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News from PDSS Inc.
"Leading the Future in Product Development" 
May 2011- Vol 4, Issue 5
In This Issue
Cost Justification for Doing DFSS
Greetings!  
This month,  Skip Creveling, President of PDSS, talks about the reasons for investing in DFSS. We hope to expand on this topic in future newsletters to help our readers understand the benefits of improving their product development processes with Design for Six Sigma methods.
Happy Spring!
-Carol

Cost Justification for Doing DFSS

For the 15-plus years I have been consulting  and teaching DFSS (Design for Six Sigma) and its derivatives for technology and product development, many prospective clients have asked me THE BIG Question: Can you demonstrate the ROI (return on investment) of implementing the methods you propose? If the prospect has implemented Lean Six Sigma, they can show you how much money they are saving by applying the DMAIC (Define-Measure-Analyze-Improve-Control) problem-solving method to their process problems, waste and outright crises, but the advantages of
product development using DFSS include revenue enhancement and cost-avoidance.

 

Barriers to Justification

 

One difficulty is that reliable data on the issues associated with these justifications is not readily available. This presents a challenge when comparing DFSS-enabled development projects to those of the past on a financial basis. What are the costs of slipping the schedule, overrunning cost estimates, losing brand reputation? What are the costs of failing to define clear VOC (Voice of the Customer) targets and tolerances and a product is launched to harsh criticism and rejection? How about money left on the table because NUD (New, Unique, Difficult) features and functions weren't developed that would have commanded a higher price?

 

DFSS-enabled development, when properly practiced, will have a positive impact on these four financial elements:

 

1.   Increase revenue

2.   Increase margin

3.   Decrease cost

4.   Decrease waste

 

Where to Begin

 

For all who ask THE BIG Question, the following is a list of why and how DFSS or DfLSS (Design for Lean Six Sigma), Lean Design or Design Excellence (it has various names in many corporate cultures) can be a reasonable investment for an organization.

 

Characteristic of DFSS Practice

Financial Opportunity

1.   Proactive focus on problem prevention during product development

         Save the time and money invested in "Build-Test-Fix" cycles (if severe enough, this can also result in reduced morale, and thus reduced productivity and increased employee turnover)

 

2.   Using VOC, define, with confidence, product requirements and features that have high value to customers, also known as NUD (New, Unique, Difficult)

         Optimize product pricing models

         Opportunity to charge higher prices and increase margin

         Direct the ad budget to emphasize the high-value features

 

3.   Focus on the entire product life cycle from the product's inception, through the use of concurrent engineering and Design for X methods

 

         Better forecasts and control of life cycle costs, e.g. production, distribution, service

         Avoid scrap and rework costs

4.   Systematic development of product robustness, long-term capability and reliability within and across product and product families through CPM (Critical Parameter Management)

 

         Design and control costs of warranty, liability and recalls

         Increase brand reputation

5.   Development of tunability in technology platforms to enable cost-effective re-use and modular design

 

         Generate multiple revenue streams via highly leveraged technology and product platforms

6.   Identification and elimination of potential design defects and excessive sensitivities in both the product and production processes

         Prevent scrap and rework costs

 

Which things in the right-hand column are issues or problems for your organization? Do you suspect (or know) that your organization's performance is below your industry standard in any of them? Are they long-standing problems? How visible are the problems? That is where your business case begins. How much is it worth to obtain better results?

 

You need to be prepared to illustrate, with examples, how the applications of DFSS will contribute to (or alleviate) the issues of concern.  You have a story to construct and these building blocks will help you frame out yours.

 

DFSS Implementation is Not All or Nothing

 

Note too, that the investment in DFSS is on a continuum; it does not have to be all or nothing. For example, 3M and Cummins Engine are creative and disciplined companies who applied DFSS widely and deeply to help grow their top line. But DFSS techniques can also be applied to just one specific problem in a product development project with spectacular success, which may justify further investment in it.

 

Product development is one of the most challenging of business processes to master, and the need for continuous improvement never ends. DFSS is an effective form of problem prevention and, when applied with reason and discipline, will add to the top line - you just have to ask the right BIG Questions.


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.

Copyright 2011, PDSS Inc.
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