Bigger savings with Product Challenge

4 min read

Taking a fundamental approach to redesigning a product can produce enormous savings – dwarfing the type usually identified in ‘value engineering’ exercises

The challenge of reducing cost is constant. It is near the top of the list whenever a product is developed. But often, the need to physically launch a product – and get it onto the market, so that it can start earning revenue – can sometimes lead to a lack of cost control. “Cost is a big issue for people,” says Dan Flicos, managing director of engineering consultancy Sagentia. “But many products are developed in an environment where you are under time pressure to get it to market.” Once a product has been launched, it is then under pressure from competitive products – so one answer is to try to make the ‘next generation’ product more cost-efficient. One way is to chip away at the components, delivering incremental cost savings. Sagentia has developed a process – called Product Challenge – that takes a more radical approach to cost reduction. It delivers typical savings of 20-40% – but savings can be as high as 70%. “Product Challenge is about taking a fresh look at the product,” he says. “Part of the ‘challenge’ is in challenging the assumptions of the design approach.” It is achieved, says Sagentia, by questioning the fundamentals of a product’s specification, technology and manufacture – and by taking a system-level approach to its design. Some examples include: an aircraft cargo roller bay with a 36% reduction in part count and half the assembly time – leading to a 30% cost reduction; and an oxygen concentrator, which paid back its investment inside six months through Design for Assembly, reduced part count and reduced interconnections. When it was first introduced, Product Challenge was mainly to extend the lifetime of mature products by improving margins. Now, it is more often used on young products – some less than two years old. Sagentia says that these products may have been rushed to market, so must be redeveloped in order to address compromises in the initial design. Flicos says that the traditional ‘value engineering’ process looks at the supplier base, optimises component cost and aims to reduce costs by a maximum of 5%. This approach, he argues, only reduces the cost of parts of the design. Product Challenge intends to address the entire design. While any company could take this kind of ‘back to basics’ approach to a design – and rethink it completely – he says that Sagentia comes to the problem with some advantages. “We’ve usually been there and done it,” he says. “We can bring different industry sector experience – such as transferring medical to industrial – and have a broad technology perspective. Our teams can take a holistic approach.” He points to a simple example: one particular product used an accelerometer – a very expensive device that was “totally over-specified for the application”. Sagentia replaced it with a simple – and far cheaper – piezo device. Part of its ability to do this was the fact that it employs physicists – something that many engineering companies cannot do. The process begins with a ‘cost challenge’ review. “We create a cost model for the customer and look at data in different ways – such as the cost per function,” says Flicos. There is also a design for assembly analysis, to reduce part count and ease final assembly. This can include solutions such as transferring functionality from hardware to software. Often, different components are combined into one to reduce product complexity. A separate ‘performance challenge’ assesses the functionality of the product: could it be made better, but at comparable or lower cost? “One thing that many companies find difficult is to understand cost implications of the specification,” says Flicos. “Marketing will often ask for a specification with lots of features. We can help put specifications in terms of cost.” Meter reading One beneficiary of the Product Challenge approach was Invensys Metering Systems. The engineering giant is a leading manufacturer of water meters and automatic meter reading (AMR) systems. It needed to apply AMR to its multi-jet and single-jet meters, but realised these could not provide enough torque to drive its mechanical encoder registers. “For this reason, it wanted a low cost, non-contact means of reading the wheel positions – that was patentable,” says Flicos. Sagentia’s expertise in sensing systems allowed it to develop a new encoder solution that was compatible with the entire range of Invensys meters. It incorporated twice as many reader wheels – for nearly the same cost – as the old encoder technology. Sagentia looked at various possibilities before choosing its non-contact (inductive) solution – in which it licensed its own position measuring technology to Invensys. Each odometer wheel in the meter contains a tiny inductor and capacitor, forming an LC resonator – with each wheel resonating at a different frequency. A transmitter coil and a pair of receiver coils are wound around the wheel assembly. The transmitter coil energises each LC resonator in turn, while the receiver coils detect the re-radiated fields. The ratio of the two signals then gives the rotational position of the wheel. While most Product Challenge applications are about cost reduction, that did not really apply in this case. “Invensys produced a meter that was not necessarily low cost – but it had more functionality without increasing cost,” says Flicos. Beyond the design Sagentia also advised Invensys on a manufacturing strategy, before setting up high-volume production in Malaysia. This required significant investment in special purpose machinery – to wind coils, assemble readers and carry out automated testing. More than 1 million of the new units are now made every year. In summing up Product Challenge, Flicos says that it brings a whole new dimension to cost reduction. “This is not just incremental,” he says. “Clients look for payback in six to 12 months.” Award winner Sagentia has been the lead sponsor of the Innovation & Design Excellence Awards since their inception. Dan Flicos is clear on the reasons for this. “There are lots of very talented people working in the UK – and lots of innovative, creative companies,” he says. “But there’s often so much doing-down of UK industry – and it’s unhelpful. It’s important that we raise the profile of UK industry – and the innovation and leadership within it. “The awards fundamentally fit with what we do,” he adds. “You should always celebrate success.”