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Design for Supply Chain

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Design for Supply Chain SJRATi.GY PROCESS VALUE Spreading the Word Across HP hcscdius. there is o^rowiti^i acceptance (il ing products with the suppK chain in mintl. We see more articles and success stories tout- ing the importance and impact of the "design For several years, Hewlett-Packard (HP) for sLippiy chain" (DfSC) eoncepl. Furihcr. the DfSC approaches themselves—such as variety has run a design for supply chain (DfSC) management, logistics enhancement, common- program aimed at bringing supply chain ality and reuse, postponement, tax and duty reduction, and take- cost considerations to bear on product hack lacililatlon—are fast becoming staples of todays business vocabulan.' As multinational corporations adapt to increasingly design decisions.The program has been global supply chains, product design decisions are affecting their an unqualified success.To date, DfSC sLipply chain costs and efficiency to an unprecedented degree. efforts have resulted in aggregate cost Despite the growing attention, however, many large man- Lilacturers are still a long way from making DfSC an integral savings that exceed $100 million. |iart ot their product-development and product-management Here's a look at how design for supply missions and processes. There are many circumstances where cbain best practices are diffused managers may see some value in practicing DfSC. But other constraints-—limited time, scarce personnel resources, or lack of throughout HP lamiliarity with the benefit.^ of DfSC. for instance—stand in the way. \ he challenge lies in the diffusion of re.sponsibility Supjily chain cost savings are rarely reflected in the [lerlormance score- By Brian Cargille and Chris Fry card of a design engineer or marketing manager. New [iroduct introduction teams are already overwhelmed with directives to Brian Cargille is the Asia Pacific Japau "design for X," and the\ prioritize their scarce resources to meet manuger of Strategic Phntiiiiig ami Modeling increasingly stringent cost and performance objectives, it is cru- lit Hi'u IL-lt'Packard Co. and was jtirttterty cial to find ways to ensure that professionals across functional tlw compmi) 's uorMwide Design for Supply areas understand and act on the DISC principles. Cluiiii prograni manager. Chris Fn is founder Our experiences at Hewlett-Packard (IIP) have shown that and president of Strategic Management there are effecti\e ways to spread DISC' best practices. Ilia's Solutions, a management considlancy. design for supply chain efforts hegan in (he early l'-)9()s with a few visionaries making innovative decisions for their |>rotiuct lines, Project-by-projeet DISC' elTorts haw reduced material, inventory, and logistics eosts LIS well as in improved serviee lo customers. In 2001, we hegan asking, "How can we harness and 34 SL'I>I>I \ (. II VI \ \1 \.\.\(;L 1 RiEV nivv • i V7AL f,L s i 2006 diffuse this knowledge across the company?" With more than jiackaging groups knew they needed an even stronger part- 30 different product lines, facilities in more than 70 coun- nership lo reach their new goals. So they looked clcisek at tbe tries, and upwards ol 120,000 employees, it was far from e^isy. OfSC: techniques tbat bad been proven elsewhere at HP—in Yet we have successfully developed a formal process that has devclopinent of DeskJet and LaserJet printers, for instance. helped us spread hest practices across all our businesses. I hey improved the all-in-ones structural rohustness so tbat it could handle rougher handling with less padding. They The Story of the All-In-One Printer kept the unit small and cube-shaped to make hetter use of Ihe power of drawing together design-lor-supply-chLiin f)est container space. They stuffed the cahles and pens inside the practices that were developed aeross the company can he [irinter access door to further reduce final packaging size and seen in ilPs efforts to design a new all-in-one printer. In thus fit more units on a pallet. 2002, HP wanted to Uiunch an all-in-one printer at a price Otber enhancements enabled the generic printer to be comparable to thai of its existing low-end printers. Until to be sold in all of HP's markets hut configured for any lan- then, all-in-ones had sold well, hut they were relatively large, guage, managing variety while keeping assembly costs low. complex products. Soon, they would no longer be competi- The team employed old tricks such as using a 110/22()V uni- tive as inkjet printer prices dropped lower and lower. HP versal power supply. And it came up with some novel ideas. management set aggressive targets for material cost, assem- One example; shipping the all-in-one with a harcode lahel bly cost/complexity, and shipping expense; there was no slack that is scanned hy the user during startup. Tbe scan aetivates added to the launch sebeduie.- the unit's own software to configure the language tbat will laced with these constraints, our R&D, supply chain, and appear on its display, among other region-specific cbaracter- Javier RoiTiaro u v\ vv.stnir.com SLI>PI.V ti[ Rt\n-:\v • JULV/AL t;LS r 2006 35 Design the unit's ov\n sohware to conCigLire the language thai w ill successes. At I IP. we perform this education through the work appear on its display, among other region-specific character- done by our internal constiltants—-members of HP's Strategic istics, Witb tbose and a few other devi-lopmcnts. the team Planning and Motleling (SPaM) team^in partnership with met its goals, and the [iroducl has heen very suceessful, protiuct-iine managers, SLICCCSSCS are publicized iiUernallv to I be outcome ol tbis partnership is an example of the hest huild excitcmetit abotit the a|i|iroaches. By reeogni/ing and that DISC' has to olicr at IIP, Instead of reiving on a single- rewarding early wins, v\e luiiitf a [xisitive reinforcement mech- minded, aeross-thc-hoard ptish for one tyjie of improvement anism to generate Itirther interest, granting more responsihil- ity, additional resources, and a wider range of leadership opportunities to those who generate HP follows a well-defined, four step the w ins. process to develop and diffuse design for supply One story v\'e tell is about the motinting I . r 1 • I -I racks for HP's mid-rantic ser\'ers. When }W chain practices. It begins by proving the concept anti C"ompat| C'ompiiter merged some years ago, HP's siip|i!y chain managers lound (hat with early wins. the raeks on HP's ser\ers had round holes while those lor C'ompacj used square holes, sueh us commonality or postponement, different departmcn- That might nol seem to be a big issue, but it meant that the tal functions work together using multiple techniques in merged company had to order, stock, anddistribute 12 dit'fer- coneert so they can meet aggressive cost and schedule goals, ent rail kits for mounting scners to cabinet raeks—an unncc- 'Ihese techni(.|ues ha\e spread across all of HP's businesses, essary cost since the rack mounting did not matter to HP's including printing, personal computing, and ser\ers. customers. The eventual decision was to create H\c common rail kits for both families ol ser\'crs. The expeeted sa\'ings in A Four-Step Process materials and in\entory o\er the lilecycic of the prodticts: ,At 1 IP, we loliow a defined process (see b,\hihit I) to de\elop SM million. and dilluse design for supply chain practices,' We belie\e the lour-step process is generally applicable to other businesses Step 2: Formalize the concept. Torniali/ing the concept and other types of best practices. While each step is impor- in\()Kes making it easy to understand so it resonates with oth- tant to DfSC's diffusion, we vviN focus the second half of this L'rs, At HP, we came up with the "DISC' Si\ Pack" as a gra|)hi- article on an interesting and \aiuable process that is central cal rejiresentation ol the concept as a whole, (See fi,\hil)it 2 on to the (ourth step: what we call our "opportunity assessment" page XX,) Over the life of our program, we have redesigned the process. First, however, we review the overall diilusion pro- Si\ Pack se\eral times. Although we don't belie\'e it is periect. cess thai we iia\c usetl at fiP. the Si,\ Paek diagram pri'scnts j clear and tinderstandable mes- sage—something that has been marketable to a broati audience. Step i: Prove the concept with early wins. I his sleji I'ormali/ing tbe concc|Jt also ineltides developing eduea- in\ol\es demonstrating the viability of the concept tising earh lional materials stich as live courses, online training classes. success stories and developing collateral that summarizes the short case studies that we call "experience stories," and pub- . lisbed articles as a wav to establish I EXHIBIT 1 credibility and iacilitate knowledge Key Steps for Diffusing Best Practices sharing. Once tbe concept is clear Develop Collateral (not perfect, jusl clear), formalizing ihe jirogram can begin, I'or exam- (1) Prove the concept (2) Formalize (3) Formafize (4) Accelerate with early wins the concept the program adoption ple, tor DfSC!. we have iiroducetl • Use a combination of • Crystallize defniitiofis • Assign business owners • tJse metrics to identify more than 20 online and instruelor- business experts and and create incentives gaps in performance leil training moilules as wx'li as cal- internal consultants * Develop educational for success materials that identify • Conduct opportunity euiators and process guides tliLit are • Recognize and reward adopter concerns, • Establish metrics and assessments to help available on tiP's internal Web site.
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