for parts in a family we can see that the classification focus on part cost reduction is well worth the effort from a financial and engineering perspective.