Soaring costs for metals and plastics are putting a new
emphasis on cost reduction at major OEMs, such as Caterpillar in Peoria, IL.
Two managers, Nelson Jones and Syamala Srinivasan, developed a computer-based
system to run CAD-based feature analysis on thousands of mechanical components,
replacing a manual spreadsheet system that was too consuming for engineers.
They're looking for a fast way to identify designs that offer potential for
While their program was developed a few years ago,
Caterpillar is just now deploying it across the company, scouring thousands of
CAD files looking for redesign and other cost-saving opportunities through a
spin-off company called Akoya.
"They're clearly achieving savings of 5 to 7 percent on a
broad category of mechanical components such as forgings, castings, tubing and
steel plate, which is significant considering the increases in steel prices,"
says Brett Holland, president of Akoya, which has three other active customers
for its cost management software.
The key aspect of the Akoya approach is a feature it calls competitive
banding analysis, which provides a price range in which companies can acquire
a component in its market from an effective producer. So in other words, it
does more than analysis just for the design features; it also looks at prices
paid for similar products across the company and compares them to
"should-costs" for the same product based on data in the computer program.
The Akoya program builds on top of cost-management programs
that engineers use at many companies to determine the most cost-effective
approach as they design. These include tools such as Design for Manufacturing
and Assembly (DFMA) from Boothroyd &
Dewhurst and Costimator from MTI
"Typically, we conduct workshops of 20 or so people when we
get all of the key decision makers together and examine all of the parameters
that affect cost as shown through the competitive banding process," says
Holland. Specific targets are identified in those meetings, such as redesign,
renegotiation and new supplier development. Specific individuals are given
responsibility and dates are stipulated for review.
says competitive banding workshops have consistently generated over $1
million in savings per workshop. Specific benefits he cites include:
- 5- to
15-percent savings on parts families by identifying the most-effective
the time to identify profit improvement opportunities by 80 percent
design time by 25 percent
For one customer, Akoya identified a price band for a
flywheel housing of $9.71 to $10.35. The OEM was paying $14.74 for the part,
30 percent above the competitive band. The company bought 133,000 of the part
per year, representing significant lost profit. Some of the features such as
sports and drill holes represent redesign opportunities. As a result of changing
various factors, the cost was moved into the competitive band.