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by Dr. David M. Anderson, P.E., fASME, CMC Build-to-Order Consulting www.partstandardization.com Cost Reduction Strategy (home page) SeminarsConsultingArticlesBooksSite Map
In mass production, economies of scale are realized at the product level. In Lean Production, Build-to-Order, and Mass Customization, economies of scale are realized at the level of part and raw materials.
Standardization supports the fundamental precepts of build-to-order and mass customization: All parts must be available at all points of use, not just "somewhere in the plant," which eliminates the setup to find, load, or kit parts. As a stand-alone program, standardization can reduce cost and improve flexibility.1 Standardizationmakesiteasierforpartstobe pulled into assembly (instead of ordering and waiting) by reducing the number of part types to the point where the remaining few standard parts can receive the focus to arrange demand-pull just-in-time deliveries.Fewertypesofpartsorderedinlargerquantitiesreduces part cost and material overhead cost. The following practical standardization techniques are presented in all of Dr. Anderson's in-house seminars.Dr. Anderson is an experienced workshop facilitator who can help companies quickly implement standardization.
Eliminate parallel lines of parts (tolerance, strength, etc.) Investigate and optimize availability and sourcing Structure parts lists into some logical order Obtain feedback and concurrence from Engineering, Manufacturing, Quality and Purchasing.
Thisapproachdeterminestheminimumlistofpartsneededfornew designs and is not intended to eliminate parts used on existing products, except, when the common parts are functionally equivalent in all respects. In this case the new common part may be substituted as an equivalent part or a "better-than" substitution, where a common part with a better tolerance can replace its lesser counterpart in existing products. EvenifpartStandardizationeffortsonlyapplytonewproducts,rememberthatinthesedaysofrapidproduct obsolescence and short product life cycles, all older products may be phased out in a few years.
STANDARDIZATION RESULTS
ThispartstandardizationprocedurewasimplementedbytheDr. Anderson at Intel's Systems Group. Starting with 20,000 parts for printed circuit boards and computers, this standardization approach generated a preferred parts list of 500 parts, which is 2.5% of the original! For resistors, capacitors, and diodes, 2,000 values were reduced to 35 values (less than 2%). Fastenersforcomputersystemswerestandardizedononescrew!Thisishowthestandardizationprocess worked: Service wanted a Phillips head so they, and customers, could keep using the same tools. Quality wanted a captivated crest cup washer to protect surface finishes and yet still have a locking effect. Engineering wanted the 632 size screw to be only a quarter inch long. Manufacturing recommended that the screw be three-eights of an inch long so that it would not tumble as it was fed to auto-feed screwdriver. PreviousdesignshadsomanydifferentscrewsthatManufacturingcouldnotusetheirauto-feed screwdriver at all. The next design used the standard screw in 40 locations. This, and the correct screw geometry, made use of the more efficient auto-feed screwdriver practical. In order to feed the screw, it had to be one eighth of an inch longer, but this meant that the screw would protrude beyond the fastened material. This violated a workmanship standard prohibiting such protrusions; some people even thought the standardization was doomed. But the workmanship standard was modified to allow the protrusion as long as it did not pose a safety hazard or compromise product functionality in any way. Intel'senforcementgoalwasnot100%,asmightberequiredforatotallyflexibleoperation,butwefeltthateven 95% usage would result in significant material overhead savings. Ingeneral,itshouldbepossibletogenerateapreferredpartslistthatis2to3percentoftheproliferatedlist.For very standard parts like fasteners or passive electronic components, it should be possible for the preferred parts list to be less than 1 percent of the current list.
EFFECT ON SUPPLIERS
Standardization of parts helps part suppliers rationalize their product lines and allow them to: C reduce their overhead costs and subsidies, which allows them to be more cost competitive C improve their operational flexibility, resulting in better delivery. C simplify their supply chain management, C free valuable resources to improve operations and quality, implement better product development
practices, and introduce new capabilities like build-to-order & mass customization.
STANDARDIZATION BENEFITS
C Cost Reduction
Purchasing costs reduced through purchasing leverage Inventory cost reduction Floor space reduction BOM/MRP/ordering expense avoided when common parts are simply drawn as needed from spontaneous resupply Overhead cost reduction
C Quality:
C Flexibility:
Eliminating setup Inventory reduction Simplify supply chain management Internal material logistics Breadtruck deliveries Flexible manufacturing
C Responsiveness:
Dr. Anderson is a California-based consultant specializing in training and consulting on build-to-order, mass customization, lean/flow production, design for manufacturability, and cost reduction. He is the author of "Build-toOrder & Mass Customization, The Ultimate Supply Chain Management and Lean Manufacturing Strategy for Low-Cost On-Demand Production without Forecasts or Inventory" (2008, 512 pages; CIM Press, 1-805-924-0200, www.build-to-order-consulting.com/books.htm) and "Design for Manufacturability & Concurrent Engineering; How to Design for Low Cost, Design in High Quality, Design for Lean Manufacture, and Design Quickly for Fast Production" (2010, 456 pages; CIM Press, 1-805-924-0200; www.design4manufacturability.com/books.htm). He can be reached at (805) 924-0100 or andersondm@aol.com; web-site: www.build-to-order-consulting.com. References 1. David M. Anderson, "Build-to-Order & Mass Customization, the Ultimate Supply Chain and Lean Manufacturing Strategy for Low-Cost On-Demand Production without Forecasts or Inventory," (2008, 512 pages, CIM Press,1-805924-0200; www.build-to-order-consulting.com/books.htm); Chapter 4, "Standardization of Parts," and Chapter 5, "Material Variety Reduction." For more information call or e-mail: Dr. David M. Anderson, P.E., fASME, CMC www.HalfCostProducts.com phone: 1-805-924-0100 fax: 1-805-924-0200 e-mail: andersondm@aol.com Cost Reduction Strategy (home page) SeminarsConsultingArticlesBooksSite Map