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Learn How Modern Manufacturers are Leveraging PCM to Improve Profitability

Rick Burke

[Video] Learn How to Improve Your Design-to-Cost Strategy

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Featuring Spirit Aerosystems

Spirit AeroSystems [NYSE: SPR] designs and builds large aerostructures, including fuselages, pylons, nacelles and wing components, for both commercial and defense programs.  Spirit is a leading aerostructures supplier to both Airbus and Boeing. Their focus on affordability in materials, processes and tools also makes them a natural fit for defense prime contractors.

In early 2016, Spirit launched a strategic business initiative to identify a new technology partner they could work with to more effectively manage the ever present challenge of rising product cost.  Shown below is the high level Spirit Affordability Process formulated to help concentrate their efforts against specific segments of the overall product development process.

After evaluating the 3 core components of their Product Cost Management (PCM) system, they concluded that they would focus on the Design to Cost (DtC) segment.  The rationale for this decision was incredibly compelling, given the following data point they determined during the course of their initial research into the overall topic of Affordability:

…at least 75% of product cost is committed during conceptual and preliminary design activity


 

Top 5 Best Practices for Implementing a DtC Strategy

At the most recent COST INSIGHT Product Cost Management Conference this past February at the Rosen Shingle Creek Resort in Orlando, Florida, Mr. David McGinley shared with the audience how Spirit evaluated product cost management technology solutions and vendors, ultimately choosing aPriori as their technology partner and trusted advisor for this mission critical project.  David is one of two dedicated resources that Spirit assigned to this project. 

The Spirit AeroSystems methodology for evaluating and deploying aPriori to achieve fast Time-to-Value is a text book lesson in how to deploy an enterprise business strategy and technology platform into a complex, fast moving, global business.

In his presentation, David shared the following recommendations for achieving success with a DtC strategy:

  • Select a Partner not a Vendor – For any strategic business initiative that will unfold and develop over multiple years, choose a technology partner that has deep subject matter expertise and a track record of delivering innovative solutions to their customers as part of a long-term relationship.  You want a partner that can help you define a successful step-by-step process that integrates DtC smoothly into your unique product development process.
  • Early Focus on Relative Accuracy – Spirit did not obsess over configuring their cost models to match a specific target dollar value.  They focused on evaluating cost from the perspective of relative accuracy, seeking to know if a change in the product design increased or decreased the cost – and by what percentage. 
  • Prove Value Quickly – Spirit organized their deployment by configuring and rolling out cost models that had the strongest capabilities, met their internally established criteria for completeness, and had the highest likelihood of driving a fast Return on Investment.
  • Invest in Training and Expert Services – Spirit invested in training for engineers and other related personnel to ground everyone in the basics of product cost management strategy and how to leverage the cost estimates being produced by the software.  They also leveraged aPriori Expert Services to provide them with a consistent advisor that could answer business process and technical deployment questions quickly.
  • Track Value Consistently – Any investment in an enterprise business technology platform requires a significant commitment of company resources.  If your intention is to dramatically improve your PCM process, it is imperative that you employ SMART metrics and refine the program based on quantitative data.

11% Savings on First DTC Project

Within the first phase of the deployment, Spirit realized they were on the right track.  Shown below is a short 2-minute video clip of David McGinley talking about one of their first quantifiable wins with the software.

Trade Studies Yield 40-50% Cost Savings

As the deployment continued to unfold, evaluating various design and manufacturing process trade-offs started to deliver significant insight into big cost savings.  In this short 2-minute video, David talks about how a relatively straightforward trade study that looked at the costs of switching from machining plate stock to machining extrusions yielded significant savings for the team.

It’s also important to note that a significant time savings was realized which positively impacts Time-to-Market.  This savings is a direct result of putting the tool in the hands of the engineers so they can produce answers quickly rather than wait for their counterparts in Sourcing to get the answer from a supplier.

Conclusion

The Commercial Aerospace industry is highly competitive and subject to frequent product cost overruns that are often due to the significant complexity of the products they are designing and the globally distributed nature of their supply chain.  Providing engineers with answers to cost questions early in the conceptual and preliminary design phases has the potential to directly impact the overall profitability of the program and the ability of the team to meet aggressive product delivery schedules as well.

Design-to-Cost business practices and technology provide aerospace leaders like Spirit with a strategic competitive advantage that cannot be underestimated.  Any company that is not providing their design & engineering team with this type of technology is putting their company at a distinct disadvantage.

Watch the Complete Video Now

In the complete 30-minute version of the Spirit AeroSystems DTC Success Story, David McGinley shares many other valuable recommendations from their deployment that will help you better understand how to effectively deploy a Design-to-Cost strategy for your organization.

 

Still Looking for More?

Here’s a great whitepaper that will provide you with some additional insight on what your design will cost to produce.

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