When organizations overcome and achieve their reuse goals, the direct and indirect savings can be significant. IBM demonstrated this through its seven-year transformation project. The company succeeded in boosting part reuse from 2% to 59% and:
- Dropped abandoned project expense from 25% to 1%;
- Cut average time-to-market from 70 to 18 months; and
- Turned an $8B loss into an $8.4B profit.
One of the most significant contributors to this positive performance was the sharp increase in designer and engineering productivity thanks to greater parts reuse.
Direct Savings
The Aberdeen Group estimates that engineers spend up to 45% of their time searching for or recreating parts that already exist. The loss of valuable engineering time can be significant in sectors whose products include high volumes of simple parts, like industrial equipment, big-ticket consumer goods, aerospace and defense, and transportation.
Consider, for example, a typical automotive engine. Simple fasteners make up more than 40% of the engine’s components. If simple parts like this can be standardized and easily reused, the number of valuable engineering hours that can recouped for higher value tasks is very high.
Significant savings can also be realized from the reduction in Engineering Change Orders (ECOs) enabled by greater reuse of existing, fully-vetted inventory parts or designs. Engineering change management is a complex, time-consuming and expensive process. Overall, change management:
- Constitutes 10% to 20% of design costs;
- Consumes 30% to 50% of engineering capacity; and
- Represents 20% to 40% of retooling costs.
Beyond engineering and ECO-related costs, reuse can reduce costs associated with other new part introduction activities, including:
- Design compliance verification
- Administrative time to create SKUs and update parts database
- Part and/or raw materials selection and purchase
- Equipment tooling
- Production labor and overhead
- Quality control testing
- Regulatory compliance certification
- Documentation
- Shipping and handling through production, supply and storage
- Inventory carrying costs (covering insurance, taxes, interest, storage, shrinkage, damage, etc.)
- Disposition of obsolete inventory
Indirect Savings
Beyond these direct savings opportunities, indirect gains from standardization and reuse can have an enormous impact on competitiveness, even if they are difficult to quantify. These include:
- Greater negotiation leverage for bulk purchases of standard parts
- More design and engineering time available for innovation
- More capital available for technology investments
- Reduced schedule slippage and faster time-to-market
- Increased customer satisfaction from higher, more consistent product quality
In order to help companies realize these competitive advantages, EXALEAD developed a solution uniquely designed to eliminate the barriers that have to date impeded effective standardization, reuse and sourcing to facilitate make, reuse or buy decisions company-wide.
Read our White Paper OPTIMIZE SOURCING & STANDARDIZATION OF CROSS-PROGRAM PARTS
Learn more about the 3DEXPERIENCE EXALEAD OnePart Sourcing & Standardization solution.
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