Up to 20,000 parts per machine, less than 100 produced machines per year, a machine lifecycle of 40+ years. These are the key figures of a larger midsized enterprise in the business of industrial plants for food packaging. A business with certainly different constraints compared to large automotive manufacturers named often in context of modular strategies. Therefore, the focus of the modularization project was not set on achieving economies of scale in a purchasing division beyond 100,000 units.
Complexity in plant systems engineering as initial situation
The company is developing, producing and selling machine plants in the food industry as well as the corresponding packages which are processed by the plants. A part of the business plan is not only to sell successful products but to maintain them at the market over a long time and to deliver service and packaging material to the customer. The packaging material actually achieves more profit than the plant selling. This is enabled by continuous adaptions of the plants to the state of art and the changing legislation for food products – over the whole lifetime of a plant with more than 40 years.
This business model gave the challenge for the product development division of the company: Beyond new product developments, a majority of development tasks deals with upgrades and adaptions of existing plants in the market. The necessary efforts for such adaptions and upgrades increase with the number and variety of the machines. Also, number and variety increase over time: A new machine generation is being developed, tested, produced and delivered to the customer – by different functional and regional-specific variants. As seen in many companies, the complexity took over. The efforts for developing adaptions and upgrades increased in a way that the companies’ ability for innovation was at risk. No doubt about it: if the development division is completely busy by maintaining the past, there is no time for developing new, innovative products. It was obvious, that the situation would become just worse if the product development strategy is not changed fundamentally. The management had to act.
How can it be obtained on one hand further to deliver the customer by new and highly variant products and on the other to manage the technical complexity? In developing and implementing a holistic modular system for the whole product family, a high market variety can be realized and at the same time the internal complexity can be reduced.
For maintaining or even enhancing the external variety and at the same time reducing the internal variety, both views need to be separated methodically. Only this way, the internal technical variety can be reduced effectively.
Step I – Analysis of the customer relevant external variety
In the analysis of the external variety, those properties which influence the buying decision of the customer towards a specific product variant are identified. In this step it is important to focus on the customer perspective only. In our example, the customer is interested in a specific unit production rate per hour. He is not directly interested in the underlying technical solution principle or assembly group.
Besides today’s choice path of the customer, the future requirements must also be included in the considerations. A modular product family can only be stable on long-term, if short- and mid-term changes are well planned within the portfolio. Even though the future cannot be predicted precisely, the planning of future changes increases the robustness of the portfolio.
In our example, the future target values for the unit production rate per hour were identified. They had a decisive influence, because from a certain threshold a new technical solution principle becomes necessary. If this influence would not have been identified, this would have led to a complete new development of the product family.
Step II – Analysis of the internal technical variety
Following the external view of the customer, the next step is the internal view towards the technical as-is design as a basis for the new machine generation. In this second step, the product is decomposed into components for analyzing its technical variety. The correct decomposition is decisive. All variants of the product family must be captured and the right granularity must be found. Once the decomposition is defined, the number of existing product variants can be determined based on the present machine generation. This as-is situation of the technical variety is the benchmark for a future modular concept.
In defining the decomposition there can be iterations: In our case for example, in the first step an assembly was chosen for variety reduction. In analyzing the current machine generation, a very high variety was observed. However, in a detailed parts list comparison we found out that all the variants show similarity of 95 percent. Only few parts, specific for cardboard packaging, show real differences. This result leads us to the concept to divide the main assembly into two components with one of them standardized. The other one showed variety for format-specific adaptions.
Step III – Mapping of interdependencies between external and internal variety
For understanding the technical variety on component level it is important to investigate the influences of the external variety. The underlying question is: If I change a customer relevant property, which influence is given on the components and their characteristics? For example: How influences the choice of a specific unit production rate (customer property) the power (technical characteristic) of the drive engine (component)? Typically, this knowledge exists in the organization although it is not documented systematically and therefore nontransparent and unavailable. The added value of this process step therefore lays not only in the preparation of the product family but also in the contribution to knowledge management in product development. As a result, a formalized and transparent documentation is given which shows the interdependencies between offered customer variety and technical variety on component level. Already the elaboration of this documentation delivers many points for improvement.
In our project example, the main drivers of technical variety were identified: The shape of the cardboard packaging, the base area of the packaging and the characteristics of the food to be filled. For example, the choice of the packaging shape had an influence on the geometry of the folding blocks in the folding unit. This interdependency was traceable in a logical way. Also it was analyzed, that different food types cause different types of ejection units. This is questionable, because the ejection unit acts only with the outer cardboard packaging instead of the food filled in.
Step IV – Variety reduction on component level
Already step III delivered first starting points for variety reduction by generating transparency. In the current step, the search for potentials for variety reduction will be intensified. Some of these potentials are obvious. This is unnecessary variety caused over the years by parallel development projects, lack of solution reuse or lack of communication and transparency. These cases mostly can be quickly identified, because a technical characteristic of a component is variant without a connection towards a customer relevant property. After identifying these low hanging fruits, the prior elaborated in-depth product knowledge is used in detail. The aim is to decouple components from customer properties by design changes. As a starting point, manifold design actions for variety reduction can be used, e. g. standardization of interfaces, oversizing or material changes. It is analyzed in detail, which design actions are suitable for decoupling. The result of this step is an extensive collection of action points for variety reduction on component level.
For the industrial plants, an instant improvement point was for example the use of the current design of the ejection unit for all machine types. The ejection unit was changed only for a certain machine type without investigating whether the new variant could be used as a standard for all machine types. A further potential was given by standardization of the lubrication unit. This was enabled by a flexible interface concept changing from pipes to tubes. Therefore, a standard lubrication unit for machines in different sizes and lubrication positions could be used.
Step V – Building modular concepts and evaluation
After step IV identified many single action points on component level, this step summarizes towards total product concepts and its evaluation. Besides the aimed variety reduction on component level, in this step the effects on all other stakeholders and divisions such as purchasing, manufacturing and service must be investigated. The proof must be given that a modular concept for the future product family gives positive effects for the whole company and also that the prior set strategic aims will be fulfilled.
And the result?
For the development of a modular product family concept for the plants, the development efforts have been set as target. A total product concept was elaborated without any radical technical changes, because the initial situation already showed overstressing of the development division. The concept gave a standardization of 55 percent of components, which lead to an overall component reduction of 51 percent. These numbers also shall be seen in the background of the long lifetime of the products and their adaptions and upgrades over time. The reduction of variety will lead to decreasing product management efforts once realized. This effort reduction was estimated by minus 25 percent for initial development and minus 10 percent for implementing changes over the lifetime.
However, the effects of the modular concept have not been limited to the development division. The estimated costs for qualifying a new packaging material will decrease by 67 percent. The purchasing costs of the newly standardized components can be reduced up to 45 percent. The costs for machine documentation can be reduced on about 20-30 percent.
The modular concept for the next generation of plants mastered the challenge to offer new and innovative products to the customer on one hand and on the other to manage the growth of technical variety for the development division.
This development, to is putting all industries under time and innovation pressure. Read more about the challenges of developing more variants in less time and how to face those challenges.