Economy of Scale

The same bottle holds many variations

In this era of mass customization, it is still possible to take picture of an army of similar product marching to market. In the selected picture you cannot see the label. You do not realize that many variations have proliferated, until you try to find your favorite formulation by searching among the ranks of less popular flavors remaining on the store shelves. Mass customization still has its economic limitations. You can have a wider variety of bottle contents but an economical packaging line needs a common bottle shape.
Old ways of looking at manufacturing still cling on. I know of many vehicle part suppliers who are still looking for a 300,000 part per year job with a 5 year lifespan to bid on. On the other side of the table is the OEM manufacturers who cannot find suppliers to build the multi- flavored parts for their 30,000 per year models at the high volume price they expect. The challenge is still capital investment. The historic production equipment concepts that were optimized to produce identical parts at rapid rate. just don’t match the current market demand. This viewpoint puts all of the foot dragging on the part supplier side. The OEM manufactures who wish to purchase competitively price parts, must also tune their designs to minimize the cost of tooling the new generation. This is especially true in an era where the marketplace is demanding a radially different product. Massive amounts of capital investment are needed to create radically different product.
Tesla is the #1 value US car company using market capitalization as the measure. This investor assessment has occurred even though the model S sells at an estimated $4000 per vehicle loss even at its high price. I am not surprised. In my small world, they asked if I knew of a supplier who could sell them a sand cast gear case at a cost that would apply to a high volume case. Could not help them. A high volume low cost gear case has a different design that requires retesting. The real test is whether they can pull off a high volume model at mass market pricing.
No, the correct solution to this problem does not involve moving production to Asia. A subsidized selling price, as a ruse to steal your manufacturing technology, is a very short sighted solution. The savvy planners take advantage of the programmed flexibility within the new generation of manufacturing equipment. Segeo Shingo asserted when he explained his SMED (Single Miniute Exchange of Die) concept. “You will not be tempted to build inventory if you can change from manufacturing one flavor to the next in less than a minute” As I began this post talking about our historical bias, we all picture swapping massive stamping dies in and out of a press. The reality as it exist in the new vehicle parts that I am launching, involves program swaps in the computer controlled 3D printers and welding robots. Yes, SMED applies. The production equipment switches from one part flavor to the next in less than a minute. It is now a software swap instead of a 30 ton die swap. The vehicle design and business plan must evolve to match. It is only possible to invest in the new generation of production equipment if multiple part volume is bundled into packages that represent enough sales volume to fund the purchase of equipment that flexibly makes them all.

Numeric Build

Noah's Arc recreat ion in Holland - picture by Ceinturion

Noah’s Arc recreation in Holland – picture by Ceinturion


“This is how you are to make it; the length of the ark three hundred cubits. its breadth fifty cubits, and its height thirty cubits.” – the Holy Bible. From the beginning of recorded history man has been employing the benefits of building guided by numeric specifications. In the case of Noah, the proportions for his ark made it seaworthy. We still use the same proportions afforded by these numeric instructions today when we design and create the ships that sail the high seas. Numbers have guided the builders of virtually everything for all recorded history. Until the advent of Computer Numeric Control, the craftsmen read and interpreted the recorded numbers and created the desired item. In Noah’s case, with God arranging the details, it is very possible that 3 numbers were all that was needed to get the job done. At least that was all that Noah needed.
Modern manufacturing is the convergence of a whole lot of processes that have been converted to numbers. At the beginning of the process is the quote. As we migrate to mass customization, every customer wants a price assembled just for him. Money is usually expressed in numbers. Calculating a custom sales price for every order has only become possible with the implementation of ever more computer horsepower. The airline model of charging an unique price for every ticket sold is spreading. Get used to it.
We hardly even think of adding numbers by hand

We hardly even think of adding numbers by hand


A lead time is a number. In pretty much all cases this number is greater than zero. I am sure that the people who needed an ark when the rain started to fall, discovered that the lead time number was a lot greater than zero. In this digital age, we place an order and expect it to be shippped in the next day or two. It is a good thing that other people start the manufacturing ball rolling a whole lot earlier.
GPS numeric coordinates track every item as they are transported to fulfill your order

GPS numeric coordinates track every item as they are transported to fulfill your order

Modern transportation management systems use numeric GPS coordinates to track every item real time. This coordination is needed for all the items to arrive together. It is more complicated than simply ordering everything you need to build at once. It is necessary to take into account the lead time of each item including transportation time. The longest lead time items need to be ordered first.
No, not even the latest computer implemented numeric build methods can deliver you an ark in a couple of days. However under the new Pack Mule Prime program the sum of the latest numeric build systems enable you to configure an electric vehicle to your needs and have it shipped out in a couple of days. Just keep watching for the rainbow, you might not ever need an ark.
There just might be gold at the end of the rainbow

There just might be gold at the end of the rainbow

Options All in Families

Jean Stapleton and Carol O Conner appealed to our nostalgia for past that they portrayed as simpler than the reality.

Jean Stapleton and Carol O Conner appealed to our nostalgia for past that they portrayed as simpler than the reality.


In 1972 the Auto Industry manufactured 2 million identical Chevy Caprices. Those were the days. Identical is boring for the assembly line worker. I am positive that a typical Caprice auto assembly line assignment of installing the same three bolts on every car going by, would drive me bonkers. As an engineer, it was all about manufacturing speed. 2 million per year works out to one part every 4 seconds for a three shift operation. And God help you if the vehicle needed 8 copies for parts like pistons. Henry Ford would be proud. You can have any color that you want as long as it is black. 1972 was the high water mark for utilizing mass production to reduce manufacturing cost by making only identical copies. The high volume price convinced most buyers to compromise what they wanted. (An Ford F150 pickup truck at 500,00 annual volume is the highest selling model today,but the volume includes two entirely different chassis in that quantity)
Computerized ERP systems increased our ability to manage a degree of variability. This is not enough by itself. In most cases a buyer cannot afford to have most manufactured products custom and designed just for them. The first test Chrysler Minivan that I built cost $1,000,000. This bargain price was only possible because we were building 100 test units. I never have had personal money of this magnitude to spend on having a vehicle designed just for me. In the real market place, it is possible to purchase optional features for those items that are sufficiently popular to have enough buyers to share the design, development and testing cost.
While we were planning the families of options to fit within the Chrysler Minivan family, we built in the ability to make a camper van.
VW offered a recreational vehicle version of their minivan to fill their sales queue

VW offered a recreational vehicle version of their minivan to fill their sales queue

To this day there is a split within the Chrysler minivan sheet metal frame behind the front seats to enable creation of a camper vehicle frame. Chrysler Minivan sales have been high enough that they never needed to go after the camper market segment. Other makers such as VW discovered that niche in Europe.
The buyers would like to think that they can custom order whatever they want. The reality is that someone has engineered a family of product so that the buyer can customize within a range of options.
by Sarah Afshar - My love for Gatorade goes beyond

by Sarah Afshar – My love for Gatorade goes beyond

Yes, you can choose the flavor of gatoraid that you want but it comes in the same bottle off of the same packaging line

Affordable Mass Customization

The front wheel drive K-body became the parent for many vehicles including the successful Minivan

The front wheel drive K-body became the parent for many vehicles including the successful Minivan


Chrysler almost went bankrupt when the first K-bodies came out. Fighting through dismal sales of historic rear wheel drive models, the K-body tooling bills, launch hick-ups, the finish line finally was in sight. Lee Iacocca was desperate for cash flow. All of the first vehicles in the initial build schedule were fully loaded with all of the options. All of the engineering thrifting needed to sell a vehicle for the $9800 advertised base price had been done right. Engineers become creative when their backs are to the wall. Changing the bumpers to shorten the vehicle by 2 inches so that 7 cars instead of 6 per row would fit onto the captive train cars used for vehicle delivery, saved $100 which was the profit on the base vehicle. Sticker shock killed the initial sales. Curious buyers attracted to the new model hype came into the dealers to see, but turned away when none of the lowest cost vehicles were on display. The funny part of the story is that the buying public did not want to purchase the base model with its manual transmission and vinyl seats. Chrysler did not want to make vehicles with manual transmissions or vinyl seats either because these components actually cost more than the cloth seats and automatic transmissions that actually sold. Actually, what turned out to be important was that the buyers wanted to judge the value of the options for themselves. Welcome to mass customization!
It is easy to determine whether a design is ready for mass customization. A manufacturer of excavators missed the mark by designing a custom frame for their combo dozer option.
Equipment that can fill multiple roles is easier to employ to generate a profit.  An excavator that also functions as a bulldozer saves equipment mobilization.

Equipment that can fill multiple roles is easier to employ to generate a profit. An excavator that also functions as a bulldozer saves equipment mobilization.

It is possible that the mass customization that was accomplished through the use of welded mounting details showed as a cheaper manufacturing option. In reality a customized frame was never available to land a order from a customer who needed a timely delivery (Most customers do) For a little more piece cost, this offering could have been designed so that the option is nothing more than a bolted variation of the parent. I find it very interesting that companies such as Toyoda employ artisan craftsmen mechanics in separate facilities to flavor each vehicle to match the customers order. Yes, a change in thinking and a new manufacturing reality combine to satisfy a market demand for more customization without incurring excessive cost penalties.
Engineering is all about planning and implementing profitable future products. I am currently designing an electric vehicle.
A burden carrier delivers parts at the Ford Rouge Assembly plant.

A burden carrier delivers
parts at the Ford Rouge Assembly plant.

Even though lithium batteries like you find on a Tesla are a lower total cost option, it will be a while before the the buying public is educated enough to invest in the higher up front cost. This is where mass customization is all about planning for options. A good measure for my design success will be whether it is possible to offer all vehicle options from a common design frame. At the same time, it will be necessary to avoid penalizing the base model pricing when adding the design provisions needed to offer the full range of options.

Jump Frog Jump

Frogs use jumps to escape danger

Frogs use jumps to escape danger


A researcher wanted to investigate how frogs jump. He invented an experiment to determine the contribution of each leg. He needed a baseline, so he put the frog down and said “Jump frog jump!” Measuring the distance, he wrote in his journal “Frogs with 4 legs jump 3 feet.” Cutting off the right front leg, he put the frog down and said “Jump frog jump.” Measuring the distance he wrote in his journal “Right front leg contributes .5 feet to jump.” Cutting of the left front leg, he put the frog down and said “Jump frog jump!” Measuring the distance, he wrote. ” Left leg contributes .8 feet to jump.” Cutting of the right rear leg, he put the frog down and said “Jump frog jump.” Measuring the distance he wrote in his journal “Right rear leg contributes 1.7 feet to jump.” Cutting off the left rear leg, he put the frog down and said “Jump frog jump!” —- “Jump frog jump!” —- “Jump frog jump!” He wrote in his journal “Frogs with no legs are deaf”
We are all aware that it is easier to make good decisions when you have good data to back them up. Designing the affordable experiments to generate good data is where the difficulty starts to appear. This is especially true in a start up, where a lack of accumulated cash limits the number of pivots that can be done to recover from bad decisions. Even if you invent a timely affordable A/B test to guage your customer’s UX [User Experience], as this joke illustrates, many times convenient conclusions are applied to avoid the work that is actually required to provide what the customer is willing to buy.
A good example is a CAD (computer aided drafting) program. Back in the 90’s we still used drafting boards. By the 90’s this was a money issue related to the user experience of the CAD draftsman. The time, effort and cost of creating CAD drawings could not be recovered by the benefits. Since the downstream benefits of CAD drawings are fairly static, it all boiled down to adjusting the program so that making a drawing on the computer was quicker than using a drawing board. As is true during disruptive time, there were many players who saw the future benefits and wished to own the market. AutoCAD succeeded and displaced most other early players by incorporating effective feedback from thousands of CAD users. A/B testing established the CAD 2D drawing interface that has become dominate.
Ah, but the season changes. AutoCAD 2000 finally had all of the features that a large pool of their users ever wanted. This is not good news for a company with a business model based on selling a new version of their software every three years. Yes, there is other market segments that can take advantage of CAD drafting. Unfortunately cluttering the desktop with additional command icons alienated the existing user base. The A/B testing that enabled AutoCAD to achieve dominance, could not uncover a new look that would entice existing users to buy a new version… A good example of trying to extrapolate a convenient conclusion onto real test data. The actual conclusion is that it is necessary to allow the user to customize his desktop, so that it is possible to retain the look and function and minimized keystrokes of the earlier versions. Only then is the added functionality of new software versions interesting to current users. A/B testing will not invent a desktop look that is acceptable to everyone.
The same process applies to my www.mileagetrakker.com device. Our benchmarking against the competition indicated that UX is the battleground. Most business travelers put 12,000 business miles on a vehicle in a year. This deduction puts $2000 in their pocket provided that they have the correct tax records in the required format. Having spent a large part of Christmas vacation inputting the required mileage logs for many years in a row, my wife and I set out to find a better way. In start-up fashion we did A/B testing during the beta phase to discover whether the user wished to interface using a cell phone, texting, e-mail or a web site.
A/B testing is only one of many testing tools to hear the voice of the customer

A/B testing is only one of many testing tools to hear the voice of the customer

I suspect that Mileage Trakker would have died if we simply taken the results to infer that it was possible to only offer the most popular method. In this mass customization era, the customers expect that they can choose the option that is best for them. Yes it does take more work on our part.
Mass customization is a paradigm shift. The reduction in computing cost has made it possible to offer your customer base some degree of choice. This reality on the ground will filter back into all of the activity and decision making methods within a business. As this example shows, it is important not to limit your chance for success with myopic vision