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At this point in time, winning may seem to be elusive. These two questions may be giving you a headache:
IMPROVE MARGINS: Existing products present three opportunities to be proactive:
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Yield improvement - investigating in-process test results to eliminate waste and rework costs
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Field return minimization - monitoring product returns to reduce warranty costs and improve product quality and reliability
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Manufacturing simplification - implementing minor, high-impact redesign to reduce labor content and material cost
Example: Client had a large pile of defective Zener diodes in its rework area and doing nothing about it. Subsequent data analysis showed a 1% failure rate involving this $0.17 component used on a 100,000 per year product; but this amounted to only $170.00 for replacement components. No big deal? Yes - BIG DEAL! No one wants to ship a product with a 1% incoming failure rate, so a sufficiently detailed test plan was in place. Let's assume a 30 second test at a $36.00 per hour loaded rate - that's $30,000 for the 100,000 units. And this does not include the labor to replace and retest the repaired units. Identified and eliminated the underlying problem, replaced 100% testing with a sampling plan, and saved over $30,000 per year. Are there any $0.17 component issues lurking in your company?
LAUNCH NEW PRODUCTS: Who hasn't had a problem launching new products? Too late, not enough features, and higher than expected manufacturing cost, to name a few of the headaches. Here are two places to focus:
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Chasm between proof-of-concept and economically viable commercial product
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Linkage between technology capability, product features and market needs
"Chasm" addresses an age-old issue: making one does not infer you can make one million. All too often I am confronted with a new product design that is really a prototype, but is viewed by the company as "The Product." Is there test to determine if the chasm is short or long? Yes! Three measures must be achieved: Predictability, Repeatability and Consistency.
Predictability refers to accurately foretelling the results of experiments; achievement confirms full understanding of the underlying technology and process techniques. Repeatability demonstrates success in achieving similar structure and performance on several lots. Finally, consistency provides multiple sequential lots within tight process and performance parameters required for release to a manufacturing facility, especially one at arms length.
Example: Client in the optical switch market was frustrated with low yield and poor performance from its critical light-steering element. It was as if each element was manufactured differently - and in reality it was! Engineers kept trying different experiments and hoping the data would tell them what to do next. Have you heard that one before? If you can't foretell the results, you have no business doing the experiment. Predictability was made the paramount issue, and a limited number of single parameter experiments quickly uncovered the underlying problems. These were subsequently solved, and repeatability and consistency followed.
"Linkage" begs a different question: "will the dog eat the dog food?"
Technology-based companies, especially startups, tend to be enamored with the technology, and believe that the customer will buy it, if we make it. Wrong! Customers buy solutions - not technology; solutions - not promises. Perhaps the disconnect stems from a focus on "product development" rather than "product realization." Product development targets the technical aspects of defining and designed the product - and this tends to be short sighted and usually minimizes the contribution that can be made by strategic customers. Product realization, on the other hand, focuses on working with customers, and satisfying their requirements with economically viable products that will ship in volume with the lights turned out. Happiness is a satisfied customer!
Example: Startup developing a one watt laser diode - absolutely at the bleeding edge of technology feasibility. Technology issues aside, after four years and $130 million in venture capital spent - no product and no market. Solution: with market input, refocused the product realization effort an unmet, but real market need. This was a market-changing, low cost 50 milliwatt laser diode that leveraged the technology developed to date, and became the backbone of its current product line.
BOTTOM LINE: How can you better handle the economic crisis? Consider the following values that I can bring to you and your organization:
A brief, insightful interaction can help you improve your company's performance. Try my approach!
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