Challenges to an Integrated Cost Management during Early Phases of Product Development
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1 Challenges to an Integrated Cost Management during Early Phases of Product Development Dr.-Ing. Markus Mörtl Lehrstuhl für Produktentwicklung / Institute of Product Development Technische Universität München Garching (near Munich), Germany Markus Mörtl, Munich: Challenges to an Integrated Cost Management during Product Development Free Univ. of Bozen, Series of Lectures, /45
2 Overview 1. Technische Universität München, Institute of Product Development 2. Introduction 3. Challenges 4. Research projects 5. Conclusion 2009 Markus Mörtl, Munich: Challenges to an Integrated Cost Management during Product Development Free Univ. of Bozen, Series of Lectures, /45
3 Garching, 15 km north of Munich Technische Universität München Faculty of Mechanical Engineering Campus Garching Viewing Direction: South (Direction to Munich and to the alps) 2009 Markus Mörtl, Munich: Challenges to an Integrated Cost Management during Product Development Free Univ. of Bozen, Series of Lectures, /45
4 Research Topics of the Insitute of Product Development Individuals teams organisation distributed organisation virtual organisation invention innovation quality cost management complexity management environment methods process person situation resources time, competitors, knowledge, competence, patents, complexity, time quality costs flexibility CAD PDM VR management of ideas engineering workshop Reference: Institute of Product Development Markus Mörtl, Munich: Challenges to an Integrated Cost Management during Product Development Free Univ. of Bozen, Series of Lectures, /45
5 Overview 1. Technische Universität München, Institute of Product Development 2. Introduction 3. Challenges 4. Research projects 5. Conclusion 2009 Markus Mörtl, Munich: Challenges to an Integrated Cost Management during Product Development Free Univ. of Bozen, Series of Lectures, /45
6 What is cost management? Cost management is targeted and systematic steering of costs. Thea aim is to influence the costs of products, processes and resources by using concrete measures, such that an appropriate company success is achieved, and its competitive strengths are improved for a long time to come. Reference: Ehrlenspiel et al.: Cost Efficient Design, Markus Mörtl, Munich: Challenges to an Integrated Cost Management during Product Development Free Univ. of Bozen, Series of Lectures, /45
7 The dilemma of product development High groß Cost appearance Cost influence Possibility Möglichkeit of der influencing Kostenbeeinflussung costs Information feedback: From former projects to new projects Cummulative costs Low gering time Product planning, project planning Development Manufacture Use Disposal Reference: Similar to: Ehrlenspiel et al.: Cost Efficient Design, Markus Mörtl, Munich: Challenges to an Integrated Cost Management during Product Development Free Univ. of Bozen, Series of Lectures, /45
8 Costs set and costs incurred in different departments Product costs in [%] 100 ~7 % ~5 % ~22 % ~18 % ~38 % 50 0 ~70 % ~9 % Design Development Production planning ~3 % Production ~28 % Costs set (established) Costs realized (incurred) Material costs, Suppliers Sales Administration Technical planning departments (product development and production planning) set approximately 90% of the product costs Reference: Ehrlenspiel et.al.: Cost efficient design, Markus Mörtl, Munich: Challenges to an Integrated Cost Management during Product Development Free Univ. of Bozen, Series of Lectures, /45
9 In former times: easy mechanical engineering and cost management. Example centrifuge base: Previous and new centrifuge base Results: Manufacturing costs: 100% => 82% Number of parts: 27 => 14 Less weld length: 57m => 23m Reference: Ehrlenspiel et.al.: Cost efficient design, Markus Mörtl, Munich: Challenges to an Integrated Cost Management during Product Development Free Univ. of Bozen, Series of Lectures, /45
10 Form design rules for milling Reference: Ehrlenspiel et.al.: Cost efficient design, & Pahl, G.; Beitz, W.; Feldhusen, J.; Grote, K.-H.: Konstruktionslehre. 7. Aufl. Berlin: Springer Markus Mörtl, Munich: Challenges to an Integrated Cost Management during Product Development Free Univ. of Bozen, Series of Lectures, /45
11 Quick cost calculation with cost growth law cost growth law Geometric similarity (size ratio) PCs MC N 0 N = ϕ 0,5 L + PCe 0 ϕ L2 + MtC 0 ϕ 3 L Length = = L Length L ϕ L MC PCe PCs MtC = Manufacturing cost = Production cost from total time units = Production cost from set-up times (Set-up cost) = Material cost Also other laws exist Reference: Ehrlenspiel et.al.: Cost efficient design, Markus Mörtl, Munich: Challenges to an Integrated Cost Management during Product Development Free Univ. of Bozen, Series of Lectures, /45
12 Html-based cost estimation tool: cost control assistent KosKA: cost estimation tools and documentation Tool box Differentiating overhead costing Analysing actual costs Estimating Similarity calculaton Weight-based costing Solution search Material cost method Regression analysis Reference: FVA-research project & Nißl, A.: Modell zur Integration der Zielkostenverfolgung in den Produktentwicklungsprozess. München: Dr. Hut Markus Mörtl, Munich: Challenges to an Integrated Cost Management during Product Development Free Univ. of Bozen, Series of Lectures, /45
13 Overview 1. Technische Universität München, Institute of Product Development 2. Introduction 3. Challenges 4. Research projects 5. Conclusion 2009 Markus Mörtl, Munich: Challenges to an Integrated Cost Management during Product Development Free Univ. of Bozen, Series of Lectures, /45
14 Challenges to an Integrated Cost Management during Early Phases of Product Development 1. cycles 2. interdisziplinarity / mechatronic products / hybrid products&services 3. virtuality 4. distributed located organisations & design departments 5. sight on functions, function-integrated products 6. complexity management 7. innovations & new business cases 8. changed use of products 2009 Markus Mörtl, Munich: Challenges to an Integrated Cost Management during Product Development Free Univ. of Bozen, Series of Lectures, /45
15 Overview 1. Technische Universität München, Institute of Product Development 2. Introduction 3. Challenges 4. Research projects 5. Conclusion 2009 Markus Mörtl, Munich: Challenges to an Integrated Cost Management during Product Development Free Univ. of Bozen, Series of Lectures, /45
16 Research project: managing cycles of innovation processes SFB 768 (Deutsche Forschungsgemeinschaft) cycles: product cost (material, ) personnel (know how, number of persons, ) tax law, different kind of cycles: Reference of figures: Friedrich, M.: presentation at SFB 768, Markus Mörtl, Munich: Challenges to an Integrated Cost Management during Product Development Free Univ. of Bozen, Series of Lectures, /45
17 Example: car / navigation system / traffic Car modell: 20 years market life time Navigation system: 1 year time to develop Street map: Update every 2 months Traffic: actualiced every 15 minutes Reference: SFB Markus Mörtl, Munich: Challenges to an Integrated Cost Management during Product Development Free Univ. of Bozen, Series of Lectures, /45
18 Example: car / navigation system / traffic Car modell: 20 years market life time Navigation system: 1 year time to develop Street map: Update every 2 months Traffic: actualiced every 15 minutes Reference: SFB Markus Mörtl, Munich: Challenges to an Integrated Cost Management during Product Development Free Univ. of Bozen, Series of Lectures, /45
19 Mechatronic product: Fuel injection system Software Electric fuel pump Injection valve Foto: BOSCH Markus Mörtl, Munich: Challenges to an Integrated Cost Management during Product Development Free Univ. of Bozen, Series of Lectures, /45
20 Mechatronic product: different design concepts 1996: 2 mechanically coupled windshield whipers, rubber lip and whisher arm separated [BMW E30] 2006: 2 separate windshield whipers, electronically combined steering e.g. for changing parking positions, [Skoda Octavia II] Fotos: M. Mörtl Markus Mörtl, Munich: Challenges to an Integrated Cost Management during Product Development Free Univ. of Bozen, Series of Lectures, /45
![e.g. for changing parking positions, [Skoda Octavia II] Fotos: M. Mörtl.](/docs-images/57/5493261/images/page_20.jpg "2009 Markus Mörtl, Munich: Challenges to an Integrated Cost Management during Product Development Free Univ.")
21 Research project: Estimation of costs of mechatronic products. Challenges in designing mechatronic products. Increasing amount of tasks More functions, more tasks regarding costs, quality, time, Higher product complexity Number of parts & variants, Higher process complexity More people and departments involved, More difficult estimation of ressources needs Intransparent and secret costs, less information, each domain has its separate cost estimation and calculation, Reference: Braun, S.C.: internal presentation at the institute, 2008/ Markus Mörtl, Munich: Challenges to an Integrated Cost Management during Product Development Free Univ. of Bozen, Series of Lectures, /45
22 Research project: Estimation of costs of mechatronic products. Challenges in designing mechatronic products. Increasing amount of tasks More functions, more tasks regarding costs, quality, time, Higher product complexity Number of parts & variants, Higher process complexity More people and departments involved, More difficult estimation of ressources needs Intransparent and secret costs, less information, each domain has its separate cost estimation and calculation, Reference: Braun, S.C.: internal presentation at the institute, 2008/ Markus Mörtl, Munich: Challenges to an Integrated Cost Management during Product Development Free Univ. of Bozen, Series of Lectures, /45
23 Research project: virtual product development & cost estimation in early phases Robust design to produce products not only at one manufacturing plant (but to be able to produce all over the world) costs Robust design Be able to make design decisions in a very early phases of product development 2009 Markus Mörtl, Munich: Challenges to an Integrated Cost Management during Product Development Free Univ. of Bozen, Series of Lectures, /45
24 Research project: virtual product development & cost estimation in early phases Robust design to produce products not only at one manufacturing plant (but to be able to produce all over the world) costs Robust design Be able to make design decisions in a very early phases of product development 2009 Markus Mörtl, Munich: Challenges to an Integrated Cost Management during Product Development Free Univ. of Bozen, Series of Lectures, /45
25 Research field at the Insitute: product development distributed at different locations 2D-Shared- Whiteboard 3D-Sketching 3D-Shared-Whiteboard Work place 1 Work place2 Fotos: Grieb, J.: presentation of doctor thesis, Markus Mörtl, Munich: Challenges to an Integrated Cost Management during Product Development Free Univ. of Bozen, Series of Lectures, /45
26 Research field at the Insitute: product development distributed at different locations 2D-Shared- Whiteboard 3D-Sketching 3D-Shared-Whiteboard Work place 1 Work place2 Fotos: Grieb, J.: presentation of doctor thesis, Markus Mörtl, Munich: Challenges to an Integrated Cost Management during Product Development Free Univ. of Bozen, Series of Lectures, /45
27 New design concepts: functional integrated products. Search table for costs for windsheld whiper (function: clean windsheld) 1. Session: Analysis, targets, potentials windscreen whiper: own system part no. actual costs % actual costs competitor target costs required cost reduction required cost reduction cost reduction potential responsible date 2386-US-DC [ ] [%] [ ] [ ] [%] [ ] person electric motor ,70 49,7 12,20 11,80-19,7-2,90 other principl. Development connecting arm ,20 7,4 2,30 2,15-2,3-0,05 welded design Devl.-Productio bearings ,80 9,5 1,90 2,10-25,0-0,70 simplify Development whiper arms ,15 14,0 7,50 7,20 73,5 3,05 change concept Development rubber lip ,95 13,4 0,00 0,00-100,0-3,95 change concept Development water pipes ,50 1,7 0,60 0,47-6,0-0,03 other supplier Purchasing software 1,25 4,2 1,00 1,20-4,0-0,05 known prices Purchasing sum 29,55 100,0 25,50 24,92-15,7-4,63 Not real example & costs 2. Session: actual costs competitor achieved cost reduction new measures responsible date [ ] [%] 14,50-0,4 other supplier purchasing ,40 10,1 change productionproduction ,76-0,4 other supplier purchasing ,11 0,0 other principl. development ,20 7,3 other principl. development ,47-5,0 ok 1,22-1,4 ok 29,66 1,4 further sessions control, New measures Integrated functions Results: actual costs competitor achieved cost reduction [ ] [%] 11,78-18,9 2,18 0,1 2,00-27,6 6,83 65,6 0,00-99,0 0,48-3,0 1,22-1,4 24,49-16, Markus Mörtl, Munich: Challenges to an Integrated Cost Management during Product Development Free Univ. of Bozen, Series of Lectures, /45
28 Cost curve over period of product development 29,55 Target costs Achieved costs 24,49 (= -16%) 24, Markus Mörtl, Munich: Challenges to an Integrated Cost Management during Product Development Free Univ. of Bozen, Series of Lectures, /45
29 New design concepts: functional integrated products Windshield whiper: rubber lip + windshield whiper arm = 1 integrated part Foto: BOSCH Markus Mörtl, Munich: Challenges to an Integrated Cost Management during Product Development Free Univ. of Bozen, Series of Lectures, /45
30 New design concepts: functional integrated products Windshield whiper: rubber lip + windshield whiper arm = 1 integrated part Foto: BOSCH Markus Mörtl, Munich: Challenges to an Integrated Cost Management during Product Development Free Univ. of Bozen, Series of Lectures, /45
31 Research field at the institute: The complexity challenge in product design Head Market complexity Product complexity Popularity Departments Long Tail Products Product lines Complexity involves many domains can provide competitive advantages Organizational complexity steadily increases Process complexity Development time Functionality Reference: Maurer, M.: presentation of doctor thesis, Markus Mörtl, Munich: Challenges to an Integrated Cost Management during Product Development Free Univ. of Bozen, Series of Lectures, /45
32 Challenge: Structure analysis of multiple-domain networks Single-domain dependency network Affects Component Analysis Component 2 Closed impact loop 8 Component 3 Multiple-domain dependency network A α γ B 1 C δ β Analysis Processed by Person 1 Uses Component 1? Describes Data 1 Reference: Maurer, M.: presentation of doctor thesis, Markus Mörtl, Munich: Challenges to an Integrated Cost Management during Product Development Free Univ. of Bozen, Series of Lectures, /45
33 Challenge: Structure analysis of multiple-domain networks Single-domain dependency network Affects Component Analysis Component 2 Closed impact loop 8 Component 3 Multiple-domain dependency network A α γ B 1 C δ β Analysis Processed by Person 1 Uses Component 1? Describes Data 1 Reference: Maurer, M.: presentation of doctor thesis, Markus Mörtl, Munich: Challenges to an Integrated Cost Management during Product Development Free Univ. of Bozen, Series of Lectures, /45
34 New products, which do not exist => New business cases: for example electrical / hybrid driven cars: How to calculate the lifecycle costs? Reference: Gorbea, C.: internal presentation at the institute, 2008/ Markus Mörtl, Munich: Challenges to an Integrated Cost Management during Product Development Free Univ. of Bozen, Series of Lectures, /45
35 Understanding lifecycle costs Reference: Gorbea, C.: internal presentation at the institute, 2008/ Markus Mörtl, Munich: Challenges to an Integrated Cost Management during Product Development Free Univ. of Bozen, Series of Lectures, /45
36 Understanding lifecycle costs Reference: Gorbea, C.: internal presentation at the institute, 2008/ Markus Mörtl, Munich: Challenges to an Integrated Cost Management during Product Development Free Univ. of Bozen, Series of Lectures, /45
37 Research project: Design for upgrading. Changed use of products. Problem: How to calculate life cycle costs? Upgrading Modernization Renew Repair Reference: Mörtl, M.: presentation of doctor thesis, Markus Mörtl, Munich: Challenges to an Integrated Cost Management during Product Development Free Univ. of Bozen, Series of Lectures, /45
38 Research project: Design for upgrading Life cycle of a normal (not upgradeable) productidea/ planning Development Manufact. Selling Use phase I Reference: Mörtl, M.: presentation of doctor thesis, Markus Mörtl, Munich: Challenges to an Integrated Cost Management during Product Development Free Univ. of Bozen, Series of Lectures, /45
39 Research project: Design for upgrading Life cycle of an upgradeable product Idea/ planning Development Manufact. Selling Use phase I Further phases of use Use phase II... Upgradeprocess Life cycle of additional components Idea/ planning Development Manufact. Selling Reference: Mörtl, M.: presentation of doctor thesis, Markus Mörtl, Munich: Challenges to an Integrated Cost Management during Product Development Free Univ. of Bozen, Series of Lectures, /45
40 Turning machine & Bottle labeling machine First use After modernization Concept without design for upgrading : Integrated product Concept with design for upgrading : Modular product (different bottles, labels, ) Fotos: FKW GmbH, Krones AG. Reference: Mörtl, M.: presentation of doctor thesis, Markus Mörtl, Munich: Challenges to an Integrated Cost Management during Product Development Free Univ. of Bozen, Series of Lectures, /45
41 Turning machine & Bottle labeling machine First use After modernization Concept without design for upgrading : Integrated product Concept with design for upgrading : Modular product (different bottles, labels, ) Fotos: FKW GmbH, Krones AG. Reference: Mörtl, M.: presentation of doctor thesis, Markus Mörtl, Munich: Challenges to an Integrated Cost Management during Product Development Free Univ. of Bozen, Series of Lectures, /45
42 Overview 1. Technische Universität München, Institute of Product Development 2. Introduction 3. Challenges 4. Research projects 5. Conclusion 2009 Markus Mörtl, Munich: Challenges to an Integrated Cost Management during Product Development Free Univ. of Bozen, Series of Lectures, /45
43 Conclusion Cost decreasing is possible (almost) at every product, process at almost every time! It depends upon different circumstances: Equipment at the plant, tasks, as well as the known methods, knowledge, Engineering & Design has a great influence on all costs of product life! Work together (with other departments) is a very important point to achieve target cost orientated design! Work systematically (and when there is no method, so create one by yourself!) 2009 Markus Mörtl, Munich: Challenges to an Integrated Cost Management during Product Development Free Univ. of Bozen, Series of Lectures, /45
44 Literature Ehrlenspiel, K.; Kiewert, A.; Lindemann, U.: Kostengünstig Entwickeln und Konstruieren Kostenmanagement für die integrierte Produktentwicklung. 6. Aufl. Berlin: Springer VDI Ehrlenspiel, K.; Kiewert, A.; Lindemann, U.; Hundal, M.S. (Ed.): Cost-Efficient Design. Berlin: Springer VDI Lindemann, U.: Methodische Entwicklung technischer Produkte Methoden flexibel und situationsgerecht anwenden. 2. Aufl. Berlin: Springer VDI Ponn, J.; Lindemann, U.: Konzeptentwicklung und Gestaltung technischer Produkte Optimierte Produkte systematisch von Anforderungen zu Konzepten. Berlin: Springer VDI Gahr, A.: Pfadkostenrechnung individualisierter Produkte. München: Verlag Dr. Hut (Diss. TU München) Nissl, A.: Modell zur Integration der Zielkostenverfolgung in den Produktentwicklungsprozess. München: Verlag Dr. Hut (Diss. TU München) Mörtl, M.: Entwicklungsmanagement für upgradinggerechte Produkte. München: Verlag Dr. Hut (Diss. TU München) Lindemann, U.; Maurer, M., Braun, T.: Structural Complexity Management An Approach for the Field of Product Design. Berlin: Springer CiDaD News (published 2x per year) for free, online CiDaD Working Paper Series for free, online Lehrstuhl für Produktentwicklung Books, Publications, Doctoral Thesis Markus Mörtl, Munich: Challenges to an Integrated Cost Management during Product Development Free Univ. of Bozen, Series of Lectures, /45
45 Final slide Many thanks for your attention! Contact: Dr.-Ing. Markus Mörtl Technische Universität München Lehrstuhl für Produktentwicklung Boltzmannstraße Garching, Germany Tel.: Fax: Web: Markus Mörtl, Munich: Challenges to an Integrated Cost Management during Product Development Free Univ. of Bozen, Series of Lectures, /45
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