[Up] Build-to-Order & Mass Customization [Rationalization]
Usually consulting on Product Line Rationalization consulting begins with discussions on product variety. In most cases, clients will have to do some research to find sales data over time. With this data, Dr. Anderson will help clients:
C Analyze production histories of all products with special scrutiny on replacement products and any products with low volume, infrequent demand, and high overhead cost (reported or not).
C Conduct surveys of manufacturing personnel to identify products that, in the opinion of the respondents, are incurring more overhead cost and resources than we think.
C Identify products that can be immediately eliminated and outsourced.
C Identify money saved and resources free from rationalization.
C Analyze current and potential processing steps to evaluate candidate product groupings that could eventually all be made without setup in batch-size-of-one. This includes material resupply, machine setup, downloading CNC programs, fixturing parts, changing materials, and finding and understanding instructions.
C Structure products into meaningful product families to support lean production, BTO and mass customization. Look for any family that corresponds to one customer or industry. Converge on best-case product family grouping plan.
C Identify products that do not fit into any product family. Estimate total costs and true profitability on these with a general model that estimates setup and other costs based on batch size, setup time, and build frequency. Obtain sales, marketing, and discrete customer feedback on tentative proposals to drop or outsource products. Reevaluate those which might appear to have value to the product line to either (1) stretch potential process flexibility to include them or (2) propose outsourcing, which could be a niche product Emerson plant or an outside outsourcer. Identify the remaining products for recommendations to be eliminated. Investigate any salvage value of dropped products for licensing or sale. Estimate savings and benefits to resource availability, other improvement programs, total costs, and the bottom line.
C Investigate substitution list for alternatives to rationalized products or products to be discouraged.
C Investigate opportunities to redirect liberated resources to improve remaining products with respect to performance, cost, and sales.
C Investigate any trends regarding quality problems on older products that are built infrequently in low-volume. Summarize cost of quality and throughput implications. Single out worst offenders for elimination or corrective action, such as redesign of the product or manufacturing processes.
C Propose steps to educate and hand-hold customers through ensuing transitions, explaining reasons for product eliminations and price changes (to rectify money-losing production). Point out how the remaining products will now be available at lower cost and better delivery.
C Identify opportunities for producing families of standard product in a spontaneous build-to-order environment and custom products through mass customization.
C Investigate opportunities for standardization of parts and raw materials.
C Investigate processing improvements necessary to be able to process product family groups more flexibly. Prepare estimates of cost of improvements in capital, calendar time, and human resources, including how much of the human resources will be freed up by eliminating high-overhead products. Estimate immediate and long term savings and benefits. Prioritize opportunities.
C Investigate impact and contingency plans for interim production of product families in existing batch-oriented operations. Add this impact assessment to help prioritize manufacturing improvements and rationalization activities.
C Speculate on competitive advantages from rationalization and competitors offering only cash cow products.
C Present recommendations for products to be dropped or outsourced, product family groupings, and a range of processing improvements to improve processing flexibility. Decide on implementation.
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Dr. David M. Anderson, P.E., CMC