Beat Foreign and Domestic Competition by Offering Your Customers More Selection
Your competition has broadened and become more sophisticated, while your customers are demanding more and more from you. Their demands for increased product selections coupled with the trend towards smaller and smaller order quantities present a daunting challenge for any small to medium sized manufacturer. Fortunately, there is an innovative solution that not only lowers costs, but also helps to build a wall against your competition.
The Solution – Matrix Bills
Product Configuration with Matrix Bills & Routings is a technology that has streamlined the order entry and manufacturing processes for companies that produce custom products. The results have also been dramatic in lowering or eliminating both inventories and obsolete stock. Some companies have even eliminated their finished goods entirely, and are fulfilling customer demands on a direct to-order basis.
Even more importantly, product configuration with matrix bills & routings allows you to offer options and features to your products that are extremely difficult for your competitors to match. Let’s review an example. You are a manufacturer of food blenders. Your foreign competition makes them in 10 colors, 4 motor options, and 4 blending option panels and has a unique BOM and Routing for each combination, resulting in 160 possible products. They build the blenders to a forecast that projects how many of each of the 160 products will be sold. They will be successful if their customers order in quantities, colors, motor types, and power options that were predicted. But what happens when demand explodes for red, high speed blenders with the deluxe blending power strip? There will be shortages for the highly demanded item, and excess inventories for everything else, leaving expensive inventory with a 35% carrying cost, and lost business…
You could, however, immediately supply those blenders in any permutation that the customer demands and in quantities that closely match current demand levels. You could final-assemble those blenders from component and sub-assembly inventory on a daily basis. Now, as the demand pattern shifts, so can you. Using a much more responsive approach, you could have fabricated 3 months worth of blender bases, assembled 2 months worth of motors, and have purchased 30 days supply of power sets( from suppliers with whom you have 3 day delivery agreements). You also might have developed a quick-fire paint room with enough paint to last 3 weeks. And with structured Matrix BOM’s and Routings that work with an Order Entry Configuration process, you could produce and ship to each custom demand while still maintaining a lower and more flexible inventory investment. Who do you think would have the cost advantage now? Who will be able to jump on moving trends and sell even more?
Matrix Bills – Ultimate Choice without the Part Number Problem
Stop creating all those one-time part numbers – there’s a better way.
The beauty of matrix bills is that you can offer an endless array of options without causing turmoil and confusion in your shop. Let’s look at a common example, the automobile. Most everyone is familiar with the fact that you can select quite a variety of options- seats, air conditioning, colors, and hundreds of other choices. For example, if you check out the manufacturer’s on-line configurator for the popular Mini Cooper, the visual provided illustrates that there are over 10 million combinations of ways to configure this automobile.
Of course, it is not possible to manage the millions of end part numbers, so they handle it through matrix bills of material. The customer selects from a series of option choices, and the product is then assembled based on those choices. In this visual example, you are prompted to configure the various options for the automobile.
Where Did the Matrix Bill Idea Come From?
Years ago, engineers recognized that when a product has a number of options, a matrix or tabular drawing could replace the need for multiple part numbers, and reduce the number of drawings that needed to be maintained. A Matrix Drawing is simply a drawing that contains a table (see example below), listing all needed component part numbers in the first column, with the top row listing all of the options affecting that component part …then an “X” or a quantity/per is entered to identify which component parts are needed based on the option choices. Today you don’t need drawings to make this work, but the drawing shows that the concept makes a lot of sense, and is easy to understand.
Let’s Review another Example:
Here’s a Matrix Bill Table where the part numbers to be chosen are a function of the Power Option selected:
Power Light Assembly
RL0010 110V Relay
RL0014 220V Relay
LB2034 60W 110V Bulb
LB2029 60W 220V Bulb
So, a customer needing the 110V Power option will be provided a product that includes the 110V Relay and Light Bulb. And these types of choices can affect any, and or every level of the bill of material! This illustrated subassembly would require two component part numbers, which in matrix bills has been reduced to one. If we were to add four color options to the power light, then this subassembly would normally require 8 part numbers, but still only require one with a matrix bill. You can only imagine if there were hundreds of different subassemblies and numerous options for each. As a result, the Matrix Bill approach not only reduces the number of drawings and end-part numbers significantly, it also does the same throughout all the lower level parts as well.
Matrix bills can also have an impact on your lean initiatives and inventory as well. By not pre-building subassemblies for each of the options, your inventories drop. By not using a separate line to build the subassemblies, and streamlining them into your main operations, your business becomes leaner.
Now let’s consider another dimension (no pun intended!) to this engineering challenge. Take a situation where not only is the selection of a part number conditional based on the option selected, but the quantity needed varies. This is always the case for a dimensional product. When the product choices include materials and dimensions, the matrix approach can easily support this as well. In the example below, not only do the material selections vary based on the option choice, but also the quantity of material needed as this is a function of the customer’s dimensional requirements. Here’s a case in point, where the customer has specified the Length and Width, and a Material Choice. Using Matrix Bills, we can correctly calculate the required materials needed:
Metal Normal Duty
Metal Heavy Duty
SM1234 12GA Sheet Metal
Length X Width
Length X Width
Length X Width
Length X Width
TR7896 Trim for Fiberglass
When a customer asks for a Heavy Duty Metal Door 4 X 8, then the bill of material will automatically include 32 square feet of Part Number SM1234 10 GA Sheet Metal.
When another customer asks for a Fiberglass Door 10 X 12, then the bill of material will automatically include 120 square feet of FG4986 Glass Layup, and also 44 linear feet of TR7896 Trim for Fiberglass.
And all accomplished with no additional part numbers! This clearly provides the way to streamline order entry and production for complex and dimensional products.
Remember the “Floor”
The matrix concept is also applicable to work instructions as well as Bill of Materials. All possible operational steps for a configured product are included in one comprehensive Routing, and each operation is linked to the appropriate option or feature. In this way, during Order Entry, as the choices are entered, not only is a unique, customer specific BOM “put together by the Matrix Configurator, but a specific operational routing is also assembled for the shop.
- Huge reduction of part numbers, unique BOM’s and Routings
- Improved Design and Industrial Engineering Efficiencies
- Less inventory and more “valuable” inventory that is built to assemble-able levels rather than “white elephant” levels
- Dramatically increased product offerings with virtually unlimited choice for the customer.
If any of these benefits seem attractive to you, check out an ERP Manufacturing System that includes Matrix BOM’s & Routings in its Product Configuration Application.