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News from PDSS Inc.
"Leading the Future in Product Development" 
April 2011- Vol 4, Issue 4
In This Issue
Article Headline
Greetings!  
This month,  the disasters caused by the big earthquake in Japan have been in the headlines. Skip Creveling, President of PDSS Inc., discusses several issues raised by this tragedy. Our thoughts are with the Japanese people as they bravely cope with these problems.  
-Carol

Consequences of the Japanese Earthquake & Tsunami

 

Over the past few months I have been writing about the two topics of problem prevention and Critical Parameter Management (CPM). Since then, the world has watched in horror as Japan has been devastated by earthquake, tsunami and nuclear power plant problems. The two topics of problem prevention and CPM have a common component highly relevant to this crisis. That component is the cost of investment.

Problem Prevention and the Cost of Fail-Proof Nuclear Power

The earthquake in Japan was foreseeable, as was the tsunami and the loss of power caused by it. This domino effect was forecasted by the civil authorities in Japan. What they did not know was when and where the potential problem would take specific form and how severe it would be. The nuclear plants had contingency plans that were almost immediately overwhelmed by the domino effects. While the images we see of the vast wave of water consuming entire cities is terrifying, the less visible effects from the breakdown of the cooling systems within the nuclear plants is vastly more concerning.

Outright prevention of any significant loss of power to the cooling systems is now seen as an absolute requirement. If the nuclear reactors eventually melt down, that area of Japan will go the way of Chernobyl - uninhabitable for 100 years, not to mention illness and death from radiation poisoning. You either do not build the nuclear plant, or if you do, invest in absolute prevention of loss of power that is essential to cooling the fuel rods. The functions that cool and contain the radiation must be fail-proof.

The economic loss that Japan now faces is enormous. The cost of fail-proofing the power system to the cooling system pales in comparison. If these nuclear plants were essential to Japan's economy, even in the presence of inevitable earthquakes and tsunamis, then the expense of fail-proof designs was completely justified. Clearly what ever was invested was not sufficient.

There is no question that design and engineering of fail-proof systems can be done - even in extreme cases such as these nuclear power plants sitting on the earthquake-prone coast of Japan. The real question is why mankind consistently under-invests in prevention when the risks are very clear and likely to materialize into severe outcomes. As in the BP oil spill in the Gulf of Mexico, Hurricane Katrina in New Orleans, Bernie Madoff's Ponzi scheme, the subprime mortgage crisis and the space shuttle disasters, we can foresee these disasters forming and progressing but we consistently fail to notice the small build up of potentialities that ultimately result in massive losses of life and/or money. Why do we wait or procrastinate or under-invest? The phase "we know the cost of everything and the value of nothing" comes to mind.

Critical Parameter Management and the Supply Chain

Although less important than the immediate human suffering, the crisis in Japan has caused a problem for many who depend on Japanese firms in their supply chain. Most notable are parts and products associated with digital electronics and the auto industry. With expected shortages of these items, alternate sourcing is going to be a fact of life for the foreseeable future.

There are two aspects of a capable product design being built up from all the parts and materials from our supply chains. The first aspect is how "good" the design actually is. We can assess that using what I call "The Big 7" metrics from CPM. They are:

1.      Measurability

2.      Stability

3.      Adjustability

4.      Independence, Interactivity & Statistical Significance

5.      Sensitivity

6.      Robustness

7.      Capability

The second aspect is the production processes that make, assemble and package the components that are integrated into the product design mentioned above. The same metrics of CPM can be applied to the manufacturing equipment and processes that produce the parts and materials used in the final product.

Returning to the crisis in Japan, we must ask the questions "Are there alternative suppliers of the parts formerly obtained from Japanese suppliers?" "Are they going to be as 'good' as those that have been affected by the crisis?" "Are we in for a supply chain crisis?"

Here are some important observations about suppliers and product design:

1.      A good product design can be ruined by a poor supplier of parts.

2.      A poor product design cannot be redeemed by a good supplier of parts.

3.      The same "good" design can be built from a mix of good and poor suppliers with the consequence of inconsistent product performance.

4.      Two suppliers can be radically different in how they make the same part.

5.      Two product designers can be radically different in how they design the same product: A good product design and a poor product design can have parts supplied by the same good supplier - the good supplier will enable the good design; the good supplier will not overcome the poor design.

You may read these five observations and say "These points are obvious". True enough. But until the lights of The Big 7 metrics of CPM are shined on both the product design and the processes that are used to produce the parts and materials in the design, suppliers will be selected for the wrong reasons.

This brings us to a point of confluence between the topics of Problem Prevention and CPM, and that is the Cost of Investment.

It seems to be human nature to be penny-wise and pound-foolish. We under-invest in problem prevention in high-risk endeavors, as in the nuclear plants in Japan.

We fail to assure that both our product designs and part suppliers are balanced and synergistically aligned around a common set of metrics that will assure the parts produced will support the product's performance. If we proactively develop a multi-sourced supply chain to absorb breakdowns in the supply of parts and materials, we must have a common standard that is not based upon our product specs. Rather, it should be a partnership of shared metrics that assure process-part-product performance is linked and in balance.

We are about to find out what parts from alternative sources than Japan will cost us in product performance. Let's hope the replacement suppliers will be advocates for applying The Big 7 to their production processes.

We are also going to find out what it will cost to build fail-proof nuclear power plants. Let's hope those who design them are good students of both problem prevention and CPM.

Is there a topic you'd like us to write about? Have a question? We appreciate your feedback and suggestions! Simply "reply-to" this email. Thank you!
 
Sincerely,
Carol Biesemeyer
Business Manager and Newsletter Editor
Product Development Systems & Solutions Inc.
About PDSS Inc.
Product Development Systems & Solutions (PDSS) Inc.  is a professional services firm dedicated to assisting companies that design and manufacture complex products.  We help our clients accelerate their organic growth and achieve sustainable competitive advantage through functional excellence in product development and product line management.

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