CASE STORY

Guldmann People Lifting Systems

Inspiration for Hardware Design

GULDMANN PEOPLE LIFTING SYSTEMS

Summary

Guldmann People Lifting Systems were looking to scale up a diversified product portfolio. The market was demanding a larger range of ceiling-mounted and mobile people lifts at acceptable delivery and price points. The challenge was to keep growing while maintaining market position as a state-of-the-art, customer-focused lift supplier; without losing control over cost.

The company was also looking to grow in developing countries, where they needed to extend their product offering with lower cost variants. To enable this, Guldmann implemented a modularity program. 

The program delivered dramatic cost-side results including: 

  • 90% reduction in part numbers per product and level of inventory; 
  • decrease in product lead time; 
  • significant cost reductions;
  • higher volume sourcing.

On the revenue side, annual revenues were estimated to have doubled.

Story

In 2003, Guldmann was the market leader for ceiling and mobile lifts. Sales in this market were strong and they were contributing a significant portion of the bottom-line. CEO, Carsten Guldmann, however, was concerned about the challenges that the company would face as it continued to grow. He and the team of top managers also recognized the opportunity in the market would be with continued product diversification and customization. Users and buyers of lifts were looking for more customized products.

With their eye on the long-term success of the company, the leaders of the company looked for a way to grow the company without becoming over burdened by the complexity of increased size. They also looked for a way to provide an increasingly wide range of products while maintaining the cost, quality and lead-time of the solutions to customers.

Product Marketing & Management

The team identified that the GH2 Platform of lifting products would be challenged to address the changing market needs with the right price-points and lead times. The company had strong capabilities to deliver customized solutions for any one customer, but they had limited capacity and a limited set of customers that would wait for engineer-to-order systems.

The company needed to predict more of the range of solutions that were needed in the market and spend the time to develop products ahead of actual orders. Of course, there would always be special needs within many of their delivered solutions, but they were striving for a major portion of solutions to be delivered from pre-developed components.

Product Design & Engineering

The GH2 Platform comprised a flexible assortment of products, but it was clear that the current design would lead to larger and larger levels of overhead to manage the added models that the market requested. The ceiling lifts are complex medical-grade systems with stressed and moving components. Careful and intricate engineered efforts are required to ensure robust and long-term operation.
There was no established product development process at Guldmann to introduce new designs. The product platform had evolved over time with new customer projects. The replacement of the GH2 platform would be a major undertaking for the company, one that had never been done before.

Product Operations

Sourcing and manufacturing at Guldmann had been deployed mostly on an individual project basis. There were some common components that could be manufactured in volume and made available in inventory, but the majority of components were built from design drawings that were recently created.

Higher volumes of more diverse products would be a big challenge for the company’s product operations. Growing the organization in proportion to the increased volume did not carry an attractive business proposal. The organization needed to find efficiencies that would support continued product diversification and increased volumes.

Guldmann sought to create a new product platform that would sustain them for the next twenty years. They intended to keep growing while maintaining a market position of a state-of-the-art, customer-focused supplier without losing control over the cost. They also looked to grow in the developing regions of the world where they also needed to extend their product offering with lower cost variants.

The new platform would be based on a Modular Product Architecture from which a steady stream of product variants could be drawn over its lifetime. The plan was to make a major upfront investment to develop and ensure a robust and beneficial platform. They would then leverage the investment by accelerating the launch of many new module variants. This was the largest product development project the company had every attempted.

Revenue Growth

By offering an expanded range of price points and customizable configurations, Guldmann planned for large sales growth within new channels and geographic locations. In a market where the other major competitors were offering mostly standardized solutions, they expected to win with solutions matched better to the specific customer needs. It was not a technical challenge in designing product that could do the job of lifting people; it was a challenge to deliver products in an acceptable amount of time and at a reasonable price.

Profitability Improvement

By controlling the direct and indirect product costs, the desired price could be supported. Direct material cost would be reduced by purchasing in larger volumes and in fewer transactions. They also sought to eliminate over-specification of components which was a common time-saving practice of selecting components with assured performance versus exactly matching the component to the application.

Indirect cost would be saved in large part due to the reduction in the number of different product designs being managed by the engineering and operations teams. This was indicated by measuring the number of active part numbers. They goal was to cut in half the number of part numbers in the GH2 platform. The company expected to reduce their overall indirect product cost which would come in part from a reduction in materials inventory, work-in-progress and finished goods. They would be working from a master manufacturing plan with greatly reduced lead times.

The team at Guldmann developed a Common Unit and Carry Over module called the Chassis Module. A number of other modules with high levels of variance connected to this module via standardized attachment and transfer interfaces. 

It is rare that you can connect so many high variance modules to a single Common Unit and Carry Over module.

The Chassis Module was a die-casted aluminum component that integrated a lot of different parts into one. It was the heart of the lift and was planned to remain the same for the 20-year life of the product platform. It can be built in large quantities, and the team worked hard to optimize cost and supply-chain efficiency.

 

In 2007, four years after the work was started, the GH3 platform was launched. By 2012, Guldmann’s annual revenue had doubled and the assortment of products on the new GH3 platform had increased dramatically.

The management team devoted a limited number of resources to the development of the new platform in order to control expenses and keep up sales and delivery of products from the existing platform. This proved to be the right balance of time and investment for the very proactive move Guldmann was making in the market.

After the initial platform launch, the remaining product variants were launched in the next two and half years. They have also continued to launch a new variant each year since. All of this has occurred without the addition of any new research and development resources.

Product Marketing & Management

As of 2012, 70% of the volume had converted over to the new, modular assortment. And by 2013, Guldmann planned to fully phase-out the GH2 product platform. 

Their cadence of adding new products looked to continue and they were able to enter the lower end of the market with a limited number of modifications in selected modules.

Guldmann also changed their messaging to the market. They launched a campaign around the central idea of More Time. With products from the GH3 platform, customers were becoming more efficient in their efforts to moving and handling people leaving more time for direct care. The identification of the importance of this benefit to customers came during the process of creating the Modular Product Architecture. Early in the process they used Quality Function Deployment (QFD) to determine the key Customer Values and established that every decision they made about the product could be linked back to the customer. The list of Customer Values became known as the company’s Ten Directives and a poster of QFD was hung in Carsten Guldmann’s office.

Product Development Engineering

Guldmann has started to follow a stage-gate product development process that has given them the discipline to focus their efforts on specific modules to launch pieces of the product assortment in waves. They have done this with a relatively small team while keeping the old platform viable in the market.

The team was diligent in the refinement and perfection of the module system enabling specific strategies for each module and protecting these strategies with robust interfaces. See an illustration of the GH3 module system in Figure 3. Their careful efforts won’t need to be repeated for over twenty years. They are now able to efficiently develop new product variants by making changes to very specific modules and have successfully launched new products every year.

The product development team was also able to simultaneously reduce the total number of active part numbers while increasing the size of the product assortment. The average number of unique part numbers per product variant has been reduced by a factor of ten. With the larger assortment, they are spending less time designing individual customer orders and can focus on new product development or high-value custom lifting systems.

Product Operations

Guldmann created a new assembly line that included module production cells that feed into the final assembly. It was a Kanban system that draws on whole module variants that are then assembled quickly into a final product. They could manage the supply chain for each of the modules and differentiate into the range of final products very late in the process.

Late differentiation was also possible due to the software that was loaded directly on the assembly line for each product variant, including a unique self-test. This enabled quick and easy testing, no matter which product variant was being assembled.

Guldmann also implemented a number of Common Unit modules for efficiency improvements in production and procurement. These modules had only one variant and were included in most lifting products. The supply chain could then be forecasted with greater accurately, with some modules able to be sourced in low-cost countries.

Guldmann People Lifting Systems were looking to scale up a diversified product portfolio.

The market was demanding a larger range of ceiling-mounted and mobile people lifts at acceptable delivery and price points. The challenge was to keep growing while maintaining market position as a state-of-the-art, customer-focused lift supplier; without losing control over cost.

The company was also looking to grow in developing countries, where they needed to extend their product offering with lower cost variants. To enable this, Guldmann implemented a modularity program. 

The program delivered dramatic cost-side results including: 

  • 90% reduction in part numbers per product and level of inventory; 
  • decrease in product lead time; 
  • significant cost reductions;
  • higher volume sourcing.

On the revenue side, annual revenues were estimated to have doubled.

CASE STORY

Whirlpool Product Architecture

Inspiration for Hardware Design

WHIRLPOOL CASE

Product Architecture Bridges Strategy and Results

STEVE PADDOCK, FORMER SENIOR VICE PRESIDENT OF PRODUCT DEVELOPMENT, WHIRLPOOL

Whirlpool had a clear strategy for its many brands of microwave ovens. 

Despite this clarity, the company found it hard to build competitive advantage, and was challenged by low profitability, limited product variants, low end-customer flexibility, low-cost competition, short model lifetimes and limited brand differentiation.

The company then engaged Modular Management to develop a product architecture. The goal was to realize brand differentiation – and accelerate value creation – by increasing the number of product variants, reducing costs and maintaining rapid refresh of models that could be produced in small batches. 

The success of the microwave program fueled a corporate-wide initiative to deploy product architecture in all Whirlpool product categories, including cooktops, ovens, dishwashers, refrigerators, freezers, clothes washers and clothes dryers.

Cost and Revenue Impact

With brand strategies driving market volumes and price premiums, the cost side results were significant:

  • 35% reduction in unique parts
  • 25% fewer parts per product
  • 20% reduction in parts costs
  • 40% fewer platforms
  • 10% material cost reductions. 

Although harder to identify causality, quantifiable market impacts were also considered remarkable, including significant brand price premiums that even exceeded the cost side results.

Full Story

Microwave ovens (MWOs) were being designed and produced in Norrköping, Sweden. The primary business was countertop MWOs, which were characterized by:

  • Global, high-volume products
  • Highly standardized SKU’s with zero or very little configuration
  • Extremely high cost-sensitivity due to direct, low-cost competition
  • Model lifetimes of only one to two years.

The Whirlpool strategy was asking the team to figure out how to produce a larger variety of higher-end microwaves that could satisfy a wide range of customers and quickly evolve with new technologies and design trends. 

Successfully achieving this objective would require the team to overcome a number of business challenges.  They would need to revamp production, create a leaner overhead structure and transform to a nimble, consumer-focused product development organization.

Whirlpool needed a way to efficiently develop and produce a wide variety of brands and models, and Modular Product Architecture became the clear answer enabling a broad range of brands and SKUs from a single, efficient MWO platform. Modular Management helped the team identify the primary challenges and identified program objectives and targets that would be achieved through the creation and implementation of a Modular Product Architecture.  The program, named “Opera” would be driven to meet the business goals with the following objectives:

  • Market strategy – Products adapted to multiple brand requirements
  • Product assortment – Multiple brands with over 10X increase in variance
  • Total factory output – Accommodate annual unit volume output reduction of 60%
  • Manufacturing strategy – Small production runs
  • Inventory strategy – Production to order
  • Total annual cost – Reduce proportion to output
  • Average unit cost – Limit to 3% increase 
  • Indirect cost ratio – Maintain ratio with lower total cost

New Strategy – New Type of Product

In addition to the challenges presented by the business goals, a built-in MWO presented several new technology challenges.  Highest among these is the cooling. Countertop MWOs have a free supply of air all around, but a build-in needs air circulated with the aid of a fan. 

Previously, their traditional countertop MWO used microwave power and, in some cases, an extra grill element. The new built-in MWO platform was designed to offer two new cooking modes; forced convection and crisp. The team also had to develop an approach to provide clear brand differentiation, distinct customer variety, and a planned development path to meet the rapid refresh requirements of the high end appliance market.

Flexible Control Panel

The Opera project had a very clear goal of incorporating a wide range of different styles in terms of look, feel and operation of the products. The platform needed to efficiently accommodate this large variation while impose as few constraints as possible. 

In a traditional MWO, knobs and buttons are placed directly on the Printed Circuit Board (PCB) in one of a number of reserved positions. If a knobs location was unanticipated by the initial design, a completely new PCB must be created. Additionally, each unique configuration requires a unique panel with a specific set of holes. Each of these panels requires a unique tool. Therefore, the traditional design has very limited flexibility due to:

  • Each knob/display configuration requires a unique panel
  • Knobs, buttons and displays can only be placed in predefined locations as relocating will require the creation of a new PCB

The modular product architecture allows for a very different approach to this problem. First, panels had pre-defined surfaces so knobs could be placed in any location. Making these holes did not require tools, but were drilled with a laser to produce smooth edges. Second, buttons and knobs were placed directly in the PCBs so all buttons, displays and knobs could communicate with the PCB via a standardized interface — a cable with a connector. All mechanical knobs were replaced with electronic knobs. This improved their lifetime and addressed known quality issues. Because of increased purchasing volumes, the price of electronic knobs was reduced to that close to the old mechanical knobs.  

As a result, the Opera team designed several panel styles.

“It’s clear that at the time we could not have reached the results we achieved without Modular Management,” said Jorma Mäkilä, Opera platform owner. “I believe we saved a full year of development time and we launched the first Opera products well ahead of schedule.

Using Modular Function Deployment®, “the Opera product was divided into 36 modules which allowed for concurrent engineering,” said Mäkilä. “The Opera team produced a specification for each module. These module specifications capture key data about the module and its variants. The key consultant from Modular Management held weekly Quality Assurance meetings with all design engineers to make sure nobody took off on their own track or broke any interfaces. The truth is, his work was extremely important in the project.” 

Actual overhead cost reduction in the project was 20%. Eventually, Opera was integrated with the oven platform, “Minerva”, which required the Norrköping site to coordinate efforts with the main oven site in Italy regarding brand, market identification and channels. 

“The mindset of modularity allows us to predict the impact of any request for change much more quickly than before. This saves time and energy. In our old designs, when someone asked us for a styling or performance change, we had to review the entire design. Now we can easily see which modules are impacted and provide a response much more quickly than before,” Mäkilä said. An early configurator showed where the unwanted couplings between modules existed and was very helpful in de-coupling the design as much as possible.

Mäkilä also said modularity allowed the team to work with drawings and Bills of Materials more efficiently than before.

Whirlpool had a clear strategy for its many brands of microwave ovens. 

Despite this clarity, the company found it hard to build competitive advantage, and was challenged by low profitability, limited product variants, low end-customer flexibility, low-cost competition, short model lifetimes and limited brand differentiation.

The company then engaged Modular Management to develop a product architecture. The goal was to realize brand differentiation – and accelerate value creation – by increasing the number of product variants, reducing costs and maintaining rapid refresh of models that could be produced in small batches. 

The success of the microwave program fueled a corporate-wide initiative to deploy product architecture in all Whirlpool product categories, including cooktops, ovens, dishwashers, refrigerators, freezers, clothes washers and clothes dryers.

With brand strategies driving market volumes and price premiums, the cost side results were significant:

  • 35% reduction in unique parts
  • 25% fewer parts per product
  • 20% reduction in parts costs
  • 40% fewer platforms
  • 10% material cost reductions. 

Although harder to identify causality, quantifiable market impacts were also considered remarkable, including significant brand price premiums that even exceeded the cost side results.

circular economy
INSIGHT

Circular Economy

BY MODULAR MANAGEMENT

Hot Topic

How to Design Products for the Circular Economy?

Shifting the Economic Model

Transformation maps from the World Economic Forum show where the shift away from a take, make and dispose economic model is gaining ground. So what does this mean for the design of products? How can companies design for the circular economy?​

circular economy

What is the Circular Economy?

The circular economy has over 100 definitions across academia and industry. Common to them all is an economic system that replaces the end-of-life concept with reduction, reuse, recycling and recovery of materials in production, distribution and consumption processes (Kirchherr et al., 2017).

One reason for the circular economy’s rising popularity is its coupling with other megatrends, such as digitalization. The idea is not only to reduce ecological footprint, but also boost economic growth and innovation. 

ISO 14040:2006 defines a product lifecycle as the consecutive and interlinked stages of a product system, from raw material acquisition or generation from natural resources to final disposal. A product system, according to ISO 9001, is the combination of interacting elements organised to achieve one or more stated purposes. A system may therefore be a product or the ecosystem of services it provides.

The circular economy requires us to rethink business models, product design and product lifecycles. And that’s where modular design comes in.

How to Rethink Product Design and Lifecycles?

Usage is typically the longest phase in the product lifecycle. For example, Swedish steel producer SSAB estimates that the majority of all steel ever produced is still in use. At the same time, disposed steel does not satisfy market demand for new steel.

In order to recover materials from products for recycling or remanufacturing, product owners and producers need to agree on product return. They need to rethink the costs of replacing and returning product, and aim to reduce demand for new materials by designing products for greater longevity, or even perpetual reuse. Companies basically need to rethink their business models and the evolution of the customer experience over time. And this naturally involves major risks and uncertainties.

There is significant uncertainty in how to invest, design, purchase, deliver and monitor products so they can be returned efficiently or reusable indefinitely. The degree of freedom for executives and designers to rethink business models or entire products is always limited by time, resources and risk. So how can we act on the opportunities presented by the circular economy? 

Create an Unfair Advantage With Modular Design

For example, take a look at Xerox. 

Xerox is one of the leading manufacturers to design and operate circular product lifecycles for printer and photocopier solutions. The table below illustrates Xerox learnings in moving from selling printer and copier products, to office automation services (pay per use). Savings from remanufacturing a non-modular design were doubled when Xerox moved to a modular design for its copiers.

Modular design enables companies to separate and replace modules that are used intensively from variant introductions and performance upgrades. This improves maintenance services along the product lifecycle, and enables processes for module return, recovery and reuse. 

Modular design also enables companies to explore new markets and new operational models, such as remanufacturing, module by module. This reduces the time, effort and risk involved in innovation, which in turn creates a competitive advantage in time to market for new products. And some of these new products may well be the key to new service business and business paradigms for the circular economy.

Modular Design for Products, Services and Organizations

Sustainable modular designs are customer-centric. This has been true for Modular Management client engagements for more than 20 years, and designs for the circular economy are no different. 

Technology will play a key role in defining product system architecture, whether modular or integral, but technology trends are many and the rate of change is hard to predict. Architectures will not last forever, but a customer-centric modular product architecture is an asset much larger than the sum of technical architectures, and can satisfy strategic and market needs over time.

How to approach customer centricity?

First, think of the customer values provided by your product and then decouple these from current products. Second, rethink your product as the combination of interacting functional elements. With this, how might some elements be designed to perpetuate reuse, decoupled from material use, or designed for effective recovery or recycling? What services would be desirable along the lifecycle? What would this require of your organisation and company strategy? Consider the following, simplified innovation scheme.

circular economy simple innovation model

The positive correlation between modular product architectures and business performance has been researched in a number of industries, including software, computer, consumer electronic and automotive industries. 

At Modular Management we’ve seen how most leading brands, often after product platform and standardization strategies, are investing in modular design and modular architectures to increase strategic flexibility and business performance. 

One learning is crystal clear: cross-functional engagement.

Cross-functional engagement in modular design is fundamental to succeed in realizing and sustaining  business performance. This becomes especially clear when companies want to offer and deliver effective and consistent product lifecycle services for their products. The longer the product is in operation, the more critical lifecycle services become, which is extremely relevant for reuse, recovery and recycling.

Modular design companies are not only faster in time to market, and more cost-effective in design maintenance, they also tend to have more responsive/proactive sales and marketing. Modular design also enables faster assembly and more effective use of suppliers and global manufacturing assets. Modular designs are more suitable to service at near-customer locations, and this reduces tied-up capital linked to logistics. Even spare parts, upgrade and service business become more responsive and efficient.

Provided information model and design principles are aligned, modular architectures for products, services and organisations can meet changing customer needs and accelerate value creation, step by step.

Five Steps of Lifecycle Design Maturity

Rethinking product design for lifecycle services and circularity was a task for a workshop organized by Eurostep, KTH Royal Institute of Technology and Modular Management at the Dome of Visions in Stockholm, Sweden. The task was to define and exemplify levels in maturity in designing for product life cycle services. Participants represented a sample of industrial core competencies, ranging from industrial robots, to heating and power systems, steel and trucks.

Each participant had a different perspective and unique industry experience, but succeeded in defining a common set of challenges, capabilities and values in a five-step maturity model.

Each of the five steps represents a maturity level in designing for product lifecycle serices, from ‘Initial’ to ‘Optimising design’ for product lifecycle services.

This staircase model provides a foundation for Modular Management research into the circular economy. More co-developments with industry are underway, and universities, industries, students and practitioners are welcome to join.

The circular economy embraces both customer centricity and business performance and there is a manageable, step-by-step path to reduce ecological footprint while realizing significant opportunities for your business. Get in touch to find out more.

Colin de Kwant

Colin de Kwant

info@modularmanagement.com

RELATED

Mobility Scenarios

A round table event, on how circular economy and industry 4.0 trends impact product lifecycle services, was organized by Eurostep and Modular Management with support from the KTH Royal Institute of Technology (School of Architecture and Built Environment and School of Industrial Engineering and Management). Held in Stockholm, industry participants came from ABB Robotics, Bosch Thermotechnology IVT, Modular Management, Siemens Industrial Turbomachinery, SSAB and Volvo Truck & Bus. And the output was a five-step maturity model in how to design for product lifecycle services.

LINKEDIN

Follow the ECO² Vehicle Design Centre

INSIGHT

How to Reduce Complexity and Accelerate Value Creation?

EXTERNAL LINK

World Economic Forum on the Circular Economy

Dellner
CASE STORY

Customer-Centric Modular Design

Case

Dellner

Customer-Centric Design

Dellner provides connection systems for train manufacturers across the world.

In order to ensure compatibility with major train types, Dellner couplers are based on a flexible, modular concept that supports customer-centric sales and aftermarket services. Business recognition has come in the form of a Super Company award - or Superföretag as they say in Sweden - from business magazine Veckans Affärer.

At Modular Management we're happy to have supported Dellner on the modular coupler. Watch the movie to find out more.

SUMMARY

"With more than 500 options, Dellner couplers are based on a flexible modular concept. The modular design enables us to offer high spare parts availability, short lead times and lower maintenance costs."

Dellner Product Movie
FOLLOW DELLNER ON LINKEDIN
HOT TOPIC

Configurability

BY MODULAR MANAGEMENT

Mass customization is a hot topic because customers want to configure their own, individual solutions. They don’t want a standardized package, but a solution that meets specific needs. 

Question is how companies can make that happen?

Configurability, Configuration and Mass Customization

A modular product architecture enables you to reduce complexity and accelerate value creation. Here's more on what it is and how you can harness it for mass customization.

Configurability is about how well a product can be configured and customized, and is primarily linked to: 

  1. How the product is designed and structured
  2. How the product is represented in IT systems
  3. How the supply chain is set up to support a configurable product. 

Configuration is the activity of arranging parts or elements in a particular form, figure or combination, and primarily linked to processes and tools, so unique customer requests can be translated into a delivered product. 

When understood together, configurability and configuration enable the mass customization of products so companies can meet specific, individual customer needs in an efficient and effective way.

Configurability

Configurable Product Design

To create configurable designs, products should be flexible enough to allow for the adding, removing or replacing of elements without impact across the product. Changes must be isolated to the directly customized element, without causing indirect changes to surrounding elements.

A modular design has exactly this ability. Why? Because functions, features and performances are encapsulated in individual modules and the modules themselves are protected from each other by interfaces. This allows one module, or variants of one module, to be changed while still fitting through the interface, without changing any other module. 

Configurability and IT Systems

A customizable product needs to be represented in IT systems so that elements can be easily added, removed or replaced. 

One important aspect of configurability is the level at which parts are documented in the model bill of materials (BOM). Many companies sub-optimize the BOM in order to simplify or reduce part number count. Parts are then documented on a too high level, and above the level at which customers want to add, remove or change elements. This means that only predefined combinations of elements exist and no unplanned combinations can be made. And over time, the goal of part number count reduction becomes harder since the number of combinations needed grows exponentially with a multiplication effect. At this stage, companies are still only making predefined combinations and configurability suffers. 

Another important aspect is how to manage the total configurable product range in terms of the bill of materials. Do you have multiple super-BOMs for different products? If so, this means you can make changes inside one super-BOM, e.g. add, remove or change elements, but for other changes you have to change to another super-BOM and throw away what you just did, open up a new super-BOM and start from scratch. A truly modular BOM, on the other hand, can handle the full range of products.

Configurable Supply Chain

The supply chain can disable configurability even if the product design and IT systems are set up well.

The most common reason for this is that the manufacture or purchase of sub-assemblies is on too high a level to stock. This problem is similar to that of documenting parts on too high a level. If you buy or sub-assemble predefined combinations on too high a level, suppliers and internal sub-assemblies are unable to run new, unplanned combinations with an acceptable lead time. 

To solve this we need to delay the so-called ‘variance point’. This is the point in the production process where parts and assemblies become a unique order combination, instead of generic parts that fit into multiple combinations. By delaying the variance point, all assembly operations that make the combination order unique are not made until the order is received. At this point, the requested combination is known and assembled to order. Only generic parts up to module level are purchased or produced to stock, before the order, and are then ready to be assembled in the correct combination.

Configuration

Configuration is the activity of arranging parts or elements in a particular form, figure, or combination. This concept primarily relates to the process and tools needed to translate a unique customer requests into a producible product. 

Configure Price Quote (CPQ) systems often see the quote, or customer order, as the end of the configuration process. But what would happen if you extended the configuration process to the point where you actually launch the internal production order? 

You can then accommodate for the fact that the configuration process should not only provide a correct, customer unique quote, but also a unique, producible bill of materials, including all technical and manufacturing documentation: drawings, diagrams, material specifications and instructions. 

One-Touch Configuration

One-touch configuration means that each customer order is touched only once. That personal touch is typically from a sales representative or the customer directly through an online configurator. 

The configurator needs to secure that the input is correct, complete and consistent. If so, interconnected systems can then generate all the quotes, internal and external specifications, bill of materials, documentation, production and material plans and orders.

One-touch configuration, or straight through processing, is fairly easy to achieve for standard, cataloge products. These are often not actually configured, but filtered by a search function that matches the request to a pre-defined product that is already documented and producible. 

Complex products come in too many combinations for a pre-defined cataloge assortment. Non-cataloge complex products tend to involve a unique combination that has never been sold, engineered or produced before. And this is mass customization.

How to Overcome IT Challenges

There are several technical, IT, organizational and process challenges to overcome if you want to achieve one-touch configuration for complex products. The biggest challenge is often how to connect sales to R&D, engineering and production. 

The sales organization works with customers on a high level, and tends to use a configuration model that covers the whole product assortment. One configuration model is necessary to avoid the scenario where changes in the customer request, which are not uncommon, force personnel to start from scratch in a new model. 

The output from sales configuration is usually a high-level, flat list of specifications and priced objects. At the other end of the organization, R&D, engineering and production work on a detailed level and need a hierarchical structure. 

Super BOM

One product model, often called a Super BOM, typically covers one certain size and type of product. A wide assortment, with different product sizes and types, necessitates multiple Super BOMs.

A Super BOM often lacks overview and cannot repeat parts and assemblies freely without repeating rules again and again in all positions. When it grows too big, any overview of how assemblies can be reused in multiple positions is lost and the BOM itself becomes unpractical. When this happens, complexity gets too high and control is lost. 

The main challenge is to connect two organizational areas that are using different product structures, definitions and levels of detail: sales with its typically flat, high-level structure and R&D, engineering and production with their hierarchical structure and full detail. The Super BOM approach works fine for products with rather low variance and complexity, i.e. where one Super BOM is enough. But when variance and product complexity increase, the maintenance cost for multiple Super BOM explodes and connecting sales, R&D, engineering and production systems becomes difficult, expensive and unstable. If it’s doable at all.

Modular BOM

A modular product architecture provides you with an information model that has a Modular BOM at its base.

In contrast to a Super BOM, a Modular BOM allows you to have a product model in R&D and engineering that can be connected to sales. The Modular BOM separates the actual hierarchy of the product (structure) from the parts and assemblies (content), which means you can freely reuse parts and assemblies and the complete assortment can be built into one model.

The commercial structure allows sales to work on a high level to create their flat list of specification and priced objects. The product properties with goal values serve multiple purposes, including control over how the commercial structure is populated, user input to the configurator, and control over how the Modular BOM is populated. 

A Modular BOM ensures consistency and synchronization of customer requests with sales, R&D, engineering and production. It’s flexible, customer centric and can connect your organization.

How to Approach Mass Customization?

A modular and configurable architecture is optimal for mass customization, whether you’re aiming for a CPQ sales configuration, a producible BOM configuration, or straight-through-processing in a one-touch flow. A modular product architecture is not always necessary for configuration, but enables you to more easily meet unique customer demands, and it’s cheaper and faster too.

Customers want innovative products, fast. Companies want to make customers happy and be 21st century lean. So how does all that work? Modular Management delivers clarity, performance and customer centricity so clients can reduce complexity and accelerate value creation.
Peab PGS
INSIGHT

Flexible and Attractive Housing

Case

Peab

Peab is one of the largest contractors in the Nordics for building and home construction.

The company has been able to create a modular product architecture that enables flexible, affordable and attractive housing.

Peab PGS

Peab’s business for building construction was experiencing a number of challenges, including increasing market demand for lower cost multi-family housing, declining productivity, incomplete building drawings, and previous failed efforts to produce prefabricated buildings with enough variation and features. To solve its challenges, Peab had to find a holistic solution that leveraged the repetitive elements of its manufactured building components (product business) with its flexible design and build capabilities (service business).

Peab embarked on a modularity program with the support of Modular Management. This program generated results including a 50% reduction in building design costs, 50% less construction time, 75% less rework, 50% reduction in on-site indirect costs, and 16% overall cost reduction. The modularity program enabled cost reductions and productivity improvements while enabling the necessary building options and variety.

SUMMARY

Flexible and Attractive Housing

Peab PGS shares how a product architecture enables flexible, affordable and attractive housing. If Swedish isn’t your language, fast forward to 2:05 and see the architecture in action. Even if we’re not totally objective, ‘Housing for Everyone – Collaboration is Key’ is a cool video.

The Full Story

Peab is one of the largest contractors in Europe’s Nordic region for building and home construction. The company provides construction services, civil engineering services, industrial products and property development. The largest division, construction services, is divided into regional groups that manage their own sales, profits and operations.

Contractors like Peab work with architects, designers and clients to coordinate and manage the construction of a building. They provide all the material, labor and equipment and hire any specialized subcontractors needed to complete the project. They work from a contract to build that includes a budget and schedule. Peab is constantly bidding on new contracts and their profitability is tied directly to the winning bid price and effective project execution.

There are many interacting systems within a building that need to be coordinated though the design plans and site construction manager. The industry is conservative and innovation is slow with new designs being implemented for the first time on actual projects. On any one construction job, there are always unknowns that need to be figured out by the onsite team.

The industrial products division of Peab manufactures building products including roof tiles and prefabricated concrete elements. They also supply raw materials in the form of asphalt, concrete, gravel and rock. The operations of this division are in stark contrast to the operations of construction services. Here the company can deploy industrial processes to optimize the cost, quality and lead time of the associated products. It is difficult to implement the same concepts in construction services because almost every new building is unique.

Newly constructed residential buildings in the Nordic regions of Europe had become inaccessible to people with normal levels of income. Purchase prices and rents had increased disproportional to existing buildings. A large market opportunity existed for any construction company who could bring the right product to the market at the right price.

In response, construction firms were looking for ways to reduce costs and offer a more affordable product. They were also striving to shed a reputation for being wasteful and inefficient. Government studies at the time showed the vast majority of industries making productivity improvements over the years, while construction has seen decreased productivity.

The fourth or fifth time a copy of a building was built, firms could reach significant cost savings. This seemed the simple solution, but communities want to control the style and variety of buildings within their boundaries. In reality, a standardized building has a very limited market, and any pre-manufactured building needs to be adapted to both the local site and the demands of customers, local authorities and architects.

Another way to reduce cost was to develop industrial-type processes that would improve efficiency of the actual construction. These processes could also support the construction of buildings with lower-skilled workers. This was not only a desirable position in terms of lower labor cost, but it also addressed the predicted future shortage of skilled tradespeople.

In 2002, Peab setup an internal project called Peab Gemensamt System (PGS) to investigate answers to these challenges. They looked into continuous improvement initiatives, including Lean, that could remove waste and reduce costs. They also looked at using more pre-manufactured components that could be built in a factory and assembled onsite. At the end of two years of investigation, the team had a good idea of the scope of changes that were needed. They needed to change both processes and designs, but they did not have a viable approach to do it.

Product Marketing & Management

There are basically two channels though which buildings are designed and constructed. The first is a direct sales channel where an independent owner, usually a real estate developer or the long-term building owner, tenders the project. The owner determines the specification, and potential contractors bid for the job competing primarily on price and, to a smaller extent, lead time.

The other channel is for the contractor to build on speculation (spec). They develop their own land with a building that is targeted at a specific customer group while anticipating an eventual buyer. There is more freedom to design a building meeting cost objectives, but the builder is still subject to the requirements of architects and external designers who might not share the same priorities. For both channels, the local authorities have the final decision determining whether a building will complement the neighborhood.

Product Design & Engineering

The complexity and massive number of details in a building design meant that no design was ever fully completed. There were always details that needed to be figured out during the actual construction. Plans would often include notes that were guidelines for completion, but they won’t specify the detailed design parameters. This happened often, for example, with curved and blended corners where the details of the final product were left up to a skilled tradesperson. For any one project, it was hard to predict what would be the onsite challenges.

New designs and concepts were conceived electronically or on paper by architects and engineers outside of Peab. The CAD systems that were used were not homogeneous, and the data being shared was mostly two-dimensional sectional drawings. The design teams were constantly starting new full-scale experiments that are put into practice by the Peab construction team. The self-contained process of new product development did not exist at Peab. If the new design didn’t work-out, they needed to adjust and make the overall project come together.

Product Operations

The operations team at Peab was constantly challenged with the generation of waste. Waste includes pure waste such as wait-time, interruptions from weather and rework. It also includes forced waste from new and unproven designs; changes in people’s roles and responsibilities; and overlooked details in the construction process that generate unnecessary activities. Waste can also occur with any building construction project from a lack of a systematic, industrialized and optimized approach. Onsite costs are decreased only when a project runs more smoothly.

The skills and experience of the site manager was an essential component for project success. Decisions and reevaluations are constantly made by this person and the individuals who do the actual work. They are constantly adapting and adjusting, and they use team consensus and opinions to feed the decisions. One of the big challenges they face is the quality of the incoming supply of materials. In most construction operations, there is no process or individual proactively managing this, and site managers need to react when a problem arises.

By creating PGS, Peab sought to make significant changes to the way buildings are constructed. They first looked at ways to apply Lean and other industrial methodologies to the current processes. Limited productivity gains came out of any continuous improvement activity, and after two years they realized that they needed a holistic approach to both the building design and the construction process in order to achieve their goals.

They needed to start from scratch and develop a whole new approach to the building product in order to reach the targeted cost savings. Peab also knew that they couldn’t just build the same building over and over again. It would require a product family with a range of buildings like the figure below that have some underlying commonality. After much research and analysis, they decided to pursue a Modular Architecture.

Revenue Growth

By meeting the price point in the market, Peab expected to grow sales at unbelievable levels. They first needed to meet the cost targets, but they also needed to offer customization of the building to maintain visual variety and satisfy the demands of local authorities and architects. They also recognized the advantage of on-time completion of the buildings which would ensure maximum financial benefit for the building owners.

A Modular Architecture would allow Peab to incorporate a range of building features and options into the same family of building products. It would also allow them to phase in and out new designs by maintaining a consistent set of interfaces. With this approach they had a viable plan to meet the market requirements and eventually dissipate the industry’s reputation for dismal productivity.

Profitability Improvement

The key to Peab’s success in this new market space was a 26% cost reduction. In the past they were able to achieve this cost level only after the fourth or fifth time they built the same building. But now they wanted to do it the first time, every time. Peab expected to achieve overall cost reduction of 15-16% in 5 years and 24-25% in 8 years once volume levels increased.

Peab approached the challenge by applying the promised benefits of a Modular Architecture and identifying targets within each of the cost categories. They set major goals of 50% cost reduction for both the building design costs and the onsite indirect costs. The rest of the cost reductions would come from direct material and direct labor cost reductions.

The team also expected to improve the predictability of the construction process primarily through a 75% reduction in rework. More projects would be completed on-time, overall scheduling would improve and they would incur less rework cost. This rework cost is mostly attributed to the unplanned resources required to correct the details in the final customer sign-off.

Developing a Modular Architecture proved to be the key action for Peab to deliver the right product to the market at the right price. After the launch of the product family in 2007, they quickly achieved variable cost targets for design activities, materials and onsite management. The fixed cost would be on track once they reached planned volumes. They also offered buildings that were desired by customers and had enough variety to satisfy architects and local authorities.

They had developed an industrialized process for a design-and-build industry that would lend itself to continuous improvement. Lean could be used to improve process and reduce waste. Materials and resources could now be managed with PLM and ERP systems. Revenue and profits were more predictable and business calculations could be made with some accuracy. Decisions that were based primarily on instinct and past experience can now be supplemented with risk-lowering data.

Compared to the traditional method of construction, the direct staffing for this type of business is greatly reduced. However, the biggest challenge has been changing the minds of the people and getting them to embrace the new way of working. It is very easy for people who have worked in the traditional construction industry to fall back into their old way of thinking. Peab needed to give constant attention to the change that was occurring with this new way of conducting business.

Product Marketing & Management

During the development of the product architecture, the team at Peab worked hard to align building specifications with architects and system designers. They wanted to limit the options and the overall price, but allow for enough design freedom to preserve variety in the housing market. Figure 2 illustrates some of the components and systems that can be selected within the new product family. By having limits, professional customers, such as housing companies, can sometimes feel constrained. Peab is working to overcome these feelings by developing a costing tool that accompanies their building configuration tool. It will help drive the professional customers toward an optimized solution with a faster cost feedback then they ever had in the past.

Product Development Engineering

The engineering activities at Peab have shifted from designing individual buildings to designing the assortment of functions and modules within a product family. In the past, much of their time was spent preparing the plans and site documents used during construction. Now they pre-develop and reuse these documents and continue to improve them as more buildings are built. Past documents were vague and often incomplete causing many things to be solved onsite.

Peab engineering is now much more like an industrial company that designs and produces products. They have an industrial IT setup including part number management through a PLM system and a 3D CAD system that uses parametric models. For many building modules, the variability has been limited and the production process established so that manufacturing drawings are no longer required. For the modules still in need of manufacturing drawings, a configuration tool is used to easily generate what is required.

Product Operations

Lead times and variable costs targets were reached within five years after launch of the new product with volumes at only 25% of long-term forecasted levels. The team expected to meet the overall target as the fixed costs are spread out over higher volumes.

The most significant change to the building process was the implementation of many standard operations. Peab is now employing many more industry workers on the building sites who are skilled at performing standard operations and implementing continuous improvements. This is a larger pool of potential employees versus the pool of specialized construction workers. The final assembly of the buildings onsite is accompanied by complete and reliable documentation that is created during the ordering process within hours of the release of the final configuration.

The factory employs all industrial workers who work on repetitive, well-established processes. The production of concrete inner wall elements began in the traditional way using detailed drawings that included the overall dimensions, specifications for steel reinforcement and the location of any doors. After building a handful of walls, the workers no longer needed the drawings. They were able to accurately manufacture the component using the bill-of-materials and the configuration information.

By predefining the assortment of building dimensions, features and options, the operations team has been able to reuse forms, tools, and fixtures while implementing dedicated production stations. Forms have been designed on a grid of 100 millimeter increments to allow for efficient resizing and repositioning of features. Problems in manufacturing are avoided or solved more quickly, and there is a good flow of communication between onsite and back-office engineering. They have a plan and a team to execute each building and know what they are doing to a high level of detail.

They are also managing their supply chain more effectively. Materials and components that gained enough volume are being produced in Poland or other low-cost countries. Peab factories can now purchase components directly from the OEMs where they were previously required to go through a distributor. They have also started to co-develop new components with industrial suppliers in a typical OEM-supplier relationship.

Peab spent a lot of time during the development of the product architecture to develop a standardized interface for the way a floor slab attached to any vertical load carry element. During typical building design, a lot of attention is focused on individual joints to ensure robust connections, but no company had looked across all the different combinations of elements being joined. Now, within their new architecture, an individual building element’s joint doesn’t need to be defined. Common connections have greatly improved their overall efficiency and reuse of components.

Peab enabled a cost-optimized overall structure while considering all the layouts that they wanted to include in the architecture. They wanted to make sure the whole system was considered. The PGS project also changed all the processes from building design to construction to emulate the industrialized processes in other industries.

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.

FOLLOW ALFA LAVAL ON LINKEDIN
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

HOT TOPIC

How to Speed up Time to Market?

BY MDULAR MANAGEMENT

When Speed is of the Essence

How can executives for large companies speed up time to market for new products?

Large companies, with many brands, tend to face challenges in terms of speed. Smaller companies, by their very nature, have a tendency to be faster and more innovative. 

At the same time as small companies are hungry to challenge incumbents with innovative products on high-margin markets, other global competitors challenge on volume. 

The market leadership of multibrand companies is therefore often under pressure, even for the most successful of organizations. But leading multibrand companies often find ways to move faster. On the product side, for example, there are opportunities to reuse parts across products, reduce cannibalization across brands, compete on innovation and speed up time to market for new products. 

Speed is a key element of The Executive Dilemma, i.e. how to optimize operational excellence, customer intimacy and product leadership. Click below to find out more.

executive dashboard
TECHNOLOGY

PALMA®

This is the world-class solution for product management.

Standing for Product Architecture Lifecycle Management, PALMA is cloud-based strategic software to create, document and govern modular product architectures. With this unique structured approach you can design, document and configure products. You can also connect enterprise systems and secure business goals.

Built on an in-memory database platform, PALMA is faster and more capable than anything else on the market, so you can create configuration rules without coding, govern product architecture life cycles and create a business advantage.

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.