Impact of Product design on Supply Chain

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How product design influences Supply Chain

Product design can have significant influence on Supply Chain efficiency. In this article we will quickly overview some key impacts product design can have on Supply Chain.

Time to Market and Time to scale: Design decisions on the functionalities of the product can:

  • Increase manufacturing complexity
  • Decrease flexibility and responsiveness

Impact on Manufacturing: Product design can significantly impact manufacturability, in the following areas:

  • Manufacturing costs
  • Quality failures
  • Manufacturing lead times

Warehousing and Transportation: The form factor (Physical specifications) of product design impacts warehousing and transportation in the following areas:

  • Packaging cost
  • Storage cost
  • Transportation cost

Inventory: Low level of commonality in product designs in a portfolio of products increases complexity, thereby adversely impacting inventory holding costs.

Procurement: Low level of commonality in product design also means that there are fewer chances of economies of scale, thereby we end up losing procurement benefits that we can derive from economies of scale.

Increased Order Fulfillment time: Non optimal product designs add complexity to Bill of Materials (BOM), send procurement professionals on a hunt for specialized suppliers, many of these specialized suppliers are generally offshore. This can negatively impact the total order fulfillment time due to increase in Inbound transportation lead time.

Supply Chain risks: As mentioned above, complexities in Product design can influence supplier selections and may lead to a geographically distributed global supplier landscape. This adds significantly to Supply Chain disruption risks and control.

Sustainability: Very soon, this will become a major objectives on vision and mission statements. Sustainable product design will soon become a requirement. Most of the product designed today are not designed from a sustainability perspective, thereby leaving an adverse impact on the environment during and towards the end of their life.

Late Stage customization: Non optimal product design can significantly hinder the ability to postpone the final configuration or packaging of a product and will therefore increase the fulfillment lead time.

Aftersales: Design of products will have an impact on after sales parts inventory, which increases exponentially with the complexity of the product design.

Views based on my own research

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