MÜY 691

New Product Development

Design for Manufacturing

and Supply Chain
Design for Manufacturing and Supply
Chain (DFM) Example

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 DFM

§ Design for X” (DFX) methods, where X may correspond to one

of dozens of quality criteria such as reliability, robustness,
serviceability, environmental impact, or manufacturability.

§ The most common of these methods is design for manufacturing

(DFM) because it directly addresses cost.

§ Although the acronym DFM emphasizes manufacturing, the

broader implications of design on the entire supply chain,
including the logistics associated with getting the product from
the factory to the consumer.

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 264 Chapter 13

EXHIBIT 13-2 Proposed

The design for Design
manufacturing
and supply
DFM Method
chain (DFM)
method.
Consider the
Strategic Sourcing
Decisions

Estimate the
Manufacturing
Costs

Reduce the Costs

Reduce the Costs Reduce the Costs
of Supporting
of Components of Assembly
Production

Consider the Impact

of DFM Decisions on
Other Factors

Recompute the
Manufacturing
Costs

N Good
Enough
?

Acceptable 3
Design
 Consider the Strategic Sourcing Decisions
Make-versus-Buy decisions and supplier selection, including the
geographic location of production and assembly

1. Supplier Arrangements
§ Full vertical integration
§ Final assembly only
§ Orchestration of suppliers
§ Contract manufacturing
§ Engaging an original design and manufacturer (ODM)

2. Location Decisions
§ Factor prices
§ Capabilities and ecosystem
§ Duties
§ Transport cost
§ Other factors 4
 Estimating the Manufacturing Costs

Cost of Goods Breakdown

COST OF
GOODS

Factory Logistics
Costs Costs

Overhead
Components Assembly Freight Duties
(& Profit)

Equipment Indirect (Supplier

Standard Custom Labor Support
& Tooling Allocation Profit)

Equipment
Raw Material Processing Labor
& Tooling

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Estimating the Manufacturing Costs
The Bill of Materials

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Estimating the Manufacturing Costs
Estimating the Costs of Standard Components
§ Comparing each part to a substantially similar part the firm is already
producing or purchasing in comparable volumes
§ Soliciting price quotes from vendors or suppliers

Estimating the Costs of Custom Components

§ Raw material cost (allowing some scrap rate)
§ Processing cost (labor cost)
§ Tooling cost
§ Supplier overhead and profit

Estimating the Cost of Assembly

§ Assembly operations
§ Assembly time
§ Labor cost

Estimating the Overhead Cost

§ Overhead rates (also called burden rates) 7
 Reduce the Costs of Components
1. Understand the Process Constraints and Cost Drivers

2. Redesign Components to Eliminate Processing Steps

3. Choose the Appropriate Economic Scale for the Part

Process

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 Reduce the Costs of Components

Total cost of a hypothetical part as a function of the number of units

produced for injection molding versus machining
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 Reduce the Costs of Components

4. Standardize Components

5. Adhere to “Black Box” Component Procurement

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 Reduce the Costs of Assembly

1. Integrate Parts
§ Integrated parts do not have to be assembled
§ Integrated parts are often less expensive to fabricate than are the
separate parts they replace∙
§ Integrated parts allow the relationships among critical geometric
features to be controlled by the part fabrication process (e.g., molding)
rather than by an assembly process

2. Maximize Ease of Assembly

§ Part is inserted from the top of the assembly
§ Part is self-aligning
§ Part does not need to be oriented
§ Part requires only one hand for assembly
§ Part requires no tools
§ Part is assembled in a single, linear motion require only a single, linear
motion for insertion
§ Part is secured immediately upon insertion
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Reduce the Costs of of Supporting Function

1. Minimize Systemic Complexity

2. Error Proofing

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 Reduce the Costs of of Logistics

§ Partial disassembly, folding, or compression

§ Minimum carton size

§ Limited or no packaging

§ Delayed final packaging

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Consider the Impact of DFM Decisions on
Other Factors

DFM decisions can affect

§ Product development lead time
§ Product development cost
§ Product quality

Trade-offs may be necessary between

manufacturing cost and these
equally important broader issues.

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