Technology and Global Industry Companies and Nations in the World Economy (1987) / Chapter Skim
Currently Skimming:
Revitalizing the Manufacture and Design of Mature Global Products
Revitalizing the Manufacture and Design of Mature Global Products
Pages 49-64
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From page 49... ...
Manufacturers usually design for function, then redesign for manufactunug; thus, two design iterations usually take place. If an enterprise wishes to maintain or gain market share in global markets, Me firms' managers and technical personnel must learn to combine manufactunug win innovation in product design.
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From page 50... ...
BLACK & DECKER When managers at Black & Decker Corporation observed growing global competition in He 1960s and 1970s, they decided Hat a window of opportunity existed to improve Heir product lines and manufacturing capability. Moreover, they decided that if they did not take time to do it right the first time, they would never have He rime or resources to do it over.
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From page 51... ...
In Black & Decker's assessment, offsethug inflation in labor costs depended on making better use of labor In adding value through design standardization, mechanization, automation, better use of material and floor space, and intelligent capital planning. We thud factor in Black ~ Decker's decisions was an anticipated continued public attention to consumer protection and environmental concerns.
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From page 52... ...
competitors that had already Introduced products win double Insulation had incurred a 15 to 20 percent premium in material and labor costs in doing so. It was Black & Decker's goal to add double insulation without increasing the cost of any new tool beyond Hat of Be existing product.
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From page 53... ...
That organization was changed, and a new position- vice president of operations was developed to combine manufacturing, product development, and advanced manufactunng engineering under one manager. A final general point about the Double Insulation program was the large investment required and the long time horizon needed to reap a return on that investment.
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From page 54... ...
The labor content cost $0.02 in the new system, down from $0.14 in the old. Through attention to standardization, the entire range of Black & Decker power tools could be produced using a line of motors that vain only in stack length Mat is, standardization froze the dimensional geometry of ...
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From page 55... ...
The only difference in cost from He low-wattage to He highwattage motors was the cost of materials and machine time; labor cost remained the same through He entire wattage range. TABLE 2 Motor Field ~oducuon, Aerator Requirements, "d Costs at 2,400 Units per Hour, Old and New Design and Manufacumng Process Old Design and Manufacturing Process 108 New Design and Manufacturing Process 16 Operators to produce Cost to insulate (materials, labor, overhead)
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From page 56... ...
The labor cost of the manufacture using He new design was only $0.025 cents per unit, whereas the cost using the old design was $0.108 per unit. TABLE 3 Armature Production, Operation Requirements, and Costs at 1,800 Units per Hour, Old and New Design and Manufac~ng Processes Old Design and Manufacumng Process Operators to produce 60 15 Cost to insulate (materials, labor, overhead)
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From page 57... ...
In its 1974 annual report, Black & Decker published its assessment of TABLE 4 Comparison of Labor and Capital Requirements for Electric Motor Production, 1972 and 1976 Volumes, Old and New Designs 1972 Volume 1976 Volume Workers required Old design 242 596 New design 86 171 Annual labor cost Old design $2,700,000 $6,400,000 New design $ 900,000 $1,800,000 Annual labor savings 51,800,000 $4,600,000 Capital costa Old design $1,300,000 $3,000,000 New design $2,300,000 $4,600,000 Capital cost difference $1,000,000 $1,600,000 Payback 1.25 years 4 months . aIncludes floor space at $201sq.
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From page 58... ...
For Black ~ Decker's pricing position in the marketplace, We relevant comparison is between the top two lines on each graph, which show the difference, in current dollars between manufacturing costs wig and without Double Insulation. Increased Vertical Integration The cost and value leadership permitted unprecedented low prices to the consumers and thereby expanded Black & Decker's market share and increased household penetrations of power tools.
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From page 59... ...
market, Black & Decker's competitors in consumer power tools were caught absolutely flat-footed. Their product designs and manufacturing processes were costly, and in an attempt to continue to compete Hey tried to match Black & Decker pnces.
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From page 60... ...
60 ~0 to to cat 1~5 _ 1.0 Cl)
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From page 61... ...
Black &Decker performed well throughout Europe as the new tools both greatly expanded Black & Decker's market share and increased household penetration. Impact on New Product Development Another benefit of Black & Decker's efforts was a substantially improved ability In product development.
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From page 62... ...
Considered in relation to developed global markets, advances in matenals and manufac~.ng processes provide opportunities for redesigning products to decrease the cost and increase Be quality of manufactured goods. Although Be success Cat Black & Decker had with power tools may not be replicated in over industries, the principle of redesign and retooling for cost and value leadership In global markets can provide a focus for other manufacturing firms.
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From page 63... ...
Sunbeam obtained samples of competitive products from around the world for analysis of materials and labor content estimated in time, not dollars. Components were reviewed and estimates of production costs were developed for aD Of the designs.
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From page 64... ...
Although reducing the part count entails a considerable effort in design engineenng, effective design and process engineering will drive down labor and material costs. The result of that effort was a composite design that would be Me best of ad of Me products collected win attention to what Me product would cost if Me design were used throughout Me world and compatibility were maintained.
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