Monday, January 20, 2014

Product Design and Supply Chain

      Surprisingly the topic of product design and its effect on the supply chain for the product has received very little attention.  It is estimated that anywhere between 70-80% of a product's whole life cost is decided at the initial product design stage. Factors that play into this estimate include the number of components, commonality of parts across portfolio, lead time of materials, physical characteristics of the product, and country of supply. As companies continue to rely on product design as a source of differentiation in a competitive market, the design gets more and more complex. This has a major effect on supply chain due to cost, global sourcing, and off shoring.
     A great example of failure to incorporate supply chain into product design and its effect is the case of Boeing 787. The failure of Boeing to deliver this new line of planes on time and on budget was due to its design which required the the best material from the best manufacturers. This simple requirement put a heavy burden on the supply chain and unfortunately it could not deliver.
     To mitigate the possibility of a Boeing 787 disaster companies need to bring the supply chain and product design team together on the same page. This allows for the product design team to design a product that will make the supply chain more agile, thereby enhancing the possibility of the product being made on time and under budget.
      Question: What can companies/organizations do to facilitate a spirit of easy communication and transparency between product design and supply chain for the long run?


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