|
manufacturing components |
| Component-Based Business applies the
building-block approach to the construction of business processes and (virtual)
enterprises.
This is strongly inspired by componentry in two other fields: physical manufacturing and software engineering. On this page, we explore some issues of physical manufacturing - with half an eye open for cross-fertilization opportunities between the three fields. |
| news
July 18th, 2001 |
Chrysler Has New Product Processveryard projects > component-based-business > manufacturing components > Chrysler |
Chrysler has created a process to better develop, build and market new products. The process is based on the creation of 50 separate product innovation teams which would work closely throughout the design, engineering and marketing of Chrysler vehicles.
Dieter Zetsche, Chrysler Group president and chief executive, said the new process would result in a greater ``commonality'' within the company which could result in sharing vehicle platforms and components with the automaker's Mitsubishi unit. There is also the possibility of sharing components with Chrysler's corporate cousin, Mercedes Benz. Greater commonality also would mean reducing the number of different types of the same component. For example, Chrysler currently has 25 kinds of batteries. Wolfgang Bernhard, Chrysler's chief operating officer, believes that only five are needed.
Rich Schaum, executive vice president for product development
and quality, said it was hoped the new process could accelerate the time
it takes from idea to launch, with 18 months as an objective.
| Product
architecture |
How is the car decomposed into 50 chunks with maximum cohesion and minimum coupling. Assuming a degree of loose coupling (engineering tolerance) between the chunks, what are the consequences of this for the performance and reliability of the whole car? And how are the chunks assembled with minimum waste and zero feature interaction? |
| Development
coordination |
How are interactions between teams negotiated and controlled? How are procurement and supply chain issues coordinated? |
Another interesting aspect of the story is how the corporate interests within Chrysler appear to line up. At least as it is being described by Chrysler senior management, the new process seems to involve a shift of power away from "creativity" and "design" and towards "marketing" and "finance" - these are Chrysler's categories, not mine. A corporate programme of common components also helps to cement the merger between the US and German operations, and may also increase the bandwidth of the relationship with Mitsubishi.
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Economies of scaleveryard projects > component-based-business > manufacturing components > economies of scale |
One of the most obvious advantages of the building block approach to
manufacture is that it sometimes enables economies of scale. In manufacturing
of physical products, economies of scale are obtained by two main factors.
| 1 | Firstly, long production runs tend to be more economic than short production runs. If you have to keep stopping the machine to change the settings, then this interferes with productivity. Although modern computer-based machine tools allow for considerable variability within a single production run, the general principle still holds valid. |
| 2 | Secondly, the more of a given product you make, the better you get at making it – economists call this learning by doing. |
Kevin Kelly quotes the example
of Fairchild Semiconductor, whose newly developed transistor would replace
a valve used in a range of military equipment. Only problem: the valves
cost $1.05 each. Based on initial production runs, the transistor
was going to cost $100 each.
| As an exercise in persuasion: what tactics would you use to persuade a hard-nosed general to pay a large premium price for a new (and unknown) technology? |
Even when economists predict that production will get cheaper over time,
it takes courage (or desperation) for businessmen to do what Fairchild
Semiconductor did. They sold the transistor for $1.05, taking a huge financial
loss.
| As another exercise in persuasion: what tactics would you use to persuade a hard-nosed banker (or venture capitalist) to extend your overdraft, based on this cost equation? |
History is written by the victors. The transistor triumphed, and so did Fairchild Semiconductor. Within two years, they had a 90% market share, and were selling the transistor for 50¢. And making a profit.
So if the building block approach means that you are using larger volumes of a small number of interchangeable parts, then this can yield significant economies of scale. But it doesn’t always mean that. Sometimes each end-product requires a completely different set of building blocks, so there is little or no reuse from one end-product to the next.
However, there a potential benefit from the building block approach
even if there is no physical reuse from one end-product to another, since
there can still be a reuse of knowledge and other intangible assets.
That's part of what's implied in learning by doing.
| Source | This is an amended extract from Chapter 1 of Component-Based Business: Plug and Play, by Richard Veryard |
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Component Reuse, Economies of Scale, Conservation of Energy |
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Two problems of repair and upgradeveryard projects > component-based-business > manufacturing components > repair |
My friend David, who is an expert on software components, recently complained about the maintenance on his expensive German automobile. He wanted the garage to fix a faulty rear light. It turned out that the light was part of a larger component and he needed to have the entire rear light cluster replaced, costing several hundred pounds.
He asked who made the decision to set the unit of replacement at the level of the rear light cluster. Was it a production engineering decision? Surely the marketing role would not have misrepresented customer requirements so badly?
Sadly for us consumers, the key question for many marketing departments is not (i) which component architecture would be most convenient for most of our customers? but (ii) does this component architecture make any difference to the likely volume of sales?
In other words, does the car maker care whether it costs you more to fix your rear light? How much money do they make from selling spare parts?
This story illustrates some useful points in relation
to component architecture, and the different interests that may be served
by different design principles.
Meanwhile, here’s a related story. My father recently had a problem with his home computer. He phoned the technical support line, and told them that the grey knob on the front had broken. Which grey knob? The one he used for switching the computer on and off.
To my father’s logical mind this description seemed both simple and sufficient, but it puzzled the technical support staff. It took them some time to work out that my father was referring to the component officially known as The Power Switch.
When one buys a complex item of equipment, one doesn’t necessarily know the official names of all the components. This doesn’t matter when everything is working, but it can cause huge problems when things start to fail. How do I reinstall or replace a faulty component, and how do I even know whether a given component is still in use, when the suppliers’ names for the components are obscure and undocumented?
Once my father had overcome the barrier of terminology, he thought it would be a simple matter to persuade technical support to supply him with a new “Power Switch”.
Not simple at all. It turns out that the makers of this brand of computer have used a variety of different Power Switches, without properly keeping track. Although the technical support division was supposedly in possession of a complete specification of my father’s computer, this specification failed to tell them which of several different (and incompatible) Power Switches had been used in this particular assembly.
It was therefore necessary to replace the entire front
panel. Sounds familiar?
| Q | If you have access to a Windows computer, look how many DLL files are installed. Do you know the purpose of any of them? Do you know where they are used? Do you imagine that anyone within Microsoft has a complete understanding of all the DLL files? |
| Q | How many different companies share responsibility for the componentry in a typical home computer? How likely do you think it is that they all use the same names for the components? |
| Q | What are the mechanisms used within the software industry to control such situations? In your experience, do they work effectively? |
| Source | This is an amended extract from Chapter 1 of Component-Based Business: Plug and Play, by Richard Veryard |
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