SCM106: Product and Process Design for Supply Chain Management

Overview

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...A major automobile manufacturer had designed separate engine wiring harnesses (groups of wires that connect electrical components and systems together) for each of its many different combinations of engines and transmissions.² Wiring harnesses are generally very similar, but specific engine/transmission combinations might require either a few more or a few less connections, and sometimes certain wires could be of slightly different lengths. The designers of the wiring harnesses had successfully minimized the cost of the wiring harnesses, where cost was defined to be unit materials cost.

A consulting firm examined the result of this process and discovered that the auto manufacturer had well over 100 different wiring harnesses for current-model cars! Maintaining inventories of all these separate wiring harnesses was difficult, and during production, lack of the correct wiring harness could create serious difficulties on the factory floor. The consultants recommended that the existing harnesses be consolidated into about a dozen distinct harnesses, each designed to satisfy multiple engine/transmission combinations.

The new designs had some "excess copper wire" and some unused connectors present since they needed to function for more than one engine/transmission combination. However, based on their analysis, the consultants knew that the minor increase in raw material cost would be far outweighed by lower inventory levels of the redesigned wiring harnesses, less complexity in the factory, and fewer stockouts.³ This is an example of commonality; a group of items was redesigned so that a single SKU could satisfy the requirements for any of the original items...

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²Thonemann, U.W., and Brandeau, M.L., "Optimal Commonality in Component Design," Operations Research, vol. 48 (2000), pp. 1-19. (back)
³If the new design increased the likelihood of assembly errors, this should be factored into the analysis. One way to avoid assembly errors is for connectors to be unique, so that it would not be possible to mistakenly connect a wire that is unused in a particular case. (back)