DFM stands for Design for Manufacturing.
It means designing a product in a way that makes it easy, cost-effective, and efficient to
manufacture. The goal is to reduce complexity, avoid unnecessary parts, simplify processes, and make sure the product can be
produced with fewer errors and lower cost.
Design for Manufacturing
Design for Manufacturing (DFM) is a proactive approach to designing products that emphasizes manufacturability,
aiming to simplify production, reduce costs, and enhance quality. It integrates manufacturing considerations early
in the design phase to optimize the entire product development process.
DFM Requires a Cross-Functional Team
Design for Manufacturing (DFM) requires a cross-functional team because it integrates diverse
knowledge and expertise to optimize the product development process effectively.
(1) sketches, drawings, product specifications, and design alternatives DFM needs people from different areas
to work together because it mixes
design and manufacturing knowledge.
(2) a detailed understanding of production and assembly processes The team utilizes information of several
types includes:
(3) strategic choices about suppliers and their global configura tion and
(4) estimates of manufacturing cost, production volume, and ramp-up timing.
Overview of the DFM Method
The Design for Manufacturing (DFM) method is a structured, iterative process aimed at optimizing a
product's design to reduce manufacturing costs and improve efficiency. The method consists of seven
main steps plus iteration, as illustrated in Exhibit 13-2:
1. Consider the strategic sourcing decisions.
DFM is a step-by-step process that helps reduce
2. Estimate the manufacturing costs manufacturing cost and improve efficiency. It has seven steps
(plus repeating if needed):
3. Reduce the costs of components.
4. Reduce the costs of assembly.
5. Reduce the costs of supporting production.
6. Reduce the costs of logistics.
7. Consider the impact of DFM decisions on other factors.
Step 1: Consider the Strategic Sourcing Decisions
Step 1 of the DFM method, "Consider the Strategic Sourcing Decisions," focuses on critical make-versus-
buy decisions and supplier selection, including the geographic location of production and assembly. The
process begins with the brand owner (manufacturer) deciding what to produce internally versus what to
outsource to suppliers. This decision affects the organization's vertical integration level—higher vertical
integration means more in-house production, while many companies increasingly outsource most
production to suppliers, as seen with companies like Apple and Nike.
Key factors influencing the geographic location decision of production include:
• Factor Prices: This refers to the costs of inputs like labor, materials, and energy. Labor costs are
generally lowest in developing countries such as Bangladesh, India, and Vietnam, making these
locations attractive for labor-intensive products like apparel.
• Capabilities and Ecosystem: Manufacturing clusters form in regions with dense ecosystems of
skilled workers, tooling manufacturers, material suppliers, and component producers. For
instance, the Shenzhen region in southern China hosts a vast ecosystem for consumer electronics
production, which attracts many manufacturers despite not having the lowest wages.
• Duties (Tariffs): Countries impose import duties, which vary by product category and origin. These
tariffs impact supplier location decisions because they add to the cost of imported goods.
• Transport Costs: Most products made far from their sales markets are shipped by ocean freight in
containers, a highly efficient mode with similar costs from major Asian ports. However, land
transport from geographically closer production sites can offer significant savings.
• Other Factors: These include geopolitical risks that might deter production in unstable regions,
consumer preferences for local manufacturing (e.g., “Made in U.S.A.”), and government incentives
such as subsidies or tax breaks aimed at encouraging local production.
Step 2: Estimate the Manufacturing Costs
Step 2 of the DFM method is to estimate the manufacturing costs, which involves analyzing the entire
manufacturing and supply chain system as a simple input-output model.
• Inputs: These include raw materials, purchased components, employees’ labor and efforts,
energy consumption, and equipment usage.
• Outputs: The outputs are finished goods and any waste generated during manufacturing.
Cost of Goods
Cost of Goods (COGS) includes all costs attributable to producing goods available for consumer sale. It
can be categorized into two broad areas: factory costs and logistics costs.
Within the factory, costs are further divided into:
1. Component Costs: These are costs of parts or components, which may include standard off-the-
shelf parts (e.g., batteries, motors, fasteners) purchased from suppliers and custom parts
manufactured in-house from raw materials such as plastic or metal.
2. Assembly Costs: Costs related to assembling parts into finished goods, including labor costs and
any specific equipment or tooling required for assembly.
3. Overhead Costs and Supplier Profit:
• Overhead costs encompass support costs such as materials handling, quality assurance,
purchasing, shipping, receiving, and facility maintenance. These costs depend on the
product design but are often shared across multiple products.
• Indirect allocations refer to costs that cannot be directly linked to a particular product (e.g.,
security staff salary, building maintenance), which are generally excluded from DFM
considerations.
• If production is outsourced, supplier profit margin (typically 10-30% of factory cost) is
included.
4. Logistics Costs: These include costs associated with transporting finished goods from
manufacturing sites to distribution locations. Transport is usually by ocean freight with known
rates (e.g., roughly $5,000 per 70 m³ container shipped from Asia to the US). Other transport
modes such as airfreight and trucking vary by weight and volume and are more expensive.
Logistics costs also consider import duties (tariffs), which vary by product category and country of
origin and can significantly affect sourcing decisions.
The Bill of Materials
A Bill of Materials (BOM) is a detailed and structured list of all the materials, components, and parts
needed to manufacture a product, including their quantities and costs. It serves as a blueprint for
production, helping with procurement, cost estimation, inventory management, and ensuring efficient
and accurate manufacturing. BOMs are essential for aligning design and production teams and
minimizing errors, delays, and waste.
Estimating the Costs of Standard Components
Estimating the costs of standard components in manufacturing typically uses two main approaches:
1. Comparison Method: Costs are estimated by comparing each component to a similar part the
company already produces or purchases in comparable volumes. This leverages existing cost data
as a benchmark.
2. Vendor Quotes: For major components especially, prices are obtained directly from suppliers
through formal price quotes. Minor components like fasteners or springs are usually estimated
based on past experience with similar items.
Estimating the Costs of Custom Components
Custom component cost estimation involves forecasting costs for specially designed parts unique to a
product. These estimates are usually sourced from supplier price quotes for accuracy but can initially be
approximated by summing:
• Raw material costs, calculated from part mass and material cost per unit, adjusted for scrap.
• Processing costs, including machine operation and labor, with typical equipment hourly rates.
• Tooling costs, fixed expenses for molds and dies, amortized over production volume.
• Supplier overhead and profit, usually a 20-40% markup on direct costs.
• For assemblies, assembly costs are added.
Estimating the Costs of Assembly
Estimating assembly costs for multi-part products is typically based on manual labor time multiplied by
the labor rate, especially for production volumes under several hundred thousand units annually.
Exceptions include electronic circuit board assembly, which is often automated even at low volumes due
to precision requirements.
Key points for assembly cost estimation:
• Assembly time per operation ranges from about 4 seconds to 60 seconds, depending on part size,
difficulty, and volume.
• High-volume production enables specialization and use of fixtures/tools to reduce time.
• Tools like the Boothroyd Dewhurst system, supported by databases of handling and insertion
times, assist in estimating manual assembly times.
• Assembly labor rates vary widely: under $1/hour in low-wage countries, $15–$30/hour in
developed economies, and higher in industries like automotive and aerospace.
• True labor costs include wages, benefits, and worker-related expenses.
• For example, Wazer estimated 10 hours to assemble a water jet cutter at $25/hour labor costs,
resulting in $250 assembly cost per machine, making assembly a key target for cost reduction.
Estimating the Overhead Costs
Estimating overhead costs in manufacturing involves assigning indirect costs to products using overhead
rates based on measurable cost drivers such as purchased materials, assembly labor, or equipment
hours. Overhead charges are applied proportionally to these drivers, for example, applying 10% overhead
on material cost and 80% on assembly labor.
However, this method oversimplifies reality, as actual overhead costs may not be directly proportional to
these drivers, potentially causing inaccuracies. Overhead includes indirect expenses like utilities,
maintenance, supervision, and facility costs that support production but are not directly linked to a
specific product.
Step 3: Reduce the Costs of Components
the DFM method focuses on reducing the costs of components, which often represent the largest portion
of manufacturing expenses in assembled products.
Understand the Process Constraints and Cost Drivers
Sometimes, parts cost a lot because the designers don’t fully understand how the manufacturing
process works or what makes it expensive. For example, a designer might ask for a very tight corner on a
metal piece that needs a costly special machine operation, or require very precise measurements that
are hard to achieve. Often these details aren't actually needed for the part to work well.
To avoid this, designers need to learn what manufacturing methods can do easily and cheaply, and what
makes things costly or difficult. Sometimes this knowledge is shared as simple design rules, such as
limits on material thickness or part size for a laser cutter.
Standardize Components
Standardizing components means using the same parts multiple times within one product or across an
entire product line. This increases the production volume for those components, which reduces their unit
cost due to economies of scale. Standardized components also often have better quality and
performance because manufacturers can invest more in design improvements and process optimization.
For example, a company might use one standard extrusion profile for most structural parts of a product,
even if it means adding some extra features only needed in one section. The overall cost saving and
simplification make this worthwhile.
Step 4: Reduce the Costs of Assembly
focuses on Design for Assembly (DFA), which aims to minimize assembly costs by simplifying product
assembly.
• Integrate Parts: Combine separate parts that do not need to move relative to each other or
be made from different materials into a single multifunctional part. This often reduces the overall
part count and eliminates assembly steps.
Maximize Ease of Assembly
Maximizing ease of assembly means designing parts and products so they can be put together quickly
and simply, reducing assembly time and cost. Key characteristics of parts for easy assembly include:
• Assembled from the top (z-axis assembly): This allows the assembly to stay stable and visible
without flipping parts around.
• Self-aligning parts: Features like chamfers help parts fit together easily without precise
positioning by workers.
• No required orientation: Parts like spheres need no specific orientation, whereas screws require
careful alignment.
• One-hand assembly: Small, manageable parts that require only one hand speed up assembly.
• No tools needed: Avoiding the use of tools reduces time and complexity.
• Single, linear motion for insertion: Simple push-in parts are faster to assemble than those
requiring screws or clips.
• Immediate securing: Parts that lock in place immediately after insertion save time and reduce
errors.
For example, replacing liquid sealants (which require long curing) with custom rubber gaskets in a
product reduced assembly time and bottlenecks for the Wazer team.
Step 5: Reduce the Costs of Supporting Production
focuses on lowering the expenses associated with production support functions, which are impacted by
the complexity of the product and manufacturing system.
• Minimize Systemic Complexity: Simplifying the product design and standardizing parts reduces
the number of unique components, suppliers, and processes to manage. This lowers inventory,
inspection, handling, supervision, and overall administrative costs.
• Error Proofing: Design parts and processes to prevent assembly errors and mismatches,
such as adding features for correct orientation or exaggerating subtle differences to avoid
confusion.
Step 6: Reduce the Costs of Logistics
Reduce the Costs of Logistics focuses on minimizing the freight and duty costs associated with
transporting products from manufacturing sites to distribution points.
• Freight costs depend largely on product volume and weight. Ocean and rail freight costs are
primarily volume-driven, while trucking costs are mainly weight-driven. For low-density products,
dimensional weight pricing applies.
• Design for minimal volume helps reduce freight costs, often by allowing partial disassembly,
folding, or compression of products. For example, detachable handles or foldable parts reduce
shipping volume.
• Optimize packaging: Minimizing clearance in cartons and using protective inserts reduces carton
size and shipping volume.
• Consider packaging timing: Delaying final packaging until distribution centers allows denser bulk
shipping, reducing freight costs.
• Strategic assembly location: Wazer shipped components to the U.S. for final assembly to reduce
shipping volume and monitor quality closely.
Step 7: Consider the Impact of DFM Decisions on Other Factors
The impact of Design for Manufacturing (DFM) decisions on development time, cost, and product quality
is critical for overall product success:
• Development Time: Time is valuable, especially in industries like automotive, where delays can
cost hundreds of thousands per day. DFM decisions that save manufacturing costs should not
cause significant delays in product launch, as time lost in the market may outweigh cost savings.
• Development Cost: Closely mirrors development time. Teams integrating DFM tend to maintain
similar or better development timelines and budgets compared to those that don’t, partly due to
good project management and streamlined design processes.
• Product Quality: Ideally, cost reduction efforts also improve quality by simplifying assemblies
and reducing complexity. However, if cost cuts affect materials or processes negatively, quality
might suffer. Sometimes, trade-offs require consumer or functional testing to decide the best
balance.
The Impact of DFM on the Larger Enterprise
Design for Manufacturing (DFM) decisions can impact the larger enterprise beyond immediate
manufacturing costs through economic externalities such as:
• Component Reuse: Investing in creating low-cost, reusable components can benefit other
product teams within the company, even if it increases cost for a single product. This broader
value is usually not factored into direct manufacturing cost estimates.
• Life Cycle Costs: Products may generate additional costs during their lifespan, such as disposal
of toxic materials or service and warranty expenses. These are often excluded from manufacturing
cost calculations but must be considered in DFM decisions for overall economic and
environmental impact.
• Supply Chain Responsiveness: Factory location and packaging choices influence how quickly
the supply chain can react to demand changes. Producing closer to the target market reduces
inventory costs related to transportation delays and demand variability. These costs, though not
always reflected in product cost, affect enterprise economics significantly.
a) How standardize components help to reduce the cost of component? Also write down the
benefits of part integration.
Ans: Standard components are those common to more than one product. This standardization
may occur within the product line of a single firm or may occur, via an outside supplier, across the
product lines of several firms. The principle of economies of scale also applies to the selection of
components and processes. As the production volume of a component increases, the unit cost of
the component decreases.
For example, the use of the 3.8-liter V6 engine in several GM cars is an example of internal
standardization. The use of a common 10-millimeter socket head cap screw across several auto
manufacturers is an example of external standardization. In either case, all other things being
equal, the component unit cost is lower than if the component were used in only a single product.
Part integration provides several benefits:
1) Integrated parts do not have to be assembled.
2) Integrated parts are often less expensive to fabricate than are the separate parts they replace.
3) Integrated parts allow the relationships among critical geometric features to be controlled by
the part fabrication process (e.g., molding) rather than by an assembly process.
Q:10 reasons why reducing the number of parts in a product can lower
production costs:
1. Lower Assembly Time: Fewer parts mean less time spent assembling the product, reducing labor
costs.
2. Simplified Inventory Management: Managing fewer unique parts simplifies inventory control and
reduces storage costs.
3. Reduced Procurement Costs: Buying fewer part types can lead to bulk purchasing and better
supplier pricing.
4. Lower Quality Control Costs: Fewer parts reduce the number of inspections, tests, and rework
needed.
5. Decreased Tooling Costs: Less tooling is needed when there are fewer different parts to
manufacture.
6. Improved Product Reliability: Fewer parts often mean fewer failure points, reducing warranty
and repair costs.
7. Simpler Supply Chain: A reduced number of parts shortens lead times and reduces
transportation complexity.
8. Less Engineering and Design Effort: Designing and validating fewer parts speeds development
and lowers engineering costs.
9. Better Process Efficiency: Standardized or combined parts streamline production processes and
reduce complexity.
10. Scalability and Flexibility: Simpler product designs are easier to scale up or customize according
to demand.
11. Black Box:
A "black box" is a concept that focuses on the inputs and outputs of a system or component
without knowing or worrying about the internal workings. In product design or
manufacturing, a black box part is specified solely by what it does (function), its interfaces,
and performance, while the detailed design and manufacturing are hidden or handled by
suppliers or specialists. This approach helps manage complexity and allows different teams or
suppliers to work independently by agreeing on clear inputs and outputs without needing to
understand internal details.
12. Keeping Score:
"Keeping score" refers to tracking key performance metrics or criteria during the design and
manufacturing process to evaluate how well the product or process meets goals like cost,
quality, time, and efficiency. It involves measuring progress, costs, defects, assembly times, or
other relevant data to assess performance, identify issues early, and guide decision-making
to improve outcomes. Keeping score helps teams stay aligned on targets and make informed
trade-offs.
Step 1: Consider the Strategic Sourcing Decisions
This step is about choosing what to make inside the company and what to buy from suppliers. For exa
Apple and Nike outsource most of their production.
Important factors when choosing where to produce:
Factor Prices: Input costs like labor, materials, and energy. Labor is cheapest in countries like Banglades
India, and Vietnam, so labor-heavy products are often made there.
Capabilities and Ecosystem: Areas like Shenzhen, China, have strong supplier networks and skilled
workers, which attract manufacturers even if labor isn’t cheapest.
Duties (Tariffs): Import taxes add to costs and affect where products are made.
Transport Costs: Ocean freight is efficient and cheap, but producing closer to customers can save more
land transport.
Other Factors: Risks from unstable regions, customer preference for “local” products, and government
incentives like subsidies or tax breaks.
Step 2: Estimate the Manufacturing Costs
This step studies all inputs and outputs to calculate costs.
Inputs: Raw materials, purchased parts, labor, energy, and machines.
Outputs: Finished products and waste.
Cost of Goods (COGS) = all costs needed to make a product ready for sale.
Factory costs are divided into:
Component Costs: Parts (standard or custom).
Assembly Costs: Labor and tools needed to join parts.
Overhead & Supplier Profit: Support costs (quality checks, handling, maintenance) plus supplier’s margin (10–30%).
Logistics Costs: Shipping finished goods, import duties, transport modes (ocean, air, truck).
Estimating Costs:
Standard components: Use past prices or supplier quotes.
Custom components: Estimate material, processing, tooling, and supplier profit.
Assembly costs: Based on labor time × labor rate. Tools like Boothroyd Dewhurst help
estimate.
Overhead costs: Add indirect costs like supervision, utilities, facility expenses.