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Sunday, January 22, 2017

Squeezing more ideas from product teardowns 01-22

Some companies are using product teardowns to dismantle silo culture in product development.

Engineers and purchasers love product teardowns—the practice of dismantling products into parts as a way to spark fresh thinking. Few manufacturers, however, elevate the practice above Skunk Works status, and many executives pigeonhole it as a tactical exercise in cost cutting. Some companies, however, are throwing open the doors of their Skunk Works labs and using teardowns as opportunities to increase cross-functional collaboration. Along the way, they are saving more money, capitalizing better on customer insights, and improving the revenue potential of their products.

Technophiles of all stripes love product teardowns—the timehonored practice of dismantling products to their constituent parts to spark fresh thinking. Yet few manufacturers get the full value teardowns afford. Many senior executives marginalize the practice, viewing teardowns as Skunk Works exercises for engineers  or cost-cutting tactics on the part of the purchasing department. Such views retard creativity and ensure that the ideas generated  in teardowns go unexplored, moldering in functional silos.

But some companies go further. This interactive explores marginimprovement opportunities from teardowns that we’ve identified in our research and examines how companies are rethinking  their approaches to teardowns to save more money, break down the silo mentality, and even improve the revenue potential of  their products.

Industrial: Redesign for lower costs A manufacturer of materialshandling equipment was developing a new forklift truck with the goal of minimizing  both its own manufacturing costs and the customers’ cost of operating the product. Recognizing that the vehicle’s weight was the key design factor (a lighter vehicle would require less fuel to run  and would have lower materials costs) the company’s R&D engineers conducted systematic teardowns of competitor’s products to study new design possibilities.

Meanwhile, executives brought in marketers, who learned that customers would indeed value the  lower cost of ownership—and reduced CO2 emissions—brought about by the new design, but they would be unwilling to pay a premium for them. This knowledge spurred the company’s engineers and purchasers to work together to reduce the weight of the new forklift truck by 7% (200 kg), while ultimately lowering manufactur- ing costs by 12% through a combination of design changes, sourcing from low-cost countries, “clean-sheet” costing, and other traditional approaches.

The resulting vehicle con- sumed 4% less fuel than  its predecessor and emitted eight tons less CO2 over  its lifespan—making it more appealing to customers.

Front-tire diameter reduced, and front axle moved closer to payload allowing for lighter counterweight in rear of vehicle

Engine, gearbox moved closer to rear of vehicle, shifting center of gravity rearward to support new counterweight Counterweight reduced, repositioned to support vehicle’s new center of gravity
Front-tire diameter reduced, and front axle moved closer to payload allowing for lighter counterweight in rear of vehicle

Changes in fan design  from blower fan to box fan: 35% cheaper

Elimination of metal base-plate on product’s  cart: 4% reduction in cost of cart

Integrated plug and fuse assembly: 12% cheaper; faster to assemble

Fewer printed circuit  boards (PCB): 14% reduction  in PCB cost

Self-tapping screws  versus threaded inserts:  50% cheaper

High tech: Break down silos A medical-products company planned a series of teardowns to improve the design of its therapeutic medical device. To generate new ideas, executives invited colleagues from purchasing, marketing, engineering, and sales to see how their product stacked up against four rival ones.

Seeing the products together was an “Aha!” moment for the purchasers, who quickly identified a series of straightforward design changes that, while invisible to customers, would significantly
lower the cost of manufacturing the device. Meanwhile, seeing the configurations of competitors’ circuit boards spurred the team’s salespeople, marketers, and engineers to discuss the manufacturing implications of the company’s modular approach to design. The engineers had long assumed that being able to mix and match various features after final assembly was advantageous and had emphasized this capability in the product’s design. Yet the salespeople reported that most customers hardly ever ordered more than a handful of modules at purchase and rarely ordered more after assembly.

The conversations ultimately led to simplifications in the product’s circuitry that lowered purchasing costs  by 23% and helped marketers identify a new customer segment where the product might command a higher price.

Consumer goods: Reduce packaging costs The use of product teardowns extends to a product’s packaging too. However few companies examine the cost of trade-offs implicit in their packaging decisions, much less look to their competitors for ideas. Such decisions tend to be the domain of
marketers, given the importance of packaging in communicating a company’s brand to consumers. Yet we have seen organizations reap considerable savings. One consumer goods maker we know reduced its packaging costs for a key product by 10% by making straightforward design changes that allowed it to use less plastic in manufacturing the product’s bottle.

In this example, based on McKinsey research into packaging and manufacturing costs in the European fast-moving-consumergoods industry, we highlight selected cost trade-offs associated with shampoo.

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