Design for Supply Chain

Nine cutting-edge strategies that will change the way your company designs new products and transform your supply chain


Also, the earlier suppliers can be provided with demand forecasts on a P/N level, the greater their capacity to reserve production capabilities to meet demand and avoid the need to expedite. Finally, engineering changes should be evaluated for their overall impact on the supply chain. This is especially important when considering heavier components that will have larger premium costs when expediting. Engineering changes later in the design process also make it more difficult for suppliers to meet demand forecasts.

4. Design for Life Cycle: Product should be designed to be supply chain friendly to potential component or infrastructure changes through its lifecycle. These include events such as small improvement to product design, cost improvements or commodity/technology/infrastructure advances. PDTs should determine which of the product's components are likely to be changed throughout the product's lifecycle and facilitate eventual change with minimum impact in the supply chain. After deciding on the changes that are likely to occur, PDTs should structure the product so that changes can be implemented with minimum disruption to the supply chain.

It is also important for product design to proactively transition out old technology while introducing new technology. Extended technology transitions add complexity and can be very expensive when the older technologies become hard to supply. The product design must consider forward and backward compatibility — not just from a customer viewpoint, but also for component parts in the supply chain. Design teams should develop risk mitigation plans for low-volume parts to avoid excess inventories or reduced service levels when the technology is going end-of-life.

5. Configure the selected Supply Chain: The role of a cross-functional product development team should include selecting and configuring the supply chain, but not creating one. Supply chains need to be established based on the company's strategic network plan, not individual products. Market requirements (i.e., volume, complexity and customization) are key factors in the best choice of supply chain.

There are several important considerations for supply chain selection. First, PDTs should determine if the product best fits the run rate (high volume) or the enterprise (high complexity) model. Second, design should determine what is unique about the product when compared to the attributes of other products using the same supply chain model, and configure the supply chain to address product specific requirements. Third, PDTs should specify the geographic distribution of customers and how cycle time and inventory targets will be achieved. Fourth, design teams should critically decide how many (few) options will be required with the product. The ultimate in postponement is for customers to enable a product to meet their specific needs. Fulfillment of options that go with the product need to be developed to minimize supply chain complexity. The final selection consideration is if and how a product will transition between different supply chains to maximize profitability for the start-of-life, mid-life and end-of-life.

6. Design for Demand & Supply Planning: Designs that leverage DfSC techniques include commonality, modular design, universal function and postponement "pool demand" requirements. Pooling requirements on a common component reduce variability and improve the ability to accurately forecast demand during lead time. Reducing part count is desirable, but when attach rates are low it may be best to use postponement. Another consideration for demand/supply planning is bundling hardware and services/terms and conditions could be unbundled. Since services and terms and conditions (T&Cs) are not planned, bundling them with hardware creates complexity for planning. Rather than bundling a product with predetermined services, infrastructure systems should enable the addition of the right services to hardware and software to be postponed until the end of the manufacturing process in order to reduce complexity and give customers more flexibility in choosing exactly which services they desire.

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