Sunday, September 16, 2012

Design for logistics (DFL)

This is a strategy in supply chain management which involves product design to reduce logistics cost. A quintessential example of design for supply chain is Soda Cans. In 1957 Soda Can manufacturers switched from cone top soda can to flat top soda can, the cans became easier to store, stack and transport. This resulted in tremendous cost savings for the industry [1].
It has three components:
  • Economic Packaging and transportation 
    • Product design should facilitate easy to ship and shelf. Example Rubbermaid design that fits Walmart’s 14x14 shelf.
    •  Product should be easy to pack and track. Example IKEA’s disassembled and flat packaging strategy.
  • Concurrent and parallel processing
    • The manufacturing process should be designed to perform steps in parallel to save lead time and lower inventory cost.
  • Standardization
    • Achieve standardization of parts by using common parts for many different products. Similarly for procurement we can use standard processing equipment for several products.

One good example of DFL is HP Printer, Model DeskJet 1200C. HP involved the package engineering and logistics team in product design phase to help devise strategies to reduce cost of packaging, shipping and warehousing. 
The packaging team researched on optimal product size and strength. It found that HP could save a lot of money if the product length was under 19 inches, product is strong enough to handle 50g shock at a specified velocity and if the media trays are made customer installable.

So, the following steps were taken to achieve logistics cost savings:
  •          Incoming kits of parts were created. This would help reduce number of parts ordered, shipped and stored.
  •           Packaging material of top case kit were reused for shipping printers to HP distribution centers and then also reused for shipping printer to customer. Reusable packaging also helped reduce trash disposal.
  •           By setting product strength at 50g, helped designers to focus to strong products. This resulted in huge cost savings of the order of 50% compared to other HP printers by reducing the thickness of package cushioning wall and allowing designers to use low cost material for packaging cushioning.

Therefore design for logistics is a crucial component in supply chain management. It is not just a mechanism to save costs but is being consistently used as a  strategic weapon to gain competitive advantage.

Question:
Are their instances in history where product design for logistics compromised product functionality?

Sources:
3.  HP DeskJet 1200C Printer Architecture: http://www.hpl.hp.com/hpjournal/94feb/feb94a8.pdf


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