The document describes a competitive analysis and benchmarking program at HP that has saved double-digit millions over 5 years. It outlines best practices for such a program, including having measurable cost savings goals, executive sponsorship, the right people assigned, and embracing what is not yet known. A case study compares HP's System 1 desktop to a competitor's System 2, finding System 1 has a $5.78 lower estimated cost due to differences in mechanical, electrical, and packaging/documentation components.
Building and selecting hardware for connected devices, use case - BLE devicesPavel Stessin
In this talk, we will show the building blocks of connected products, we will discuss the various considerations for selecting the hardware and components. Deeper examples of BLE products will be given.
We are the first company in Taiwan identified the future of auto identification market and manufactured over million units label printers. We are also one of the most flexible thermal printer manufacturers in the world, satisfying our customers’ diversified printing needs.
Precision Tower 3630 Setup and Specifications Guide !
Nhat Thien Minh cung cấp tư vấn cấu hình m báo giá Precision 3630 Tower tphcm .và toàn quốc !
Vui lòng liên hệ :
Phone : ( 028) 38684338
Web: https://www.ntm.com.vn/dell-workstation.html
So, you want to build a hardware product? Every so often, a device comes along that changes the way we live our daily lives and things are never the same again. With today's digital technology, such devices may come more frequently than in the past - personal gadgets you cannot live without. What’s inside? What makes it tick? How do you find out? In this sharing session, Mark will provide an introduction to hardware hacking and why it matters, going through some quick tips on getting cosy with hardware to find out what makes it tick. Mark (MK FX) is a founder of Bazinga! Pte Ltd, a technology development and prototyping company that builds gadgets from ideas. An engineer since birth, because if you can dream it, think it - you can build it.
Making Use of a Knowledgeable Design by Design for ManufacturingVayoInfo
Design for manufacturing, making use of a knowledgeable design staff, improves return on general venture investment by developing efficient, repeatable, trusted items and preventing expensive item problems. Design for manufacturing will improve the high quality of an item from the starting of investment. Vayo provide the best DFM Software, check out design for manufacturing at http://www.vayoinfo.com/
Procedure of Proactively Designing Products by Design for Manufacturability (...VayoInfo
Design for manufacturability (DFM) is the procedure of proactively designing products to improve all the manufacturing features: fabrication, assembly, test, procurement, shipping, delivery, service, and repair, and guarantee the most effective cost, quality, reliability, regulatory compliance, safety, time-to-market, and client fulfillment. VayoInfo provide the best design for manufacturability, check out VayoInfo design for manufacturing at http://www.vayoinfo.com/
Building and selecting hardware for connected devices, use case - BLE devicesPavel Stessin
In this talk, we will show the building blocks of connected products, we will discuss the various considerations for selecting the hardware and components. Deeper examples of BLE products will be given.
We are the first company in Taiwan identified the future of auto identification market and manufactured over million units label printers. We are also one of the most flexible thermal printer manufacturers in the world, satisfying our customers’ diversified printing needs.
Precision Tower 3630 Setup and Specifications Guide !
Nhat Thien Minh cung cấp tư vấn cấu hình m báo giá Precision 3630 Tower tphcm .và toàn quốc !
Vui lòng liên hệ :
Phone : ( 028) 38684338
Web: https://www.ntm.com.vn/dell-workstation.html
So, you want to build a hardware product? Every so often, a device comes along that changes the way we live our daily lives and things are never the same again. With today's digital technology, such devices may come more frequently than in the past - personal gadgets you cannot live without. What’s inside? What makes it tick? How do you find out? In this sharing session, Mark will provide an introduction to hardware hacking and why it matters, going through some quick tips on getting cosy with hardware to find out what makes it tick. Mark (MK FX) is a founder of Bazinga! Pte Ltd, a technology development and prototyping company that builds gadgets from ideas. An engineer since birth, because if you can dream it, think it - you can build it.
Making Use of a Knowledgeable Design by Design for ManufacturingVayoInfo
Design for manufacturing, making use of a knowledgeable design staff, improves return on general venture investment by developing efficient, repeatable, trusted items and preventing expensive item problems. Design for manufacturing will improve the high quality of an item from the starting of investment. Vayo provide the best DFM Software, check out design for manufacturing at http://www.vayoinfo.com/
Procedure of Proactively Designing Products by Design for Manufacturability (...VayoInfo
Design for manufacturability (DFM) is the procedure of proactively designing products to improve all the manufacturing features: fabrication, assembly, test, procurement, shipping, delivery, service, and repair, and guarantee the most effective cost, quality, reliability, regulatory compliance, safety, time-to-market, and client fulfillment. VayoInfo provide the best design for manufacturability, check out VayoInfo design for manufacturing at http://www.vayoinfo.com/
2. Jonathan Rayner - Profile
Jon has worked at HP for 16 years in a variety of supply chain functions focusing
on cost, quality and delivery. He has worked across a variety of HP’s portfolio –
servers, storage, networking, ink-jet printers and personal computers.
He is currently an engineering program manager working in HP’s Operations
leading a portfolio of programs focused on competitive analysis & cost analytics.
He has a bachelors in Engineering Physics from Miami University (Ohio) and a
masters in Mechanical engineering from SUNY Binghamton.
https://www.linkedin.com/in/rayner-jonathan-a1681825
2
3. Case study disclaimer
• The following slides are representative case studies. The values, where present, do not reflect actual or modeling
results.
• Numbers and product and component descriptions are provided for discussion purposes only and do not
necessarily represent actual product specifications or performance. No qualitative statement about any
company’s products, including those of HP Inc, or its competitors is express or implied.
3
4. Key ‘best practices’
4
Program has saved double digit millions over past 5 years. Here’s what I’ve learned.
Measurable program goals (in dollars) are critical.
• Goals should be high level, but reasonable (X% of spend).
• How you measure savings needs to be defined (cost avoidance vs. cost savings, timeframe, etc).
• Money isn’t everything.
Executive sponsorship is critical. Support from employees is (equally) critical.
• Regular engagement with executive sponsors (1x per month for us) is critical.
• Savings goals for the entire team/organization. We are often challenging assumptions/decisions that haven’t been reviewed in a long
time/are difficult to review.
• Be nice.
Getting the right people in the right job is critical.
• Questions are easy (‘how much should that cost’). The answers are simple (some series of numbers). Quality of the answers will depend
on the quality of the analysis, which is dependent on the right people.
• Analytical skills. Problem solvers. Math/engineering oriented.
• Hire people that can be nice.
This is hard work. What’s harder is embracing that there’s now more you don’t know.
5. Question: ‘What are our competitors doing differently than we are’?
Teardown program started:
• Identify feature, speeds/feeds
differences.
• Architecture differences.
• Benchmark competitor’s product to ours.
5
0
5
10
15
20
25
30
0
50
100
150
200
250
300
350
2003 2004 2005 2006 2007 2008 2009
Growth(pct.)
Units(M)
Axis Title
Unit sales to global PC market*
Units (M) Growth (pct.)
*Data from Gartners via Wikipedia: https://en.wikipedia.org/wiki/Market_share_of_personal_computer_vendors
9. Questions remained
• What’s the implication to cost?
• How much do we think their box costs?
• Estimate of their box cost will be compared
to our box cost (actual).
• Estimate vs. actual: apples vs. oranges.
• Estimate vs. Estimate: unbiased analysis.
10. Complex product required several different models to provide a complete product cost model.
So we developed a cost model methodology
Commodities
HDD, memory, capacitors, resistors, etc.
• System 2 commodity prices (do not
assume you get a ‘better deal’).
o Typically prices represent a weighted
average vs. individual supplier
negotiated prices.
• External resources (Industry market
trends)
Custom designed parts
• Materials (sheet metal, plastics, corrugate,
etc)
– Industry/market prices
• Process (injection molding, stamping,
painting, etc)
– Process rates: Amortize capital investment/
maintenance of equipment
• Labor
– Industry labor rates.
10
𝐶𝑜𝑠𝑡𝑖 = 𝑚𝑎𝑡𝑒𝑟𝑖𝑎𝑙𝑠 + 𝑝𝑟𝑜𝑐𝑒𝑠𝑠 + 𝑙𝑎𝑏𝑜𝑟
𝑌𝑖𝑒𝑙𝑑𝑒𝑑 𝑐𝑜𝑠𝑡𝑖 =
𝑌𝑖𝑒𝑙𝑑𝑒𝑑 𝑐𝑜𝑠𝑡𝑖−1 + 𝑐𝑜𝑠𝑡𝑖
𝑦𝑖𝑒𝑙𝑑𝑖
11. Commodities
• CPU, Graphics,
ASSP, Memory,
HDD, ODD, LCD
PCAs
• Motherboard,
I/O Ports, Card
Readers, etc.
Mechanical
• Chassis, bezel,
keyboards, etc.
Power
supplies
• Internal &
External power
supplies
Commodities
• CPU, Graphics,
ASSP, Memory,
HDD, ODD, LCD
PCAs
• Motherboard,
I/O Ports, Card
Readers, etc.
Mechanical
• Chassis, bezel,
keyboards, etc.
Power
supplies
• Internal &
External power
supplies
Competitor System 2
Applied on System 2 & competition for unbiased comparison.
12. System 1vs. System 2
System 1 design cost estimate $5.78 lower than System 2
Design Differences
• Mechanical: System 1 had higher chassis cost due
larger blank size(driving $1.09 cost delta)
• Electrical: System 1 had 221 fewer components and
was $3.50 less expensive than System 2.
• Packaging/Docs: System 1 higher packaging cost and
System 2 higher document cost driving a cost delta of
$0.87
Feature Differences
• System 2 has 2x PS/2 ports, System 1 does not
• System 2 has 1x Serial port, System 1 does not
• Location of USB 3.0:
• System 1: 0 front/ 2 rear
• System 2: 2 front/0 rear
System 1 System 2 Delta
Commodities $237.27 $241.64 ($4.37)
Mechanical $20.91 $19.82 $1.09
Electrical $22.01 $25.51 ($3.50)
Packaging /Docs $5.23 $4.36 $0.87
ODM Overhead
/Profit $16.80 $16.67 $0.13
Total $302.22 $308.00 ($5.78)
ODM
Street Price $519.00 $519.99
14. Item System 1 System 2 Delta
Processor Fan $1.90 $1.90 $0.00 Both System 1 and System 2 has processor heat sink cooling fan
Processor Heat sink $0.45 $0.53 ($0.08) System 1 has a 20mm tall extruded aluminum heat sink; System 2 has a 30mm tall aluminum extruded Heat sink
System Fan $2.30 $2.30 $0.00 Both systems provide system fans
Air Duct $0.40 $0.40 System 1 with PC+ABS Air duct; System 2 without air duct
Total $5.05 $4.73 $0.32 System 1 higher thermal cost with addition plastic air duct
System 2 with a lower cost on thermal solution
Thermal Solution
Processor Fan
System Fan
20mm tall extruded Heat sink
30mm tall extruded Heat Sink
Processor Fan
Air duct
System Fan
System 1 3020 SFF vs System 2 ProDesk 2.5 SFF (Modena)
15. Potential cost reduction opportunities.
More questions: How do we action this competitive insight?
Need additional analysis
• Not an ‘end to end’ view of cost.
• Not an analysis of value.
• No process for reviewing value of competitive
opportunities
– Product development process may not be location for this type of
analysis.
– Complex products/ complex organizations.
– Portfolio level decisions
– Complex analysis
– Effects P&L
Value analysis of opportunities.
• Framework for analysis of opportunities.
• Formal process to review.
• Partnership across Supply chain, R&D, marketing,
Industrial Design, Quality, etc.
– End to end view of cost.
– Value analysis of opportunity.
• Executive sponsorship
– Cut thru complex organization.
– Support for portfolio level decisions.
– Broader view of P&L
15
16. Project framework: Value Analysis
Analysis discipline founded at G.E. by Lawrence D. Miles
in 1947.
“…an organized creative approach that has for its
purpose the efficient identification of unnecessary cost,
i.e., cost that provides neither quality nor use nor life nor
appearance nor customer features.”
Opportunity Project description.
• Why is our material different?
• What work needs to be done to evaluate the
opportunity?
• Where on the roadmap is the opportunity applicable?
• When can the change be implemented?
• Who is needed to drive the change?
• How much would we save?
– Verify the material cost difference.
16
17. Process to review.
Competitive Analysis
& Benchmarking
• Teardown
• Team provides
unbiased analysis
of cost.
• Opportunities are
identified.
Value Analysis
• Partnership
between
functional groups
• End to end view of
cost
• Value analysis of
opportunity
• Recommendations
made
Executive review
• VP level review of
recommendations
• Approve of or
decline
recommendation.
• Next steps
defined.
Execution
• Recommendations
implemented in
product
development
17
ID R&D
Quality Marketing
Cost Supply Chain
18. Program structure to review
VP Level program
sponsorship
Director level
program leadership
Competitive
Analysis &
Benchmarking core
team
Value Analysis core
team
18
Provides funding &
direction for
program.
Executes on
direction,
coordinates
program work.
Review & analysis
of cost
opportunities from
competitive
analysis
Unbiased cost
analysis of System
2 & competitive
products ID R&D
Quality Marketing
Cost Supply Chain
19. TCE/Q
Decision Owner:
Decision:
Savings Est.:
Material Cost Marketing
SC/ODM ID R&D
Key Factors evaluated
Details
AnalysisOpportunity Description
Reduce Heatsink Thickness
$0.08 savings per unit, estimated lifetime savings of $80k
• With two heatsinks, there are management and inventory excess issues that
would create costs that outweigh savings. (Supply Chain)
• Currently the HS are shipped with the chassis. If this continued, we may see
additional complexity, excess and inventory costs outweigh cost savings/unit.
• If shipped separately we would incur an extra cost of $0.10/unit. ($100k total)
(R&D)
• $0.08 cost
savings/unit
• N/A • N/A
• Having 2 heatsinks
would affect our
current L4 shipping
model and create
inventory excess
issues.
• N/A • Having 2 heatsinks
would affect our
current L4 shipping
model and create
inventory excess
issues.
System 2’s heatsink thickness was 30mm. System 1’s was 20mm.
• Product volume of 1M
• Estimated lifetime material savings of $80k for reducing the heatsink
thickness.
• Heatsink can accommodate different wattage CPUs (35W, 65W)
• Director Supply Chain
• Declined
• $0.08 savings / unit
System 2 System 1
20. TCE/Q
Decision Owner:
Decision:
Savings Est.:
Material Cost Marketing
SC/ODM ID R&D
Key Factors evaluated
Details
AnalysisOpportunity Description
$2.20 Opportunity $1.50 ‘end to end’ savings
• Service impact of $0.70 (based on projected ARR)
• Material savings of $2.20 (confirmed by ODM)
• Improved cosmetic finish on D cover (ID)
• Impact to APJ requested marketing feature
$2.20 Based on projected
ARR: $0.70 cost per
unit
TAT increase
APJ request service
panel for 14” platform.
No input. • “Industry trajectory
is that more
cosmetic finishes
are also being
adopted on the D
cover”
No input.
Competitor’s notebook has service panel (additional plastic, brass
inserts, EMI tape, and fabric over foam). System 1’s comparable system
does not have a service door. Estimated savings of $2.20.
• Service panel enables Customer Service Replacement (CSR) for 4
commodities (Memory, HDD, ODD, WLAN)
• Moving a part to non-CSR incurs an additional cost of ~ $50 in EMEA,
Americas. APJ does not do CSR.
• Will increase service time for repair partners/ centers
Notebook Director
Commit to implement
$1.50/unit
Remove Service Panel on cost sensitive notebook
21. TCE/Q
Decision Owner:
Decision:
Savings Est.:
Material Cost Marketing
SC/ODM ID R&D
Key Factors evaluated
Details
AnalysisOpportunity Description
($3.00) est. savings per unit (before HDD costs)
• Net $2 savings for 500GB units.
• Net $0 to $2 cost increase for 1TB / 2TB units
(respectively)
• Based on current attach rates, weighted average
$1.6/unit savings (estimated)
Cost up:
500GB……………….$1.00
1TB……………………$3.00
2TB……………....... $5.00
Might reduce warranty
costs by up to
$0.60/unit
Attach Rates:
500GB…………………50%
1TB……………………..30%
2TB……………………..20%
$0.10 cost savings/unit
on packaging
$0.05 cost savings/unit
on logistics
May reduce AiO
thickness by up to
15mm.
Reduce mechanical
costs by ($2.00)
Reduce electrical costs
by ($0.25)
System 2 system has a 3.5” 500Gb HDD. System 1’s AiO has a 2.5”
500Gb HDD. This smaller HDD enables lower mechanical/electrical
design cost.
• Projected yearly volume of 1M for all System 2 OPP AiO.
• 2.5” HDD reduces system wattage by ~5W.
• 500Gb has the highest attach rates in this product category.
Desktop Director
Commit to implement
$1.6/unit
Switch to 2.5” (vs 3.5”) HDD for cost sensitive All in One
22. TCE/Q
Decision Owner:
Decision:
Savings Est.:
Material Cost Marketing
SC/ODM ID R&D
Key Factors evaluated
Details
AnalysisOpportunity Description
Estimate average $2.50/ unit
• RD confirmed fan-less solution meets specs.
• Different thermal design strategy implemented on
applicable next generation products.
• Fanless solution reduces system noise.
$2.50 average saving
per unit
No input. Confirmed System 2
PDD CPU SDP
marketing spec of
Buckfast is 4.5W
No input. No input. Confirmed System 1
unit CPU SDP is 4.5W
HP’s thermal design consists of heatsink, heatpipe, cooling fins, and DC blower.
Competitor’s thermal solution consists of heatsink with dummy blower housing.
• Competitor has equivalent spec as System 1. Processor power
spec is 4.5W.
• Dummy DC blower suggests product developed with blower.
• Notebook Director
• Implemented
$2.50 /unit
Change Thermal Design in cost sensitive notebooks
aluminum heat sink
dummy DC blower
DC blower54 cooling fins
220mm heat pipe
aluminum
heat sink
23. Your cost analysis show a different number than what we pay. Why?
Your number is wrong.
“all models are wrong, but some are useful” - George P. Box
How does our cost model compare to what we pay?
24. CAB- Mechanical Estimation cost model.
Custom parts/Mechanical Estimation
Example – comparison to quotes.Focus on parameters for Material, molding ($2.66)
$1.67
$4.02
$1.03
$4.63
$1.56
$2.66
Finishing (polish, painting)
Other (inspection, etc)
$15.57
-$2.68
Overhead/profit (12%)
Material, molding
Yield (62%)
Additional process (CNC, trimming)
Cost Model
Estimate
Preliminary
Supplier Quote
$18.25
𝐶𝑜𝑠𝑡𝑖 = 𝑚𝑎𝑡𝑒𝑟𝑖𝑎𝑙𝑠 + 𝑝𝑟𝑜𝑐𝑒𝑠𝑠 + 𝑙𝑎𝑏𝑜𝑟
𝑌𝑖𝑒𝑙𝑑𝑒𝑑 𝑐𝑜𝑠𝑡𝑖 =
𝑌𝑖𝑒𝑙𝑑𝑒𝑑 𝑐𝑜𝑠𝑡𝑖−1 + 𝑐𝑜𝑠𝑡𝑖
𝑦𝑖𝑒𝑙𝑑𝑖
Die casting
Material • AZ91D die cast material
• 125g + 148g of scrap material
• $2.96/kg (@ 1.25% material markup)
Process Molding
• 650T Thixomolding
• 50 sec. cycle time, 1 cavity
• $95/hour machine rate
Yield • 97% yield (per supplier discussion)
Plastic insert molding
Material • PPS+45%GF
• 28g + 6g of scrap material
• $9.82/kg (@1.25% material markup)
Process • 350T injection molding
• 45 sec. cycle time, 1 cavity
• $15.96/hour
Yield • 90% yield (per quality goals on insert molding)
Yield loss is a key
driver for the part
cost
PBM team can work
to negotiate down
Two Takeaways for
Supply chain
25. Leveraging our Technical Know-How into Cost Modeling
Injecting Cost Insight into
Two new Areas
Beyond traditional CAB program usage
• 20 models, 450 parameters (to date)
• Leveraging cost models from experts in
HP & outside industry benchmarks.
Where we are focusing
Developing PS mechanical cost model
Product Design with Cost in Mind
Equipping design teams with tools to
understand impact of cost on design
decisions.
Cost Estimate Info for Negotiations
Equipping our supply chain with
benchmarks and analytics for
negotiations.
Typical Product Cost
1
2
ODM Material &
Manufacturing
Logistics
Commodities
Processor
OS Royalty
Our
Focus
Category percentages are illustrative
26. Injecting Cost Insight into Two new Areas
• Product Design with Cost in Mind
– Optimize design for cost?
– Maximize design value?
– Value = Function/Cost
• Cost Estimate Info for Negotiations
– Where to focus our energy during cost negotiations?
– When is yield an issue and how will improvements impact cost?
– Are we getting a good deal on product a, but not b?
– How do changes in market prices (raw materials, labor) effect our product cost?
– Can we use this to understanding cost for a new technology/material so that we can effectively negotiate?
26
27. Cost Model Process proposal
Build model
• input from:
• Supplier
• DFM/process
documents
• engineering
• CAB team
• Previous
(similar)
models
Use model/ analysis
• Use model
analysis for
intended
purpose
• Understand
impact of cost on
design decisions.
• benchmarks and
analytics for
negotiations.
Analysis feedback
• Document
results from
analysis
• Initiate feedback
loop to verify
parameters
used.
• Archive project
Parameter feedback/validation during product (SQE/ others?). Model accuracy, parameter feedback,
use for negotiation, build up engineering expertise
28. Key ‘best practices’
28
Program has saved double digit millions over past 5 years. Here’s what I’ve learned.
Measurable program goals (in dollars) are critical.
• Goals should be high level, but reasonable (X% of spend).
• How you measure savings needs to be defined (cost avoidance vs. cost savings, timeframe, etc).
• Money isn’t everything.
Executive sponsorship is critical. Support from employees is (equally) critical.
• Regular engagement with executive sponsors (1x per month for us) is critical.
• Savings goals for the entire team/organization. We are often challenging assumptions/decisions that haven’t been reviewed in a long
time/are difficult to review.
• Be nice.
Getting the right people in the right job is critical.
• Questions are easy (‘how much should that cost’). The answers are simple (some series of numbers). Quality of the answers will depend
on the quality of the analysis, which is dependent on the right people.
• Analytical skills. Problem solvers. Math/engineering oriented.
• Hire people that can be nice.
This is hard work. What’s harder is embracing that there’s now more you don’t know.
