24 Common design problem solutions using Product Standardisation
Design problem(s) can affect the profitability and efficiency of the business. This article looks at 24 design related problems which can be improved using product standardisation principles.
The Business of Product Standardisation
Product standardisation is often a misunderstood term and many people cast out the idea because they believe it means restricting options to a few distinct designs and variations. This is a common misconception as product standardisation can and should provide a full range of product sizes, options, features and functionality to meet both customer and business needs.
Product standardisation can address many business-related problems by eliminating wasted effort, irradicating selection and design errors and providing an efficient way of managing both products and business processes. The following paper considers 24 business problems which can occur in a manufacturing company which does not have a strong focus on product standardisation, each problem is followed by a short explanation of why product standardisation can eliminate these problem areas.
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- Do standard products require engineering before manufacturing can begin?
- Is engineering is seen as reactive, not proactive?
- Do errors occur when issuing standard products?
- Is product information difficult to locate?
- Are standard product costs estimated not actual?
- Do products fail to fully integrate?
- Are Products continuously improved, or are they static?
- Are products copied from previous projects?
- Do Sales need to wait for product definitions?
- Are product rules adequately communicated?
- Are margins always achieved?
- Do quotations get completed within minutes?
- Does Sales information get routinely challenged by Engineering?
- Is your time to market acceptable?
- Does your company have time for innovation?
- Do bottlenecks in Sales or Engineering occur?
- How fast can you respond to change?
- Does your company waste time writing documentation?
- How valuable are your design engineers?
- Are component volumes affecting profitability?
- Does the company feel obliged to add a contingency to standard part costs?
- Does your company suffer from low order conversion rates?
- Can you quickly and accurately manage a change in material or finish?
- Will high-cost processes impact product margins?
Manually engineering standard product derivatives at the time of order adds cost, time and the likelihood of error. Product costs will be less well defined and other engineering tasks can often be delayed awaiting product definition, adding to project uncertainty and complexity.
Standard products should be fully defined regardless of complexity, features, or customer driven parameters. A product review must identify the scope of the product including derivatives, features, options, and variables. Once fully understood the product can be fully defined preferably using a modular structure sharing many common features and parts. Standardising products in this way reduces engineering effort in both sales and engineering processes.
Queues can often occur whilst waiting for engineering to define products which result in management time to juggle resources to make most effective use of teams and overcome bottlenecks. If engineering effort is largely used for processing standard products, this is a grossly inefficient use of time.
By ensuring that standard products are fully defined in advance and work together with dependable results, engineering work can focus on adding value to the overall solution. Product definition should be achieved in advance, in a systematic and logical manner without competition with order book deadlines.
Errors occurring in the issue of standard parts or assemblies are costly, they lead to delays, rework, loss of creditability and poor morale throughout the company. Rework from these errors naturally takes a high priority and impacts workflow in other areas of the company. Without fully defined products; change procedures have a little lasting impact and future product problems are likely to recur.
Errors in the definition of standard products are completely avoidable. Standard products can and should be fully defined in advance. Whilst this may seem a costly and time-consuming process completing product standardisation will reduce cost, bottlenecks and increase customer and staff satisfaction.
Where does the full definition of the product exist? Is some the information in Sales, Engineering or Production? Perhaps key individuals hold onto useful data, or information is buried in old projects or archives? It’s no wonder that defining a standard product is a painful and time-consuming job with variable results.
Product information should be centralised and available to all authorised personnel. This is valuable intellectual property and should be regarded as an investment and valuable business asset. Having a single, well indexed and accessible standard library will allow new personnel to quickly understand how the product works and will greatly reduce time to become effective. Centralising information will ensure the data can be easily backed up and secured.
How accurate are your standard product costs? Are these costs based upon actual costs or are they estimated? If standard products are not fully defined it is highly unlikely that costs will be accurate. Many companies are known to add an annual inflationary adjustment to their cost base in the hope that such an adjustment will maintain profitability. After years of such adjustments costs are unlikely to reflect actual costs. Understanding the cost of a product is essential if the company is expected to make informed commercial decisions.
The cost of every standard product should be fully defined. Costs can be linked to standard parts and sub-assemblies. A system of standard costing is preferred over dynamic, last paid costs as these can be volatile depending upon the nature of the product. Either way, the product costs should be continuously monitored and adjusted to ensure they remain accurate.
It is frustrating to Sales and management when Engineering explains that a feature previously used cannot be easily incorporated in the current project? This statement is probably supported by an extensive list of technical reasons and justifications.
Products can and should be structured in a way that the complete range fully integrates. This often results in fewer components being used, reducing product complexity and production costs.
Product development is seen as a major time-consuming exercise which can require a major investment of resources. A lack of product development, however, can reflect on falling profitability and poor customer perception.
Product development should be a continuous incremental improvement of the product, which is far more achievable when the product is fully defined and modular in construction. Most product development will be incremental and involves making small improvements in the design that collectively and over time leads to significant overall improvement.
Basing standard product designs upon previous project definitions is fraught with danger. Short-term benefits are quickly replaced with recurring quality problems and systemic errors as problems and defects are recycled. Elaborate change procedures are often employed to correct archived information but are rarely effective and mask an underlying problem that the product standards have not been fully defined.
Standard products should always refer to a standard library, which is a single repository where all product definitions are located. This library should be carefully managed to ensure all product features, options and derivatives work together as an integrated product family. Project definitions should be achieved “as-built” and provide a reference for goods supplied but should never be used for defining future products. In this way, products will always be based on controlled accurate data and incorporate the latest changes.
Sales teams need to react quickly, and their efforts can be frustrated by the need to wait for engineering to prepare standard product arrangements. These product details can often frustrate the quotation of larger high-value proposals.
Standard product definitions, arrangements, and details should be made immediately available to the Sales team. Ideally, this information should be available dynamically using a product configurator where sales engineers can see real time the effect of product selection on the overall system or quote.
The rules governing the selection and use of standard products are often complex and have far-reaching implications. Often these rules are known to key individuals and this knowledge is closely guarded and rarely shared unless prompted. Unless these rules are embedded in the product definition and freely available to all involved there is a high probability that product selection errors will occur.
Product selection rules should be readily available in the standard product library. Product definitions should alert the user that rules are available and should be applied. Ideally, a product configurator will automatically apply these rules in the selection and configuration of a standard product.
Most companies can record and manage project costs but find it difficult, if not impossible to determine product margins and to make informed decisions regarding products, their pricing or ongoing product management.
Product cost performance should be available for every manufactured product, and ideally, the granularity of cost information should extend to sub-assemblies within specific products. This allows informed decisions regarding pricing strategies and allows accurate information to be used in sales when calculating product sales margins. There should be minor variation in the “as-sold” and “as-built” margins. A cost database should be linked to standard product definitions.
How long does it take to prepare a product quotation? For many companies preparing a product, quotation can take days of work. It is not unusual for sales to request information from suppliers, engineering and production departments. It can take days if not weeks to collate information to enable a quotation to be written. The quotation is often generated by hand, written then submitted for approval before issuing, all adding to the cost and delays in responding to a customer.
It doesn’t need to be this way. Quotations can be prepared within seconds using a product configurator that refers to well prepared standard product data. The quotations will be prepared in a format and style that reflects the companies brand. There will be less requirement for approval because the data used has already been approved by the company. The customer will receive information which is accurate, clear and delivered on time. The company has negligible processing cost, can support more customers and focus more time on providing innovative solutions.
The sales handover process is often a hotbed of disagreement. It is not unusual for engineering teams to challenge information provided by sales as incomplete or inaccurate. Assumptions are often challenged, omissions highlighted, or costs rejected. This almost certainly results in an immediate threat to the project margin and interdepartmental friction.
It is Engineering’s responsibility to prepare product standards that can be used by Sales teams. Providing excellent quality information ensures that information is both accurate and consistent. Sales handover meetings can then focus on how to add value for the customer in terms of overall project and service.
How long does it take from the receipt of a customer order to issuing the product for manufacture? Whilst this is dependent upon many factors, product definition should not be one of them.
Standard products of any configuration should be immediately available to be issued for manufacture. Detailed drawings should be already prepared or available at the touch of a button. Purchase specifications, bills of materials and data sheets also immediately available. Ideally, a product configurator can provide this data automatically to match the configuration.
Many companies are so busy processing standard products that there is little or no time available for innovation. Without innovation a company will stagnate, competitors will catch up and overtake. Product innovation is essential for a business to grow or maintain market share.
Product standardisation allows a company to redirect valuable engineering resources to innovate new and improve existing products. Engineers will start to think proactively about the future products and services which add value to the company and their customers.
Spending excessive time on quoting or specifying standard products can lead to bottlenecks in both Sales and Engineering. Bottlenecks quickly propagate through the company and can cause massive fluctuations in workload.
By eliminating the need to engineer standard products at the time of order can contribute significantly to the reduction in bottlenecks. For this to be achieved sufficient resources need to allocated to product standardisation.
Change can come from many various sources, but how quickly your systems respond to this change will impact workflow, cost and creditability.
Product standardisation can be a considerable help to negate the impact of change by giving immediate availability to alternative design definitions. Using a product configurator, this process is accelerated even further, whereby new quotations and product specifications can be produced at the touch of a button.
Many companies spend an enormous amount of time producing documentation for standard products. This information may consist of process documents such as P&ID’s, I/O lists, instrument lists, process definitions, electrical drawings and schematics, pneumatic circuits, data sheets, operating and instruction manuals, risk assessments and compliance documentation and many more documents.
With a product configurator, it may be possible to automate the production of every document written to support the standard product. This can radically reduce the time to market and the cost of generating each of these documents manually.
In many companies’ design engineers kudos is relatively low. Sales are often given credit for innovation, and the engineer’s contribution can be devalued to that of an expensive administrator.
Design engineers are too valuable an asset to be expected to arrange standard product derivatives. Engineers need to feel that they are adding value to the company and customer by being involved in the innovation of ideas, products, and concepts. By engineering standard products, engineers can be freed from the mundane iteration of product work and develop a new level of kudos in the organisation.
Manufacturing low volumes of parts are often less cost-effective than higher volumes.
Product standardisation can lead to higher component utilisation and lower costs. The product standardisation process should look to make use of fewer components with higher reuse. These higher volumes of parts give purchasing teams greater opportunity to predict part volumes, make better inventory decisions and negotiate lower prices.
Companies feel obliged to add a contingency to estimated costs. This is a very strong indicator that the product standardisation has failed and that a company has little or no control of its costs.
Product standardisation and a well-managed cost system should negate any need to apply a contingency to standard product costs. The system should be sensitive enough to alert management if costs vary outside agreed limits.
Low order conversion rates may be an indicator of many business issues, however, if the quotation of standard products is a costly and time-consuming process, the low order conversion rate can result in a major drain on company resources.
Product standardisation can radically reduce the time to quote products as information for every configuration will be readily available without the need to refer to engineering. Product configuration will further reduce the time to quote to provide virtually instantaneous quotations which are accurate and perfectly formatted.
Materials can have a major impact on the design and cost of products. Reflecting a change of material or surface finish can require significant estimation or extended time to refer to suppliers. This can add uncertainty, cost and time to either generating a sales quotation or project specification.
A well-designed standard product will have already incorporated design and cost data for all offered materials of construction or materials finishes. Using a product configurator, the impact of these changes can be virtually instantaneous and always 100% accurate.
The need to carry out a high-value process such as finite element analysis. Required to evaluate the strength of specific assembly can have a severe impact the cost of the project. In some cases, to avoid costs a decision may reduce critical work. Possibly increasing the risk of failure.
The best time to carry out processes such as finite element analysis is at the product design stage. Product standardisation encourages in depth analysis. This minimises the overall cost and provides valuable information in the products standards library.
Written by Peter Slee Smith, Edited by Jason Spencer – 20/04/2018
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