How important is it to properly manage your product's bill of materials? As a manufacturer, do you take the time to perform a substructure, or sub-assembly analysis in order to segregate your most common sub-components and incorporate them in future designs? Do you understand the importance of isolating commonality at the part and raw material levels in order to reduce inventory skews, counts, costs and manufacturing cycle times? If you’ve answered "no" to each of these questions, then this is a definite must read. Identifying common sub-components often holds the key to increased production throughput. So, what are the critical steps to performing a sub-assembly analysis?
The Benefits of Standardization Through a Sub-Assembly Analysis
When I first start working with a manufacturer, this is typically the first place I look. In fact, I am often able to decipher whether bill of materials management is a problem just by walking around the production floor.
One of the biggest issues I see is when manufacturers let their supply chain strategy dictate their part and raw material availability, when in fact, it's their manufacturing volumes, and customer demand, that must dictate their supply chain strategy and purchasing requirements.
That supply chain strategy is often predicated on trying to run JIT or “Just in Time”. Unfortunately, many of these companies have too large a product portfolio and don’t have the sufficient volumes, or economies of scale, to justify running JIT. In essence, they manage a product portfolio from “A to Z” and have small volumes across that portfolio. This is often the number one cause of poor bill of materials management and leads to companies having too large a product line, not enough oversight on their bill of materials, and not enough eyes at the sub-component level. The solution comes from using a sub-assembly analysis.
To learn more about JIT, please see: Choose the Right Supply Chain Strategy: Make it an Easy Choice
Performing a Sub-Assembly Analysis
The purpose of this exercise is to segregate the most common components, raw materials, parts and processes that should be the same for multiple products, but are not being called out within the products' bill of materials. In essence, it’s about incorporating more standard components within your finished goods by reviewing your bill of materials for multiple product lines.
To succeed means you must stick to the three “F’s” of product management & design – “Fit, Form & Function”. As long as standardizing the components within the finished good doesn’t change the product’s overall envelope, and doesn’t impact any of these three “F’s”, then it’s fine to proceed.
Fit: Does standardization change the fit or envelop of the finished good? Does it force other adjustments in other portions of the finished good? If not, then proceed with changing the product's bill of materials.
Form: Does standardization add unnecessary time in manufacturing, assembly, testing, inspection, or in shipping? If not, proceed with the change.
Function: Does standardization change the product’s operating window, its parameters in terms of performance, or does it have any impact on how end-users interact with the finished good? If not, proceed with changing the bill of materials.
Here’s an example of what a sub-assembly analysis would look like when comparing the components for two finished gear assemblies. While this is a fictitious example, it’s fairly obvious what the overall benefits are. By comparing the bill of materials between the two gear assemblies, the company is able to make a number of changes in order to come up with a more standard component list.
Change #1: The company standardizes its ridged gear sub-assembly and finds that a neoprene strap can be used on both finished gear assemblies, without affecting specifications or costs.
Change #2: The company decides to use standard lock nuts and carriage bolts because of their quicker assembly times. The changes do not affect performance in any way and helps to lower costs.
Change #3: The company switches to aluminum fin extrusions due to better heat dissipation. Increasing costs of copper material makes this change to aluminum a necessary and cost-effective decision.
Properly managing your bill of materials and production packages is an essential part of increasing your production throughput. The benefits of standardization are rather obvious. It reduces the number of inventory skews you must carry, increases your economies of scale by allowing you to purchase high volumes of more standard parts and raw materials, and finally, it simplifies your entire approach to production planning.
Most companies encounter these issues over time. What tends to happen is that companies do a poor job of tracking their standard parts within their finished assemblies. They continually reinvent the wheel. This often happens to companies who manufacture custom-made products and forget to incorporate standard assemblies in the initial design stage. The focus must be on using as many standard parts as possible in order to shorten the product to market lead times for all product lines.
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