Take a more proactive approach to supply chain management with Design for Supply Chain
You’re probably familiar with the concept of Design for Manufacturing: taking manufacturing processes, scalability, and profitability into account as a product is being developed, and designing for optimal results given all of the known constraints. Design for Supply Chain (DfSC), represents the next rung up in process-management ambition, with an emphasis on production and distribution reliability. And as supply chain consistency is becoming an increasingly important (and difficult to manage) variable within the overall commercial marketplace, DfSC is a method Supply Chain and Product Dev leaders need to begin priotitizing. We’ll talk about why companies who are thinking ahead are building DfSC into their process, how they’re doing it, and how your company can do the same.
Constraint-based design: converting risks into opportunities
I’d like to kick this conversation off with a quick story about how design-constraints can lead to breakthroughs. I was sitting in a product development meeting recently with Elementum’s Head of Product Management, Jon. During his update, Jon mentioned that the mobile designs were almost ready for the next major feature release. This pleasant surprise caught me a little off guard, because I hadn’t seen the (desktop) web designs yet.
I was still rooted in my old mental-model, where most supply chain software users are using a web browser — Chrome or Firefox — as their primary device. iOS and Android, in my familiar schema, come next. I’m used to starting with web designs, prioritizing for where the users are, right? So I asked Jon what was up.
Jon explained that his team had changed things around. Sure, most usage is on web. However, mobile is more constrained in terms of capabilities. And it’s a lot more demanding to create a winning user experience on a 3×6” screen than it is for a 15” monitor, with a separate keyboard. Jon said if they prioritize web, the mobile team has to retrofit the web experience into mobile. And that particular conversion process has always been painful and fraught with difficulties. The usual result has been a sub-optimal user experience for mobile users. Jon compared it to taking the dinner menu from the 5-start restaurant and asking your favorite taqueria to produce it. In the process you lose both the five star meal — and the great food your favorite taco joint serves up.
The same has been happening with desktop to mobile designs, so with Jon showing the way, Elementum now starts out with the mobile designs. As he puts it: “Our first job is making an amazing user experience for mobile — then the web team can build on that foundation.”
What the design team has discovered, is that it’s much easier to add based on availability than subtract based on constraints. Mobile-first design has made our apps easier to navigate and use, and altogether, more powerful — whether users are on the mobile version or on the desktop application.
Elementum’s UX team is certainly not the first team to achieve breakthroughs through design constraints, nor the only one to up-level the overall output by designing to the highest level of demand and constraint. Let’s bear this idea in mind as we get into our discussion about designing for supply chain.
Design For Manufacturing: Necessity Births Invention
As we noted in our introduction, Design for Manufacturing or Design for Manufacturability (DFM) aren’t new concepts. Like me, you may remember learning about them in college. (Even if it was 20 years ago — or more!) DFM concepts are still fairly straightforward: look at manufacturing processes more holistically, taking that one giant step back to begin designing products with an eye toward the means and methods of manufacture you plan to employ.
The broadening of scope this backward step provides often saves companies from full on retreats. Sure, it’s great when Sales and Marketing get a lot of people interested in buying a great new product, but when that product can’t be manufactured profitably, sustainably, or practically, hours of effort and tons of equipment can tie an anchor around your quarterly, annual…or lifetime results.
With DFM, profitability is usually the primary constraint that’s being optimized for. As any good manufacturer will tell you: almost anything can be built — but you’ll have to do some real homework to assure it can be built profitably. Of course you’ll also want to answer this question before launching mass marketing campaigns, building up inventories, and hitting record sales — only to learn that money’s being lost because material costs are too high. (Or that specialty manufacturing process will prevent reaching the scale you need to turn a profit.)
The good news? One “expensive success” is usually all it takes to learn this lesson for good.
Next Level: Design for Supply Chain
Design for Supply Chain exists, but at this time, it hasn’t yet caught on or begun to compete with DFM for public awareness — or corporate investment. But with supply chain being on the tip of everyone’s tongue, that may change soon. We think leaders in the DfSC space will derive significant benefit.
According to Supply and Demand Chain Executive, Design for Supply Chain (DfSC) is the process of optimizing the fit between supply chain capabilities and product designs. It creates product configurations that address infrastructure limitations and optimize supply chain capabilities, also contemplating how these might evolve throughout the life of the product.
Where DFM represents an algebraic sort of complexity, DfSC, like calculus, puts things in motion.
Traditional DfSC best practices include: minimized premium freight, expected product updates, pool demand, minimized carrying costs, optimized order management, and minimized warranty cost. As you can surmise from this listing, we’re also looking at a product’s entire lifecycle through this lens.
While DfSC isn’t new, it’s rarely considered today, and even more rarely prioritized. A quick comparison of DfSC with DFM on google trends, reveals that DFM is 5x more common / popular as a search subject than DfSC:
Supply chain veterans looking at this chart might just sigh and wince, because supply chain needs have tended to come as an afterthought for so long. As you may know, we’ve written about that tendency on several occasions. In fact, the crisis we have today with supply chain is due in no small part to product development processes that put supply chain considerations off to the very end of the line.
Historically, the corporate thought process (and its operation) has looked like this:
- If there’s a market for the product, and
- It can be built economically (DFM), and
- We can sell it…
- Then of course we’ll find a way to deliver it on-time, at-cost (DfSC)
Supply chain veterans have always lived in a world where their job is to make “of course” happen. But in the last few years, that very difficult job has become all but impossible to perform consistently.
Supply Chain Volatility: Here To Stay
Supply chain volatility is one of the biggest threats facing the global economy today, and it doesn’t appear like this is going to be a passing phase.
While the pandemic was an aberration in global health, its impact on supply chain hasn’t been transient. And the weaknesses it has exposed have pretty deep roots. For many years running now (a decade at least), supply chains have been facing increasing disruptions due to increases in extreme weather events: hurricanes, floods, droughts, fires, etc. Increases in political conflict — many of these tied to climate disruption — have also exacerbated the situation, with stiffer tariffs, embargoes, and wars.
Complicating this already difficult situation, as these various sources of turmoil have joined and boiled over, the dependency on functioning supply chains has — you guessed it: increased. Today, more shipments are being sent to more people in more places around the world than ever before. And we expect that trend will continue.
This means that both complexity and risk have increased significantly. As a result, when something goes wrong, the impacts can be truly catastrophic. We can look to the recent baby formula shortage as an instructive example.
DfSC: An Innovative Response to New Necessities
Looking over the recent history of events shaping the global supply chain, we’re squarely in the camp that assumes that there’s no longer a question of IF disruptions will hit — but rather, a matter of when, where…and how many will hit at the same time.
Yet in the midst of this environment of escalating demand, we’ve seen innovation for supply chain emerge as a reliable source of strategic advantage. Increasingly, consumers are investing less and less into the idea of well-known brands, and instead, commuting the value brands use to offer (reliability, availability) to a simpler, more transactional rubric. “Do you have Brand A?” has been replaced by more prosaic concerns like: “Is it available?” “ Will it arrive on-time?” And “Is it easy to return if it doesn’t work?”
During the extended disruptions we’ve all been living with, companies that have made sure their supply chain operations can reliably answer these questions, have steadily gained market share. Not surprisingly, they’ve also built their brands.
How can your team get started with the idea of DfSC?
To begin with, it’s all about a shift in mindset…and ultimately, in priorities. Make sure design teams not only consider, but emphasize operational reliability and agility during planning phases. Assume disruptions will happen, and make supply chain responsiveness a prerequisite to any new product release.
For many executives, this is going to be a cheese-moving moment. Supply chain thinking has to move from “of course” at the end of the line, to the first course of thinking, as design begins. This is the “mobile-app first” idea — but on a much grander, more ambitious scale.
And it’s urgently needed: because the world has changed. Availability and reliability are going to become essential differentiators and profitability drivers over the long-term, and the truth is, successful brands won’t be made (or sustained) without them.
Five Ways To Kick Start DfSC in Your Organization
Sometimes it’s helpful to break down this kind of big, ambitious thinking into bite sized chunks. With this idea in mind, we’re offering up five ways to give a push to your own DfSC conversations.
Source local: Shortening the length of the supply chain inherently lowers the surface area for potential disruptions. Labor may be cheaper overseas, but when the price of maritime containers increases 1000x, those cost savings are immediately devoured. Companies should at least identify local contingencies, particularly near the biggest markets, whenever 100% local sourcing isn’t possible.
Multi-source: Plan ahead, and give yourself options. Never be locked into one supplier, especially for critical components.
Avoid known hot-spots: The political tension between China and the US continues to escalate. At the same time, China’s Zero Covid policy has repeatedly brought supply lines in the country to a halt. Yes, China has many extraordinary manufacturing capabilities on a cost-to-value equation — but cost doesn’t matter when output is zero.
Minimize complexity: More components mean more opportunities for disruption. It only takes one part to be late to delay an entire product. In a volatile world, every touchpoint represents a potential delay. The good news is: simplify is a classic design constraint that has provided many a breakthrough.
Stick to industry standards: Avoid the need for specialty transportation or supply lines. If something goes wrong with your primary mode of transportation, you want options. Stay with the strong horses, it always beats hunting for unicorns.
DfSC is Coming — and It Has Been For Some Time
Much of the foregoing discussion has been informed by the major disruptions of the very recent past, And we’re aware that we may be leaving the impression that DfSC is itself a product of recent, urgent necessities. But the truth is, at forward thinking organizations, product design and supply chain has been headed down this path for decades. Supply chain, relegated to the “last detail” in many environments, hasn’t waited to show its muscle and contribute to scalable manufacturing operations. We would contend that wherever supply chain has been allowed to help lead and shape design and manufacturing operations, it has proven its remarkable potential. Even as supply chain itself fights through its own crises, we’re confident that innovators in this space will continue to prove out the potential for Supply Chain as a source of innovation and increasingly dramatic differentiation.