CASE

One-Touch Configuration

Case

Alfa Laval

One-touch Configuration

Alfa Laval is a world leader in heat transfer, separation and fluid handling. The company’s global organization embraces 42 major production units and 17 000 employees in 100 countries.

Key enablers for smooth configure-to-order are the modular product architecture and an information model.

The modular product architecture at Alfa Laval is now clearer and better documented. Thanks to PALMA®, data can be connected and communicated to CPQ, PLM and ERP business systems. 

By restructuring the product with the Modular Function Development (MFD®) method, the new module system enhances the intrinsic modularity of the Alfa Laval gasketed plate heat exchanger range – and this has been achieved without any design changes. A key success factor for the new architecture has been to define the right level for the modules, neither too big nor too small, and as a result they are now more manageable.

PALMA® is proprietary software from Modular Management. It has been used by Alfa Laval to create the modular product architecture and document it in information model format. In addition, PALMA® is the tool for Alfa Laval engineers to maintain product data, including specifications and rules for dimensioning and performance.

PALMA® has tools to execute the information and create configuration intent and logic. The user-friendly interface enables access to data in a common environment for both engineers and configuration modelers. This enhances collaboration between and enables faster development of a new configuration model.

With the integration of PALMA®, and business systems including CPQ, PLM and ERP, the information model creates a digital thread throughout the value chain of Alfa Laval gasketed plate heat exchangers and eliminates manual data transfer and interpretation. As a result, Alfa Laval is now using PALMA® as an enterprise solution to develop, communicate and share modular product architectures across all product areas.

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SUMMARY

How to Enable Configure to Order?

 

There are two key enablers for Alfa Laval’s cutting-edge order-to-configure process:

  1. Configurability
  2. Information Model.

Alfa Laval continuously develops the gasketed plate heat exchanger assortment to correspond to new and increasing market demands. This development has incurred challenges for internal business processes to accommodate more complexity. 

This configure-to-order project was designed to reduce manual involvement in product specification and delivery, and extensively minimize internal workload, reduce the number of module variants and eventually reduce lead times from order to delivery.

The Full Story

Here we focus on two key enablers for Alfa Laval’s cutting-edge order-to-configure process:

  1. Configurability
  2. Information Model.

Configurability

The first enabler to improve the configurability of existing products is to restructure them into modules with defined interfaces. The product structure, or architecture, is defined at a level so the modules are neither too big and complex, nor too small and numerous. The architecture is created by restructuring the existing design, without redesign, so desired business effects can be reached faster.

Information Model

The second enabler is to define the modular architecture in an Information Model that feeds product data to downstream business systems, including Cost Price Quote (CPQ), Product Lifecycle Management (PLM), Computer Aided Design (CAD) and Enterprise Resource Planning (ERP). 

In the Alfa Laval case, the information model is developed, executed and governed in PALMA®. PALMA stands for Product Architecture Life Cycle Management and Alfa Laval uses this enterprise solution from Modular Management to develop and communicate modular product architectures across product areas. In summary, a modular product architecture improves the configurability of the assortment and PALMA® software manages the information model and enables system integration.

Alfa Laval is a world leader in heat transfer, separation and fluid handling. The company’s global organization embraces 42 major production units and 17 000 employees in 100 countries.

Alfa Laval’s gasketed plate-and-frame heat exchangers provide efficient heat transfer in compact equipment with a small footprint. The products are used for heating, cooling, heat recovery, evaporation and condensation. Industry applications include heating, ventilation, air conditioning, refrigeration, engine cooling, dairy and food processing, and even larger processes in the oil/chemical production and power generation. The product range is almost as broad as the industries it serves.

Over the years, the assortment has grown in line with demands for faster and more frequent launches of new, updated and customized products.

To maintain and develop this strong position, Alfa Laval realized that a fundamental change was needed in how products were structured and offered to the market. 

The decision was made to introduce a more modular product architecture to enable the configure-to-order process and integrate IT solutions along the value chain. The vision was for seamless and fully-automated product handling, from CPQ via PLM into ERP 

Challengers for Product Marketing & Sales

Alfa Laval uses a CPQ configurator to sell products. 

Although customers increasingly want to configure their own solutions to optimize their heat exchange process, the product structure used by the configurator did not reflect the modular design of the product. This lack of configurability led to a higher resource load when creating and maintaining specifications and configuration rules. It also necessitated non-value adding activities in the organization and longer lead times for product launches. For many projects, only the most prioritized parts of the offering were implemented in the configurator. And in very big projects, only the highest volume variants were implemented. A big challenge.

Although improvements had already been made in both the product structure and configurator, several issues could only be solved by a new approach to the product rules and logic.

Challenges for Product Design & Engineering

Heat exchangers are highly configurable products and because customized solutions are highly sought after, steps to improve configurability have the potential to deliver high value. 

The configuration model at Alfa Laval had to be improved. Product logic and rules were not easily accessible, which created dependencies on product and configuration experts. This also caused delays in implementing new variants in the configurator, not to mention difficulties in getting new engineers and product managers up to speed.

Longer lead times for new product launches were primarily due to the specification workload caused by the product structure. For example, an update of a single part could require updates to thousands of specification documents. No fun and a clear downside business risk.

The product structure generally provides a good overview of modules, variants and product data. Yet in the old structure and its accompanying documentation, this overview of design variants (parts or assemblies), including where they were used, was lacking. 

It was considered essential to improve governance of the product model and shorten the analysis time needed for design changes to be approved.

Challenges for Operations

Due to a high degree of customization, and a less than optimal product structure, the delivery process was complex and included non-value adding activities. To reduce and avoid manual activities in the delivery process, the goal was set to integrate the sales order systems with the ERP system. The product architecture information model was to be the enabler – the common ground – to link cost and lead times. At the early stages of product configuration by customers, it was about to become clearer what could be built, at what cost (internal) and when (internal/external to customer).

There were two main goals for the order-to-delivery project:

1. Restructure the modular system. The target was to significantly reduce the number of module variants, directly impacting many activities within engineering, product management and the supply chain. 

2. Create a configuration solution for the full gasketed plate heat exchanger product offering. The target here was to establish a solution that was easier to maintain for engineers in terms of product data, specifications and performance rules. It should also provide a better overview of the logic and rules used during configuration. 

Since gasketed plate-and-frame heat exchangers products are highly configurable to meet specific needs, customers need to be able to select a solution based on parameters ranging from capacity, flow routing, extra inlets and outlets to material choices, temperature and different pressures for the various flow media. The new configuration model had to manage this and enable a simpler and more robust solution.

The new restructured module system and configurator solution is now in place and the results are being followed closely.

Two of the main impacts are reduced workload and shorter lead time when launching new product variants.

Reductions in workload for product development and management are expected to be in the range of 15-20%, and the removal of non-value adding activities is also expected to positively contribute to employee satisfaction and competence development. When repetitive tasks are replaced by more challenging and interesting ones, work usually gets more fun.

Aside from the workload reduction, dependencies on expert product and configuration personnel will also be reduced. With fewer bottlenecks, the organization can increase efficiency and become more self-contained. A more complete offering in the configurator means less manual work in the sales and order processes and fewer design-to-order activities. In operations, manufacturing and assembly is already smoother, since orders can be built as configured.

Key enablers for smooth configure-to-order are the modular product architecture and an information model.

The modular product architecture at Alfa Laval is now clearer and better documented. Thanks to PALMA®, data can be connected and communicated to CPQ, PLM and ERP business systems. 

By restructuring the product with the Modular Function Development (MFD®) method, the new module system enhances the intrinsic modularity of the Alfa Laval gasketed plate heat exchanger range – and this has been achieved without any design changes. A key success factor for the new architecture has been to define the right level for the modules, neither too big nor too small, and as a result they are now more manageable.

PALMA® is proprietary software from Modular Management. It has been used by Alfa Laval to create the modular product architecture and document it in information model format. In addition, PALMA® is the tool for Alfa Laval engineers to maintain product data, including specifications and rules for dimensioning and performance.

PALMA® has tools to execute the information and create configuration intent and logic. The user-friendly interface enables access to data in a common environment for both engineers and configuration modelers. This enhances collaboration between and enables faster development of a new configuration model.

With the integration of PALMA®, and business systems including CPQ, PLM and ERP, the information model creates a digital thread throughout the value chain of Alfa Laval gasketed plate heat exchangers and eliminates manual data transfer and interpretation. As a result, Alfa Laval is now using PALMA® as an enterprise solution to develop, communicate and share modular product architectures across all product areas. 

Curious? Just email info@modularmanagement.com for more.

One-Touch Configuration

Bosch
INSIGHT

The Quietest Heat Pump

Case

Bosch

Bosch

Bosch Thermotechnology (TT) is a division of the Bosch Group. The company is a leading supplier of building heating products and hot water solutions.

Electric heat pumps are most commonly used in Scandinavia and Northern Europe including the UK. Tranås, Sweden is the location of Bosch TT’s competence center and manufacturing of electric heat pumps (TT-HP). In 2005, the original Swedish company, IVT, was acquired. Today, new heat pump concepts based on various technologies are being developed and manufactured under several different brands, most well-known: Bosch, IVT, Junkers and Buderus. Product brands were deployed regionally and differentiation was primarily limited to look and feel.

In Sweden, IVT branded products are sold through the own wholesalers and other through independent distributors. In other countries like Germany the branded products are sold through independent distributors including specialized dealers and big box stores. Annual revenue is around 100 MEUR. Final assembly of all electric heat pumps occurs in Tranås where components and sub-assemblies are sourced globally. The site employs about 320 people in both manufacturing and product development.

Bosch TT’s heat pump businesses faced a number of challenges, including lower profitability, more low-cost competitors, complex range of product options and large inventories. 

Bosch TT implemented a modularity program supported by Modular Management and achieved dramatic results: 60% fewer part numbers, 40% reduction in inventory, and a stunning improvement in productivity – 50% reduction in assembly time and 66% less floor space. 

The simplified designs generated highest in class energy efficiencies, the quietest heat pump ever built by the company, and five new patents. The product cost was reduced by 44%, which enabled a large increase in profitability and price competitiveness, and this led to double digit market growth once the product hit the market.

Summary

Creators of the Quietest Ever Heat Pump

 

Bosch TT heat pump business faced a number of challenges, including lower profitability, low-cost competitors, a complex range of product options and large inventories. And then Bosch TT implemented a modularity program supported by Modular Management. 

Business Value

The simplified designs generated highest in class energy efficiencies, the quietest heat pump ever built by the company and five new patents. The program also enabled a large increase in profitability and price competitiveness, with double-digit market growth generated once the product hit the market. The division experienced a significant overall improvement in productivity.

KPIs

  • 44% reduction in product cost
  • 60% fewer part numbers
  • 40% reduction in inventory
  • 50% reduction in assembly time
  • 66% less floor space.

The Full Story

In the 1970s, IVT pioneered liquid-to-water technology which integrates a liquid circuit under the ground with a heat pump in the building. This made a giant leap in efficiency that allowed consumers to easily justify a higher price. Being first to market, the company grew with high profitability for many years. As time moved on, competitors introduced similar products and the efficiency of competing technologies was improved.

In order to maintain its market leadership position, Bosch TT-HP expanded its portfolio to include products based on air-to-water and air-to-air technologies. These technologies exchange heat directly with the outside air and require fewer components and simpler installation. They are lower priced and deliver lower levels of efficiency. System components are sourced from suppliers in Asia, and the profit margins were significantly less than Liquid-to-water systems.

With expansion into new markets and at the same time declining home market Sweden overall profitability for the business unit declined. A broader portfolio coupled with the need to offer multiple brands led to a very high complexity.

In 2011, the management team decided to make significant improvements in response to the declining business situation. It would develop its own air-to-water product family in Tranås that would leverage many fewer components and unique part numbers into a similar breadth of products using a Modular Product Architecture, which would replace the two own platforms for air-to-water heat pumps (Optima and Premium Line). They planned for significantly fewer parts and less finished goods inventory. They also need to significantly reduce direct material costs.

Product Marketing & Management

The product family of air-to-water consisted of, the two own platforms complemented by OEM sourcing. The team had little ability to make changes to the products and there was virtually no difference with the products of the competitors. Consequently, the marketing team was focused primarily on the Liquid-to-water product niche.

The team was also challenged with prioritizing between tactical (short term) and strategic (long term) activities. Marketing attention and development resources were often pulled from ongoing NPD projects in reaction to competitive threats and quality problems.

Product Design & Engineering

Since the air-to-water technology was partly OEM-sourced, the technical knowledge in these products was limited. The primary area of this limited knowledge was the out-door unit of the system. A system is comprised of both an indoor and outdoor unit. There was limited control over the design of the remainder of the system. Even if marketing identified an opportunity for a new product, it was very difficult for the team to deliver a new product in the required time frame.

Before the decision was made to develop the new product family, the Tranås site began a transition to the new Bosch product development process called TTM. This provided the development team a clear process, but it added a level in learning necessary, to complete the design.

Product Operations

The indoor unit, in particular, was an operational challenge. Many indoor units had been designed to meet the range of customer needs resulting in a complex range of options and many different part numbers. It was not possible to present incoming components at point-of-use in a good way. A lot of space was required for final testing because there was no way to support the testing of sub-assemblies.

It was also difficult to run small batches of a product variant, even though a business model with multiple brands, required it. This problem was further compounded by the fact that the brand variant was determined at the beginning of the value chain. The result, huge finished goods inventory and obsolescent products in the worst case.

Before creating the Modular Product Architecture for the Air-to-water product family, the management team at Bosch TT-HP formulated plans to turn their company strategy and market objectives into a program plan with a supporting business case.

Revenue Growth

Bosch TT recognized the opportunity to gain market share by offering an Air-to-water system with increased efficiency. No significant efficiency gains had been made with this technology in recent years and a product leadership position would be achieved to whoever accomplished this. They also needed the ability to offer lower priced variants to better defend against new competitors.

Profitability Improvement

The air-to-water product line delivered the second lowest profitability of the three heat pump technologies. Significantly improved profitability would be achieved by having lower complexity. Without a reduction in the number of product variants available for the market, the goal in a part number count reduction was at 50%. Fewer parts mean more reuse of parts and more time to design for lower cost. A 50% reduction of direct material cost was planned across the product family.

A significant reduction of inventory was also planned by the management team. With less variety of parts and higher volumes, the components in stock could be reduced by 30%. Finished goods inventory would also be reduced.

In 2014, the new AirX heat pump product family was introduced to the market as the most efficient air-to-water system in the Nordic market. This was confirmed in by an independent Danish test institute. It was also, at normal speed, the quietest Air-water heat pump ever built by Bosch. The result of being the most effective heat pump in the market resulted in double digit market share growth immediately after the product launch.

The new product family also achieved almost all of the profitability goals including an overall part number count reduction of 60% when compared to the old Air Optima product family. Part number reduction for the outdoor unit have been from 650 to 213 parts, achieving a 67% reduction. Indoor unit part numbers have been reduced with 40% (240 to 145 parts). Consequently, they expect component inventory to be reduced by 40%.

Overall, counting all part numbers for all heat pump products, Bosch TT-HP is now at 19% modularity. They are currently working to launch two new modular platforms, partly based on the first AirX platform. The long term goal is to have all products in a Modular Product Architecture.

The planned product cost (PPC) for the outdoor unit was significant better, 44% better. About 10% of the saving was attributed to a doubling the volume of components giving a larger scale to Bosch TT-HP suppliers. The other 90% of the saving was due to smarter design and new production methods. The original target cost reduction was reached, and the team was very pleased to achieve this kind of reduction and on the same time significantly increasing the performance level of the heat pump.

Product Marketing & Management

Between 2011 and 2014 Bosch TT-HP experienced saturation of the liquid-to-water heat pump market and a shift in product mix to lower margin products, resulting in less sales and profit.

However, the team responded by planning and developing a new and efficient product family to addressed many of these challenges. They invested to increase the market knowledge and develop product roadmaps to fill the existing assortment gaps. They have now acquired the know-how and lots of success to build upon.

During this period, the belief in modularity as the way forward for the heat pump products is actively supported by the marketing team and top management.

Product Development Engineering

A total of five innovations have been patented for the AirX modular heat pump. They team implemented variable speed compressor technology to control and minimize energy use. The team has also change the approach to accomplishing a range of system capacities.

Depending of the heat pump capacity, different sizes of heat exchangers are needed. This normally means a lot of different evaporator variants. In the AirX modular system, a common frame to hold the coil and fin packages was developed with standardized interfaces to the surrounding systems.

Product Operations

The launch of the AirX modular system was coupled with a revolution in the approach to the production system. The system was planned and implemented in parallel with the product development and overall costs have been greatly reduced. Compared to the previous system, the number of operators has been reduced by 75% and the throughput times have been reduced by 90%. Furthermore, the overall floor space has been reduced by 66% (see Figure 1): 70% for the outdoor unit product line and 40% for the indoor unit product line.

Modules are now sourced as sub-assemblies from suppliers based on their strategic intent. Some common modules are sourced for lowest cost and some are sourced locally. By focusing on the assembly of modules, the module variants to be assembled are presented to the line in Kanban systems. This in addition to clean and simple fixtures, has resulted in a dramatic improvement in productivity with shorter change over’s, short assembly time and very high quality.

The production has been further decoupled from the specific brands using extremely late-point differentiation. From the Tranås plant, a generic heat pump is sent to the customer together with a branded design kit. This eliminates the finished goods inventory of branded heat pumps which was a huge problem before. In addition, market volumes can now be better forecasted than before, reducing lead times, inventory and cost.

The fan is key component in the outdoor unit moving air through the heat exchanger. In the past, fans were mounted in the product using many different styles of fabricated brackets. The fan must also be insulated, but this was mostly done as an afterthought in the design. It was placed wherever open space existed.

During the process of creating and optimizing the Modular Product Architecture, the team closely examined the technical solutions interacting with the fan. They discovered that the functions of supporting and insulating the fan could be accomplished with a single set of modules. These modules would have a standardized interface to the fan and to the rest of the structure in the unit. A single design to the module set could be used and scaled for the different sized units.

With this higher level of part commonality, the team determined that they could produce it with techniques reserved for higher volume components. It became a molded part that was constructed of expanded polypropylene (EPP). 30 parts have been reduced to 2 parts and corresponding resulting the complexity cost has been reduced to 1/15.

The same concept was used to hold and insulate the indoor unit’s water tank, saving numerous components, cost and heating energy.

CASE

The World's Most Efficient Engine

Case Story

Wärtsilä

Wärtsilä is a global leader of power solutions and services to the marine and energy generation markets with net sales of around 5 billion EUR in 2014. Operating profits in 2014 were around 570 million EUR, or approximately 12% of net sales.

Wärtsilä is a publicly traded company with 17 700 employees who operate in nearly 70 countries, with headquarters in Helsinki, Finland.​

Wärtsilä provides ship machinery, propulsion and maneuvering solutions for all types of vessels and offshore applications. Marine applications range from fishing vessels with a single main engine to large cruise ships that carry thousands of people, deploy multiple engines for propulsion and additional engines to generate electricity. Caterpillar and MAN Diesel are important medium speed engine competitors within the core marine market segments, while Hyundai Heavy Industries competes within the smaller output electricity generating segment.

Wärtsilä also participates in the more fragmented energy market where numerous engine manufacturers and gas turbine suppliers compete on power generation facilities. These power plants range in size from a few megawatts for a small city or university to hundreds of megawatts that capture the daily peaks in electricity for an entire country such as Jordan. Wärtsilä typically sells an entire power plant, but there are also some opportunities where the scope of delivery is an engine with certain ancillaries.

Medium speed engines have the highest efficiency of any internal combustion engine. They can be configured to burn light fuel oil (LFO), which is similar to diesel for cars and trucks; heavy fuel oil (HFO), which has lower viscosity; and natural gas. Medium speed engines operate in the range of 500 to 1200 revolutions per minute using 4 to 18 cylinders to produce 0.8 to 19.2 megawatts of power (1 000 – 26 000 horsepower). The smallest engines are approximately 2.5 meters long, 2 meters high and 1.5 meters wide, weighing a respectable 7 tons; and the largest engines are 14 meters long, 5 meters high and 4.7 meters wide, weighing an enormous 240 tons.

Wärtsilä produces approximately 1,000 engines per year with the majority coming from European plants in Vaasa and Trieste, but there are also engines produced by joint venture factories in China and Korea.

 

SUMMARY

Creators of the World’s Most Efficient Engine

 

Wärtsilä’s Medium Speed Engine business faced a number of challenges, including customer requirements for more fuel-efficient engines, flex-fuel options and faster time to market. In addition, the company needed to develop an entire family of engine products with future upgrade paths, retrofits and enhanced serviceability. Wärtsilä embarked on a modularity program with the support of Modular Management.

Business Value

Wärtsilä was able to develop the entire product family simultaneously, at dramatically reduced time to market, and created the world’s most efficient four-stroke engine with greater than 50% efficiency rating, which is a Guinness World Record.

KPIs

  • 45% reduction in initial development time
  • 44% lower cost for ongoing product care
  • 43% fewer unique part numbers
  • 100% increase in use of common parts
  • 40% less purchased parts
  • 50% reduction in assembly time. 
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The Full Story

In 2008, there was a strong push in the market to increase fuel efficiency, and customers were looking for flexibility to burn different types of fuel. Other engine manufacturers were starting to deliver next levels of performance with newer products, while Wärtsilä was not able to quickly answer with something new. They needed to make improvements to their entire line of medium speed engines to stay competitive.

The range of medium speed engines at that time was based on designs that originated in the late 1980s and early 1990s. Performance improvements had been implemented continuously, but at this point the engines had reached the physical boundaries of the design and no further performance increase could be achieved without major redesign.

In the past, each engine was designed and optimized independently with little shared design between medium speed engines. The standard time for Wärtsilä to develop a single new engine was around 10 years. The management team decided that this needed to change, and the company could no longer develop just one engine at a time. They needed to determine how to develop and launch an entirely new range of engines and ensure the potential for incremental performance improvements during the coming twenty years.

To answer this challenge the company enlisted a large management consulting firm and began work on a commonality initiative with the goal of deploying more standard components. By working from the bottom-up to choose a smaller set of components that deliver the range of engines, they could reduce development time and costs. Unfortunately for Wärtsilä, these standardization efforts turned into a never ending process that didn’t help them reach their goals. Once a specific engine was optimized with standard components, the others were no longer optimized.

They also found that commonality was driving toward reduced variety and forced choices based on volume goals rather than the market demand, which was quite volatile. Oil prices are one driver of volatility. With increasing prices, the demand from the off-shore oil industry goes up and the demand from the cruise ship industry goes down. With decreasing prices, the opposite happens. With component standardization, Wärtsilä found that they would never reach the volumes needed to take advantage of any savings. Instead, they needed a variety of engines and options coupled with commonality and efficiency. They concluded that the bottom-up commonality initiative could not solve the challenge of widening the portfolio while increasing commonality at the same time.

Product Management & Sales

To address the new levels of competitive products entering the market in 2008, Product Management and Sales established the vision of Wärtsilä as the performance and efficiency leader. Since they could not squeeze more power or efficiency out of the old engines, they needed a step change that phased out the old product family.

Defining the exact requirements for this new product family was a difficult task. For the various marine and power generation applications, the product requirements and technical restraints were very much intertwined. The requirements were a moving target that changed with each customer conversation by the sales team. It was difficult to manage and track where requirements came from and how they changed over time and across customers.

Product management was also done on the level of individual engines rather than at the level of the portfolio. Sales and marketing, on the other hand, was managed on a business unit level with separate focus on the marine and energy generation markets. This division was clearly reflected in the implementation of sales and engineering configurators. There were sales configurators managed at each of the business unit levels and separate engineering configurators for each of the engine sizes.

When customers specified their requirements, the sales team translated their request into a selection from the portfolio offering in the sales configurator. This request was then converted to a configuration in the engineering configurator. Often, the engineering configurator was not able to fulfill a specific customer request and a “non-standard request” was issued for technical and economical evaluation.

Product Design & Engineering

The engineering team was the most challenged of any group at Wärtsilä with the goals established for the next generation of products. They were under extreme pressure to develop new products quickly, but the roll-out of new engine capabilities and features took a long time. Many of the engineering resources were deployed to create unique customer solutions, and every new capability or feature on the existing products required adaptions of every engine type. Furthermore, there was no formal technology roadmap in place to address the step change in performance. Up to this point, technology planning was left to the intuition and experience of the senior engineers.

Engine development was highly dependent on multi-million Euro, full prototype testing as the primary mode of design evaluation. In addition to being a large portion of the overall expense, the designs were never well coordinated and there were many surprises that caused delays. Engineering was also challenged with pressure to reduce costs. This included both product material cost and the cost of developing new products. Cost reductions were challenging because most product costs are set during the initial design. They needed a new design that would accomplish their cost reduction targets.

Alongside the commonality initiative, Wärtsilä had started to implement a new Product Data Management (PDM) system to support the reuse of components. Wärtsilä had identified the primary barrier to component reuse as the ability to easily find them. However, they discovered the quality of the existing part data was very low, and the effort to implement a solution required the experience of people who have worked on the product for a long time. In addition, the same, highly valuable engineers involved in the customer orders are required to create the PDM data.

Wärtsilä had two legacy PDM systems that existed in separate companies before they were merged together. Since Wärtsilä was a pioneer in the usage of PDM systems, the systems had become heavily customized, making a simple merging of the two impossible. A lengthy PDM program was defined with four multi-year phases to first merge and then improve the management of product lifecycles at Wärtsilä.

Product Operations

Generally, it is a long process to source and produce a big engine for marine and power generation. They are comprised of big, heavy and difficult to fabricate components. For the largest components, only a few suppliers around the world are able to manufacture them. New products and engine variants always brought new processes or assembly sequences and changes to the support functions like factory logistic and quality.

Because of the large number of different engines and sizes, the assembly operations had to handle a lot of variations. Years back, an assembly line was implemented to improve the efficiency and productivity of the final assembly. It was difficult to achieve a consistent movement of products. They worked to limit the steps completed on the line, and much of the work was done off-line with components preassembled into large modules. The cycle time of the line extended into the preassemblies because the large assemblies could only be assembled once an order was received.

During the process Wärtsilä had to deal with customization changes that were often not settled once the supply needed to start. It was hard to predict how these changes would affect the product to be produced – they could have big domino effects inside the product. Long lead time components, that had to be ordered early, could need re-work or even become unusable when the impact from the customizations emerged. Such unused components were put into the warehouse, tying up capital and waiting for another suitable order, and many were scrapped in the end.

It was hard to setup an efficient sourcing and production flow or commit to production lead times when there were grey areas in the production bill of materials (PBOM). Customization changes could potentially have a wide impact to the system. This prevented Wärtsilä from ordering components in bigger batches to make sourcing more efficient. Instead components were ordered one-by-one, disabling any batching synergy effects. With the low volume per part, high variety and many new parts, there were large investments in tools, fixtures and automation support.

After Wärtsilä was unsuccessful with component commonality and standardization, they examined other companies to see how large strategic changes to their business were made. Modularity was one of the major initiatives identified to enable increased commonality. They found that commonality occurred at a lower, more granular level than their previous approach, and the modular architecture would simultaneously provide variance in their product offering.

“There is some risk,” says Director of Concepts and Solutions, Patrick Baan. ”But we’ve studied companies in other industries and it’s clear that the ones who adopted a similar approach have been consistently successful, delivering good results for long periods, well over 20 years.”

The initial program to implement a modular architecture was focused on the middle power range of Wärtsilä’s medium speed engines. This range of engine constituted the largest portion of sales revenue, and the architecture that was developed could be extended to larger and smaller sizes.

Revenue Growth

Wärtsilä planned to maintain their significant share in the marine and energy markets by regaining their leadership in technology and performance. This included significant advancements in fuel efficiency, fuel flexibility and improved serviceability. With a modular architecture, they would offer customers high performance, tailor-made solutions that are validated in product development rather than engineered during the delivery process.

During the lifetime of the medium speed engine family, Wärtsilä planned to roll out novelties across the family at a faster pace than with the previous family. They also planned to increase serviceability through backward compatibility of new module variants and a limited number of different spare parts. Products would need to be easy to upgrade, cost-effective to recondition, and provide a low total cost of ownership.

Profitability Improvement

 

The overall profitability of the product family would increase by reducing cost in product development and operations. They planned to reduce the cost of developing new engines and maintaining existing engine products by using fewer designed articles. The cost of engine components would be reduced by using more common components.

Lower production costs, increased production flexibility, worldwide availability and high quality level would be achieved through global suppliers and module production with centralized final assembly. They looked for an increase in standard processes and a faster flow of engines through the factory.

The new middle power range, medium speed Wärtsilä 31 engines are truly flexible to meet varying customer demands. They can use HFO, LFO and natural gas, plus any combination of these fuels. The initial launch of the product family can be configured to host 8 to 16 cylinders that crank out 610 kilowatts per cylinder. This is the highest power per cylinder and total overall power for middle power range engines. They achieved above 50% efficiency rating, making this the most fuel efficient four-stroke engine in the world – for which Wärtsilä received a Guinness World record award.

“With this breakthrough development, which is based on the introduction of the very latest technology, we can now open the doors to a new level of optimization that is valid throughout the entire life of the vessel,” says Roger Holm, President of Marine Solutions and Executive Vice President of Wärtsilä.

With the new engine platform based on a modular architecture, commonality level has doubled. It took half the time to develop the engines versus any other product in the past, and the range was 2-3 times the scope of any of the past product development efforts. With fewer prototypes, the company saved over 10 million Euros. They also reduced the annual continuation engineering cost by 700 000 Euros.

The company has grown in modularity competence quickly. The development team learned how to work better together making compromises and balanced decisions,” said Marco Delise, General Manager. “Wärtsilä has also created specific positions to manage the modular system. “This was due to the Modular Management consultants who were very professional with high competence and experience.”

Across the family of medium speed engines the number of unique components has been reduced from nearly 7 000 to under 4 000. Product development expense for the entire family was initially estimated at 88 million Euros, but it was reduced to 49 million Euros with the use of the modular architecture. The time to develop the new engines was also reduced from 15 years to 10 years. The ongoing cost of maintaining the product family has also been drastically reduced from 6.1 to 3.4 million Euros. By reducing the number of different purchased articles from 1 200 to 720, Wärtsilä has gained leverage on higher purchased volumes per article.

Product Management & Sales

For customers, the modular design of W31 enables time spent on maintenance to be notably reduced. Since the entire engine modules can easily be removed and exchanged with modules available from stock, no dismounting and overhauling of individual parts is necessary. The shift from single spare parts to exchanges including power units, injectors and high pressure fuel pumps allows servicing to be more efficient, while engine uptime is maximized. Single parts dismounting remains possible when needed.

“The modular design will also allow for technological upgrades over time, particularly with regard to evolving emission controls and decisions to opt for different fuel types,” says Giulio Tirelli, Director of Engines Portfolio and Applications.

There are many customers building power plants on sites where only diesel fuel is currently available, but they know that a gas pipeline or a gasification plant is coming in few years. Now, Wärtsilä can offer a new engine optimized for diesel that can be easily converted into an engine optimized for gas. This is a strong value proposition that can be quantified by the savings in fuel consumption and the conversion cost. Similar retrofits can be made for different levels of emissions.

To develop the modular architecture, the team needed a plan for the whole family. They worked from a market view – not from a single customer or application view. Product requirements became marketing’s assessment of the market rather than the specific needs from each customer. Customer focus is now the “why” behind everything they do. Every variant of a module exists for a specific customer reason.

Targeting the most important segments first, four complete engine configurations were completed before the product family was launched to the market. The remainder were prioritized by segment and would be completed as additional Module Variants were designed. They could get the new product on the market faster while maintaining the ability to meet varying customer demands. The new product configurator was a helpful tool to prioritize what modules and variants to develop based on market demand. The product configurator also helps Wärtsilä to sell existing variants, rather than having the customers tell them exactly what they want. Sales has become much more proactive.

“Customers are unlikely to see any difference because the flexibility we’re offering is the same as it was before”, says Patrick Baan, Director of Concepts and Solutions. “By getting this right, our view of what we’re doing and how much time, effort and risk it entails will be much improved. It will be easier for us to keep the promised time schedule. And there’ll also be more components that we’ve already used in other solutions, making the commissioning process smoother.”

Product Development Engineering

At the beginning of the project, the team developed a technology roadmap that was a clear and objective evaluation of what should be done to become the technology leader. It was a solid starting point for the development of the architecture and for achieving performance and technology goals.

The reduced complexity and standardized interfaces have increased Wärtsilä’s ability to pre-test components on rigs during the development phase. All of the mechanical equipment is now evaluated with computer-aided engineering and then moved to a rig test long before it ever makes it to full prototype validation. This has resulted in many fewer early failures and quality problems than in previously launches.

“The Wärtsilä 31’s modularity is a very powerful property,” says Ilari Kallio Vice President Engines R&D, “allowing us to make the product easily configurable to all kinds of applications. You’ll see this approach at work in all the new engine generations we create. This development establishes a new type of thinking for Wärtsilä – a new way to design and manage a product.”

CAD System

By using existing CAD features in a smart and harmonized way, the modularity program defined a new way of working in order to capture and use the modular data. CAD system changes were implemented and procedures were added to the CAD protocol to embrace module interfaces and skeletons. The modularity program now became the vehicle for changing CAD systems. There were many opponents to the change in beginning, but once the design work actually started and passed a threshold it was very much appreciated.

“We created a lot of new stuff. It was more work at the beginning, but the benefits came when we created all of the Module Variants and when we started maintaining the product family”, says Juha Matti Myllykoski, the head of the design team.

A more advanced way of working with the new CAD system, that was several years newer and more capable than the previous versions, enabled reuse of design elements ranging from interfaces to regular parts. They could now reconfigure a complete engine by using modules and a standard assembly of the virtual product. Module Variants are replaced automatically or with simple, manual interactions. Something that only a few experts could do before was now easily available for everyone.

PDM System

In parallel with the modularity program, the PDM beta project had been executed and was nearly complete. Special requirements for the modular architecture were added to the final stage of PDM the project. Specifically, they added special item types for modules and interface and divided some into sub-classes.

By integrating the PDM system with the modular architecture, users were able to navigate the modular architecture to match parts to modules, to list all of the variants of a module, to see what interfaces were used by a module, and to see other modules using the same interfaces. Authorization and release procedures could also be maintained by these new item types, which enabled tracking and governance of the ongoing modularity program.

Product Configurator

Managing the configuration of the engines with a modular architecture was an eye-opener for Wärtsilä. It was significantly more efficient than the existing configuration tool and practice. Now the complete engine in all its variations could be captured in one configuration model within days of completing the architecture. Previously, an engine assortment like this was divided into a number of subgroups where each group was programmed independently over weeks or months amounting to several month or years for the complete product family.

They were now able to build an early picture of the logical limitations in the way modules and variants had been specified. During the refinement of the architecture, timely measures could be taken to adjust the definition of the modules to achieve an improved configurability. As they built experience, Wärtsilä found that they could create even more flexible configuration rules with less complex programming. Previously, the configuration rules were done after the complete design was finished. Now, configuration rules were available long before design work began as part of the initial engineering and planning work.

Product Operations

In past, Wärtsilä talked about a few large modules that were brought together on the assembly line. Their new way of thinking about modular architecture deploys a larger number of smaller modules – many of which are planned, batched and pre-assembled. They continue to use the single assembly line, but there is significantly more parallel production. There are modules that enable flexibility during the engine assembly, which extends the point where an exact product configuration is determined. This has allowed Wärtsilä to offer fast delivery on many of their engine configurations and an overall 50% reduction in the engine assembly lead time.

“The new, modular W31 family of engines is much more efficient to source and produce, even in a situation with many customization changes,” says Janne Kansanaho, New Product Development Manager for the Delivery Center in Vaasa. “The stable interfaces put a limit to where customizations impact the system. This makes it possible to source in batches, and the risk of ordered components that will be unused is virtually eliminated.”

Early availability of product architecture data with the specification of all module variants and the three-dimensional module data of skeletons and interfaces allowed the production experts to simulate and optimize the assembly line well ahead of the finalization of drawings and realization of first prototypes. When the manufacturing engineers knew the weights, dimensions and interfaces in advance, they were able to plan for jigs, movements and storage. They were able to design, optimize and “virtually validate” the system for the whole portfolio at once. The new operations design was completed well before the first new engines were produced.

With the modular architecture, the PBOM has become much clearer. Late customization components have empty placeholders in the bill of materials that tell exactly what components will be unique. Wärtsilä has also found it much easier to convert the Engineering BOM to a PBOM. There was a much better coordination of activities between engineering, manufacturing and sourcing. They had fewer problems and a quicker ramp to full production reducing tied-up capital and Return on Investment (ROI).

It is common for marine customers to choose the driving end of the engine relative to the intake and exhaust. Finding an innovative way to handle this need was an objective of the new modular architecture. With this goal in mind, the team came up with a symmetric engine design where both ends of the engine block were identical.

They could now switch the side of the engine where it is connected to whatever it is powering. This is shown in the diagram below where the large flywheel is located on the left side of the engine in the left picture and on the right side of the engine in the right picture. In both of these pictures, the turbo charger, intake, and exhaust on top of the engine remain in the same location.

In the past Wärtsilä had to use 40% unique parts to be able to offer both engine configurations. Now there are only a few parts that change. To accomplish this design they had to use a thicker engine block in some areas than was necessary for the individual configurations. This added some material cost to the engine block, but it was a small price to pay to reuse parts within the portfolio.

The team similarly optimized the portfolio for other product variance drivers such as fuel type. This greatly reduced the number of fuel system components unique to the fuel types increasing the overall commonality of parts within the engine portfolio. They have increased the number of fuel choices for customers and have created a cost effective path to upgrade an engine.

CASES

Cut Time to Market by 50%

Case Story

Husqvarna

Husqvarna Group is a world leader in outdoor power products including chainsaws, trimmers, lawnmowers and garden tractors. The offering includes products for consumers and professional users and is available via dealers and retailers in more than 100 countries.

Acquisitions, regional product variations and low-cost competition all meant Husqvarna needed to find new ways to rationalize part numbers, lower costs and globalize product design. The goals were clear: improve profit margins, speed up time to market and meet customer demands for product variations. Husqvarna turned to Modular Management and two leading brands of electric string trimmers with annual sales of over 500,000 units led the way in a modular design project.

The results? 50% faster time to market for new SKU’s, up to 25% reduction in manufacturing costs, 50% less resources to develop new products, substantial reductions in inventory across the supply chain and, best of all, a significant increase in EBIT margin despite fierce competition.

Summary

Cut Time to Market by 50%

 

Acquisitions, regional product variations and low-cost competition all meant Husqvarna needed to find new ways to rationalize part numbers, lower costs and globalize product design. The goals were clear: improve profit margins, speed up time to market and meet customer demands for product variations. Husqvarna turned to Modular Management and two leading brands of electric string trimmers with annual sales of over 500,000 units led the way in a modular design project.

Business Value

  • Developed profitable entry-level price point product
  • Freed-up resources to develop more new products
  • Entered new markets with unique product variants
  • Drastically reduced amount of inbound inventory
  • Maintained low Service Call Rate with less effort
  • Reductions in inventory across the supply chain
  • Significant increase in EBIT margin despite fierce competition.

KPIs

  • 50% faster time to market for new SKUs
  • Up to 25% reduction in manufacturing costs
  • 50% less resources to develop new products.

The Full Story

The global annual market for Husqvarna’s products is estimated at approximately 23 billion USD. North America accounts for approximately 60% of this market, Europe for more than 30% and the rest of the world for less than 10%. Demand is driven overall by the general economy, the level of activity in the forest and construction industries and private consumption of household capital goods. Average annual growth in global demand is estimated by Husqvarna Group at 2-3% per year in terms of volume.

Strong local variations in product volume occur as a result of weather conditions, primarily regarding garden equipment. Garden products also experience a strong seasonal cycle where the vast majority of products are purchased in the spring. To grow the company and counter the fluctuations in the business, a number of companies were purchased by the Group starting in the late 1990s and continuing through the early 2000s. Many brands were added to the portfolio along with manufacturing facilities and engineering resources. These lead to business complexity with an expensive range of components that needed to be source regionally and many times in high cost countries. By 2010, to increase operating margin, executive leadership was looking to fully integrate the various businesses and transform the company into a strong global player with effective and efficient functional organizations.

One of the key strategic moves was to reduce technical platforms and unique components by Modular Design. And one key product group in the handheld category is string grass trimmers, which uses a flexible, monofilament line for cutting grass and other plants near objects like fences. String trimmers are powered by either a gasoline engine or electric motor. The market for electric string trimmers was extremely competitive with fierce competition in all geographies. In the United States, especially, it was hard to make a profit. Competitors from China were buying market share by accepting 1% EBIT margins. To survive, Husqvarna needed to reduce their cost of goods sold, maintain price points and keep their market share.

Product Marketing & Management

The five Husqvarna brands for electric string trimmers were Gardena, Flymo, McCulloch, PoulanPRO and Weedeater. The aim was to develop a stronger brand image for these electric products while creating synergies across brands and simplifying the business.

In the same timeframe, the market opportunity for battery powered units was growing. Battery technology had matured where the price and performance were becoming attractive to consumers.

Husqvarna had a challenging position with retailers in North America where retailers strive to have unique products for their stores. These unique stock-keeping-units (SKUs) enabled more differentiation with other retailers and avoided having to match prices. Husqvarna sales teams had to respond to these demands which drove complexity and cost in operations. This situation deemphasized the brand identities that were product performance-based, and aesthetic features were about the only thing that could be maintained.

The Executive Leadership sought a way to proactively and systematically make product decisions that 1) ensured commercial success and 2) enabled improved operational efficiency. A part of the answer was to put more emphasis on product planning to provide input to a market driven modular design of the next generation product lines. This was a difficult initiative that involved changing the roles and responsibilities of both the marketing and sales functions.

Product Design & Engineering

Husqvarna engineers were in charge of creating the technical specifications and incorporating the features and look of each brand. The detailed engineering of the products was sometimes outsourced to low-cost suppliers who would complete the designs, set up the inbound supply chain, and sometimes manufacture the product, put it in a box and ship it directly to Husqvarna’s market channels.

In many cases, the design teams would maintain a unique trimmer platform for one specific product for one specific retailer. There was little sharing of efforts between the different design sites as each was focused on supporting their specific products and a broad range of unique designs. Husqvarna sought to create an engineering organization that would share designs and design efforts to improve the efficiency of new product development.

To keep up with competition and demands from the sales channels, Husqvarna needed to introduce new products every year. Since few components were shared across brands, this drove complexity in all parts of the business.

Product Operations

Depending on brand, different supply chains were being used. The Gardena brand products were assembled in Husqvarna’s factory in Ulm, Germany, and the distributed to many retailers throughout Europe. The Flymo brand was fully sourced from suppliers, and sold through a few big retailers in the UK. In USA, the El. Trimmers were sold under the brand WeedEater, these products were manufactured in the Husqvarna factory in Shanghai, China.

The demand for trimmers occurs primarily in the spring season. Manufacturing starts in late fall and continues throughout winter, while finished products are stored in warehouses. It’s important for the company to accurately predict the volumes for the upcoming year because it is difficult to recover once the buying season has begun.

The primary objective for electric string trimmers was to create a global portfolio of brands with a uniform approach for each brand across all channels and geographies. Husqvarna looked to Modular Product Architecture as the key enabler for more profitable product families. A global product architecture would combine the needs of the various brands and regions into an efficient family of products. The product development teams would work together to develop it, and the suppliers would be able to complete the detailed designs and build the products in a more uniform and optimized way.

The leadership team wanted to maximize commonality for the Husqvarna medium and high end product range that was designed and manufactured in-house, outsourcing the low end products. For the medium and high end products the goal was to leverage the use of a modular architecture to the largest extent, creating product families, technical platforms, and technical commonalities. The primary desired outcomes were to reduce the cost of R&D and tooling.

Electric string trimmer product activities at Husqvarna were a small portion of the products sold by the company. They faced the same challenges as the other products, but on a smaller scale. Husqvarna chose to focus here to prove the benefit of modular architecture and establish how to best make the transformation with modularity.

Modularity as a Business Enabler

In this highly competitive market, prices were trending downward for electric string trimmers, and Husqvarna was starting to lose market share. Their ability to maintain their market share and potentially grow was based on a faster cadence of new product introductions. This opportunity was about refreshing the existing products faster rather than increasing the number of different product variants.

Since the magical entry price point for electric trimmers in the mid-price segment was moving down towards 50 Euros, it was necessary to significantly reduce the manufacturing cost of the trimmer. This was quite a task. To enable this cost reduction, they needed to reduce part numbers for the new range by 40% and reduce new parts introduction by 60%. Furthermore, the complexity reduction enabled the goals of reducing the inventory level by 30% while improving the on-time delivery performance.

During the project, there was a redefinition of brands across all Husqvarna products. This changed the scope of the modular architecture, and some brands were slated to only be petrol powered and others were upgraded to more professional products. The electric trimmers sold under the WeedEater brand for the US market became independent and managed from Husqvarna’s US organization.

The focus was placed on the Gardena and Flymo brands with a combined volume of 500 000 units annually.

With the new products based on the modular architecture, the manufacturing cost has been reduced by 5 – 25%, depending on brand and product, yielding a significant EBIT margin increase. Furthermore, the inbound inventory had dropped significantly, as predicted and targeted by the project. The resources required to introduce a new SKU’s was also significantly reduced and the time to market for a new SKU was dropped by more than 50%. With the efficiency gained from the modular architecture, resources were freed-up for other projects. Moderate growth has also been achieved by entering markets in different countries with a few new SKUs.

Product Marketing & Management

After the modular architecture was completed, the entry-level price point for an electric string trimmer was well established at 50 Euros. Without the manufacturing cost reduction from the modularity program, Husqvarna would not have been able to sell these products with profit at these low price points.

“The electric trimmer market is about fierce competition. Without modularity, we would have lost market share.” says then Director of Product Management, Martin Lienhard. “Now we are competing with regular feature upgrades, and this was not the case before the modular product architecture”.

Looking ahead, Mr. Lienhard commented, “One promising segment is Demanding Consumers. It will take off, but we do not know when. So we are watching it and have the ability, thanks to modularity, to react fast when it happens.”

Product planning has taken on a much longer-term view. The evolution of a product variant is predicted and the impact to the product design is plotted in terms of the modules that will stay the same and the ones that require new variants to be developed.

Product Development Engineering

The design teams saw much higher certainty on projects coming into the queue and could work more confidently without being constantly redirected. The framework from developing a modular architecture created a new mindset. The approach, starting from business factors, has made the engineers more cost aware and better able to design in efficiencies. Projects are well defined up-front with engineering input, and they are being completed faster, on-time and on-budget. The module design project gave opportunities to design-out cost everywhere, contributing to the up to 25% manufacturing cost reduction.

The Project Leader and Product Manager, Felix Wegerhoff, says that “The big impact was the shift in mindset coming from the systematic approach of Modular Management’s method to modularize a product family called Modular Function Deployment® (MFD®). It makes it easier and more predictable to develop new product families.”

In the development projects, the teams are now talking about modules. A new project is judged on how many new module variants need to be developed. The teams can focus on these smaller chunks and work more efficiently, rather than redesigning the entire trimmer architecture every time.

The design teams for the Gardena and Flymo brands were centralized to Ulm, Germany, and the Flymo R&D site in Aycliffe, United Kingdom was closed. The R&D team in Ulm is grateful to the modular product architecture work when developing new products for multiple brands and many retailers, which now come about at lead times less than half of what they were beforehand.

Product Operations

The modular structure of the new electric trimmer product lines has reduced the need for inbound inventory and the quality measured by the Service Call Rate (SCR) is maintained with much less effort than before.

Given the optimized supply chains for the different brands, the time and effort to introduce a new model has dropped by more than 50%. This enabled the new products to be launched to the market in the three separate waves that were much closer together in time. From the modular architecture, the module variants necessary for a wave were developed, using the standardized interfaces defined in the up-stream conceptual modularization work.

First, the Flymo (mains and battery) products for the UK market were launched in 2014. These products are now fully sourced (trimmer in box) from suppliers and shipped directly from suppliers to a few very large retailers in UK.

Gardena (battery) products for the EU market were also launched in 2014. Components are now sourced and assembled into modules at the suppliers. Final assembly to products is made in house.

The third wave was the Gardena main product lines for the EU market. These products were launched in 2015. Components are now sourced and assembled into modules at the suppliers. Final assembly to finished products is made in house.

The majority of the cost savings came from the new Power Module. This module provided 80% of the common parts shared between the Gardena and Flymo products. The module had four plug-in electric module variants and two cordless module variants.

The whole motor, drive unit and shaft was to be sourced as a single unit and shared among all of the products. At first, it was difficult to find a supplier that would manufacture the power module based on the exact specifications. It was important to get the suppliers involved early so that they could strike the right balance. The four plug-in module variants differ by the motor, while the lowest power variant does not include the ball clamshells at the trimmer head. The two battery-powered module variants differ only by geared drive or direct drive.

All of these parts are common across the whole product family:

  • Cable Grommet
  • Switch
  • Capacitor
  • Internal Cable
  • Al Tube End Plug (x2)
  • Al Tube
  • Height Adjustment Nut
  • Ball Clamshell Loc
  • Ball Clamshell Cov
  • Ball Kick Spring
  • Motor
  • Motor Mounting Plate
  • Cutting Head
  • Spool
  • Cutting Linev
  • Cutting Head Cap
  • Line Feeder
  • Cutting Head Spring.