A recent Spend Matters perspective asked a very important question: “Have You Got the Total Package?” This is important not only because packaging costs money and adds to total product costs, but also costs money by adding to transportation costs – twice, and, even more importantly, can cost sales by limiting how many units of a popular product you can have on the shelf at any one time, especially if poorly designed.

More importantly, as the perspective pointed out, you can save significantly if you attack the packaging category strategically, even when prices are rising across the board. Up to 20% savings are possible through better sourcing and requirements definition, and up to 50% are possible with re-design. The key, as with any other strategic category, is to understand what you’re buying, with whom, in what volume, and what you really need. Not only are there spend leverage opportunities, but there are often significant substitution capabilities simply by changing the specifications from “‘B Flute’ Cardboard box, 12″ by 6″ by 8″, Form Factor 2” to “Box: minimum 11″ by 5″ by 7″; maximum 13″ by 8″ by 12″; minimum weight capacity 15 lbs; maximum weight capacity 25 lbs;” … because this allows the supplier to offer you the product that is the most effective for them to make if multiple boxes will do equally well. No redesign necessary.

It also allows you to bypass the “crawl” phase of the “crawl – walk – run” maturation process for sourcing organizations presented in the perspective, which is important as this will significantly increase your chances of achieving big savings quickly, without requiring any significant involvement from engineering. All you are asking for is a specification of the requirements in a product neutral manner, which engineering would have defined before they selected the current standard packaging.

This allows you to get to the “run” phase faster, which is where significant savings opportunities are to be found, especially if you’re willing to go beyond simple material substitution and engage in a full packaging design process that will minimize package size, minimize raw material requirements and associated costs, maximize the number of units that can fit onto a pallet, and minimize the shipping requirements for the packaging itself. For example, just like a box generally allows for tighter packing than an odd shaped container, a tetrahedron often allows for denser packing than a cube while reducing the amount of packaging material required to achieve the same volume. Thus, just like tetrahedron containers make sense for certain liquids, they might also make sense for odd-shaped products (like pyramid-shaped ornaments) that would leave too much free space in a box (and increase the filling material requirement as well as waste).

And the sooner you’re running off to do package design optimization, which will could also help you get greener faster, the sooner you’re saving money on categories that would otherwise have price increases through the roof. So, Get Packing and save money!

The April 1, 2008 issue of Theory and Practice from Manufacturing Insights had a great article on “Design For X” – the practice of incorporating different tangential factors into the design of a product that are intended to better integrate the new product with downstream activity. One of the more familiar DFX practices is, of course, DFM – Design For Manufacturing – where engineers strive to produce a product to be easier, safer and less costly to manufacture.

However, DFM is not the only DFX discipline that product companies need to consider. There is also DFSC – Design For Supply Chain, DFS – Design For Serviceability, DFC – Design For Compliance (& Sustainability), and DFW – Design For Warranty, and each of these is important. However, in today’s economy where costs are rising and discretionary spending is falling, probably the most important consideration in product design is the end cost of production. Since early interaction between design and supply chain is key to making the right build-versus-buy and material selection before design decisions, and associated costs, are locked in – I’d argue that DFSC should be on top of every company’s mind. Especially since, as the article points out, DFSC leads to further optimization and agility in the supply chain and reduces the impact of inevitable late changes and quality problems.

Of course, you cannot ignore DFS, DFC, and DFW. There are always going to be failures, and DFS evaluates design modularity and supply chain alternatives in order to maximize serviceability and enhance the customer ownership with inventory and reverse logistics operations in mind. A good design considers the complex dependencies between product design, reliability, service, inventory planning, and reverse logistics. The expected frequency of repairs and the type of parts that need to be replaced will determine the reverse logistics, depot repair, and part restocking requirements in the supply chain.

Similarly, if you actually want to be permitted to sell your products, you have to adhere to product compliance regulations such as RoHS and WEEE for the European electronics industry and the TREAD act for the American tire industry as well as corporate accounting regulations and overall social responsibility. Compliance cannot be an afterthought – it needs to be taken into account during design, manufacturing, shipment, servicing and decommissioning of products through a total life cycle approach. For example, in RoHS if even one separable component contains more than a minute trace of hazardous material, the entire assembly could be banned – leaving you with millions of dollars of inventory that cannot be sold.

Finally, you need to consider what reverse logistics and repair activities will exacerbate warranty costs and insure that tradeoffs are made to minimize those activities that will be most costly in the design process.

In short, DFX is a total lifecycle design practice that takes into account the costs and benefits of each and every design decision in the different life-cycle phases of a product, considering both the short and long term ramifications, from a Manufacturing, Supply Chain, Serviceability, Compliance, and Warranty viewpoint.