Within the past year, many companies have experienced an industry downturn; however, the opportunity to work on new programs and the engineering effort that goes with them has never been higher. The decision was made to hold a lean engineering event with the intention of removing waste from the design process. The team was assembled and consisted of multi-disciplined team members heavily involved in the new product design and development process.
It was explained that we didn't just want to change the development process and have a theoretical outcome, but we should also try the process on a real product. At that point we broke the team into 2 teams with one focused on improving the process and the other focused on a new product.
This new product we determined to work on had volume potential up to 10,000/year, however the price target was under $300. A similar product currently sold for over $1200 a piece. We had just notified the customer that delivery of the initial prototype for the new product would be in 6 months. We did not know if we could achieve the cost target. The team went to work starting with a phone call to the customer (who was pleasantly shocked to learn that a team was now focused on his project). A schedule with responsibilities for the week was established, a supplier was brought in to meet with the team, and in 3 days the team had great success.
The design was completed in a cross-functional environment, with open communication and out of the box input from team members, especially those who were not experienced with this particular product line. The cost of the product was reduced from $1200 to $190 with firm supplier quotes leaving us with good margin at $300. Best of all, a schedule with clear accountability was established (see post on Gantt Charts) to deliver initial units to the customer within 2 months. The customer was very excited and after the initial units were successful, he received an additional customer order for over 750 systems. Many of the cost savings ideas were implemented on the similar product selling at $1200 allowing us to take at least $200 of cost out for an annual savings of $100,000.
The second team also completed their project of improving the design process. Improvements centered around utilizing focused multi-disciplined teams working in a very defined timeframe to accomplish the design. The concept of freeze gates was implemented to eliminate mistakes and back tracking. To be successful at focusing effort, a better system for establishing product line priorities is also being implemented.
Both teams agreed that a focused burst of effort was significantly faster that the current way of designing product and the initial open communications allow s the team to really optimize the design for cost & quality.