Maximizing Efficiency: The Impact of Early Decisions on BIW Project Costs

The diagram compares the actual expenses of the Original Equipment Manufacturer (OEM) with the committed costs throughout the Body in White (BIW) product's life cycle cost.

For instance, once the BIW concept design is frozen, even if the actual accumulated expenses on the car program are only ~5% (as shown in the diagram) the committed BIW project cost has already reached >75%. By committed cost, understand the subsequent costs resulting from early decisions, such as choosing to use composite material for a subassembly, which adds the cost of processing this material for each car produced right after the Start of Production (SOP) without adding significant expenses at the time of the decision.

Respectively at SOP the actual accumulated expenses is ~15% while the committed cost reached 90%. Incidentally it means that Bodyshop Manufacturing team can only influence 10% of the total project cost.

These numbers reveal a critical insight: decisions made during the early stages of design and development have a decisive impact on the profitability of the project.

he diagram compares the actual expenses of the Original Equipment Manufacturer (OEM) with the committed costs throughout the Body in White (BIW) product's life cycle cost.

For instance, once the BIW concept design is frozen, even if the actual accumulated expenses on the car program are only ~5% (as shown in the diagram) the committed BIW project cost has already reached >75%. By committed cost, understand the subsequent costs resulting from early decisions, such as choosing to use composite material for a subassembly, which adds the cost of processing this material for each car produced right after the Start of Production (SOP) without adding significant expenses at the time of the decision.

Respectively at SOP the actual accumulated expenses is ~15% while the committed cost reached 90%. Incidentally it means that Bodyshop Manufacturing team can only influence 10% of the total project cost.

These numbers reveal a critical insight: decisions made during the early stages of design and development have a decisive impact on the profitability of the project.

4 Key Takeaways

1?? The majority of project costs (75%) are determined during the product design phase.

2?? Once the process layout is finalized, 90% of the project costs are committed, leaving minimal room for changes.

3?? Early-stage decisions have an increasingly significant impact on costs and long-term profitability.

4?? Even with exceptional production performance, the manufacturing team can only influence 10% of the total lifecycle costs.

This is well-illustrated when comparing the production strategies of BMW and Toyota:

• BMW, with its highly customizable vehicles, often deals with a higher degree of complexity in production. While this flexibility caters to a premium market, it results in higher costs due to late-stage changes and the need for manufacturing teams to work around inefficiencies that stem from design decisions made without their input.

In contrast, Toyota integrates its production team into the product design process. This close collaboration ensures that:

• Product designs are inherently optimized for manufacturability, avoiding complex designs that require costly or time-consuming production methods. For example, the production team might recommend fewer variations in components or suggest alternative materials that are easier and cheaper to process.
• Design choices are aligned with existing manufacturing capabilities, reducing the need for new equipment or reconfiguration of production lines.
• Assembly complexity is minimized by suggesting design adjustments that simplify the number of steps or eliminate redundant operations.
• Early identification of potential bottlenecks ensures that the product and process design are adjusted to avoid future inefficiencies.

Through this proactive involvement, Toyota's production team directly reduces production costs by influencing product design decisions that align with lean manufacturing principles. By prioritizing simplicity, efficiency, and standardization during the design phase, Toyota minimizes waste, reduces setup times, and ensures smoother transitions from design to production.

The Strategic Role of Manufacturing Teams Upstream

Ironically, the responsibility for production performance over the 5 to 8 years following SOP often falls on Bodyshop Area Managers. Yet, these managers are rarely involved in the early decisions that shape:

• The choice of equipment, which determines maintenance requirements and uptime.
• Logistics flows, which can lead to bottlenecks.
• Design choices, such as the use of aluminum, which adds processing costs without immediate expenses.

To maximize profitability, manufacturing teams must adopt an advisory role during the early stages of the project by:

• Collaborating closely with product design teams, just as systems engineering experts do during the Systems Engineering (SE) phase.
• Benchmarking proposed process solutions from the manufacturing engineering team using relevant production Key Performance Indicators (KPIs).

Conclusion

Deploying experienced production engineers to advise on process layout and product design is a critical factor for profitability. Their expertise helps anticipate challenges, optimize costs, and ensure a smooth transition from design to production.

Toyota’s ability to empower its production team to influence product design illustrates the financial benefits of aligning manufacturability with design decisions. BMW, while excelling in customization, demonstrates the cost challenges that arise when manufacturing teams are excluded from early design stages.

By integrating manufacturing expertise early, companies can eliminate inefficiencies, reduce costs, and achieve higher profitability across the product lifecycle. Let’s embrace this approach to create more robust and successful projects. ??