What is the cost of maintaining a digital part?

What is a Standard Part?

Any part that can be reused or “standardized” across an assembly or multiple assemblies can be classified as a “standard” part. For instance, a standard part may be the assembly of an entire hydraulic system, or all the individual parts that make up the system such as the fittings, cylinders, pistons, fluid filters and more. Being able to reuse standard parts and assemblies, and the ability to transfer their applications from one project to another, accelerates the speed of design and drastically increases efficiency for engineering departments. Digital standard parts are the veritable catalyst for saving money in assembling new designs. Or at least they should be.

And whether designing a better little red wagon, or facing the growing threats, competing priorities, and fiscal pressures at the Department of Defense, an engineer must be cognizant of the costs associated with maintaining digital parts.

Digital Parts Management

What is the Cost?

According to a report published by The Department of Defense Parts Standardization and Management Committee, it takes an average of six hours to search for a new part in a data management system. Remarkably, it then takes another sixty hours to document the part. In addition, the process of design engineering and documentation for a new part is 46 percent of the total cost to simply introduce it to the market. Furthermore, it is a waste of value-added time to search for a part that is not readily available in the system, is duplicated or especially if it’s inaccurate. This clearly slows down the design process, diminishes quality of the final assembly, and increases engineering costs. In addition, studies have shown that the engineering design phase can make up over 70 percent of the total life cycle cost of a new product post market introduction.

 

A Look at What Goes Into Calculating Digital Part Cost

When adding a non-standard part in the design of a system the average cost can be as much as $20,000 over the life of the program, with design and engineering of the new part being almost half the total program cost. And even adding an existing nonstandard part can still have a significant impact to the system cost. The following are six cost drivers and their percentage impact on the program. This reveals the importance and benefits of parts management in alleviating the added cost of designing a new part while maintaining design flexibility.

 

Cost Distribution of Introducing a New Part:

  1. Design and engineering 46%
  2. Inventory 4%
  3. Logistics support 19%
  4. Manufacturing 9 %
  5. Purchasing 19%
  6. Testing 3%

 

Note that the three most significant areas a parts management system can impact are also the three largest segments of costs: engineering & design, logistics and purchasing.

 

Design and Engineering

As noted above the majority of cost to introduce a new digital part into the parts library is in design and engineering, which after concept are the first stages of the process. Therefore, leveraging an effective parts management process will reduce costs early, which can otherwise snowball out of control. A parts management system allows cost-effective digital part selection in design and engineering, enhances part interchangeability, and alleviates:

  • Duplication of work between designers, engineers, and support personnel
  • Creating, releasing, and maintaining duplicate or other unnecessary drawings
  • Program risks from using untested or unknown parts
  • Wasted time in searching for parts
  • Missing schedules due to unobtainable parts

Recurring Costs

The table below shows the typical hours and costs to design and engineer a new part.

Recurring Costs for Design and Engineering of a New Part

1 According to NAS 1524 Standardization Savings, Identification and Calculation:

 

  • Savings from Reduced Engineering Search Time:

Savings = (the annual number of searches for data x rate of engineering costs) x (the time to finish a search x the success rate).

  • Savings from Using a Stocked Standard Part in Lieu of a New Design:

Savings = the cost of releasing and stocking a new part drawing in the system, including all paperwork + cost of quality testing + the number of hours to engineer a new part x rate of engineering costs) + (number of hours to design and draft a new part x rate of engineering costs).

  • Savings in Paperwork and Handling:

Savings = (the cost to process a purchase order + reduction in shipments) x the cost of paperwork and inspection.

 

2 Documentation:

  • Hours for mechanical parts = 50
  • Hours for electrical or electronic parts = 70
    Average of above = 60 hours
    (45 hours for creation and 15 hours for review and release. Engineering change order signatures involve 15 to 20 personnel)

 

3 Failure rate analysis:

  • Hours for mechanical parts = 8
  • Hours for electrical or electronic parts = 16
    Average of above = 12 hours

 

Intangible Costs

The intangible costs that are usually not tracked, but impact the bottom line may be from:

  • Lack of a technology pool of part experts
  • Extended procurement lead-times
  • Repeating the same mistakes (Einstein’s rule: keep doing it over and over expecting a different result)
  • Risks to completion schedule of final item
  • Scheduling parts for manufacturing
  • Technical support provided to purchasing, suppliers and manufacturers
  • Using a part that doesn’t have a supportable performance history

 

The $9,300 estimate above is just for design, engineering and wasted time for having to develop a new drawing for a standard part lost somewhere in the system (an example which reinforces the need for an effective and efficient parts management solution).

 

Digital Part Standardization

Clearly, the cost of a newly created self-designed digital part is expensive. Adding a part can require as many as 400 additional data elements and processes. Of course, the costs vary depending on the industry. Yet a survey of various manufacturers identified the average cost to introduce a new part can range from $200 for clamping devices at a machine tool equipment manufacturer, to $4,000 at a truck and bus manufacturer, and as high as $27,000 for the Department of Defense.

 

A standard part is defined by its usage history, which indicates its reliability and is readily available in the parts library. Parts standardization replaces multiple comparable items with a single common part.

With 46 percent of the total cost for introducing a new part coming from engineering and design, and 19 percent procurement, the need to standardize and eliminate duplicate parts is unquestionable. By using parts management to leverage commonly used, standard parts the design and life-cycle costs of equipment are significantly reduced.

Digital part standardization allows for a common part to be used in multiple applications. It also allows for larger part-type buys which provides economies of scale for the company and ultimately benefits the customer. And part standardization reduces a company’s costs by avoiding part proliferation, which is a result of engineers creating duplicate parts because they can’t find what should be a single standard part in their ERP.

Identifying the right standard digital parts during design is faster and more cost effective than recreating what is already in the system. A design engineer should be able to rely on finding a typical standard part, instead of spending hours searching or designing it from scratch.

Strategic Parts Management software reduces costs in design, engineering and procurement, and eliminates the burden of parts obsolescence.

 

Increase Your Engineering Efficiency & Free Up Your Time for Innovation

We’ve yet to meet a design engineer that wakes up every day excited to draw screws and brackets. Does modeling a bracket or a bearing make a design better? Most design engineers strive to create innovative products and solve complex problems. Not every part is worth designing from scratch and custom design isn’t always better. Instead, by using more standard parts, design engineers can spend their time creating and innovating. By leveraging engineering standardization, reusing standard parts helps create better designs, gets them to market faster and gives your engineers time to revolutionize the market well ahead of the competition.

Take the example of physical inventory. It’s not surprising that many people actually believe that once a company pays for material and puts it on the shelf in a warehouse, it no longer costs anything to keep it there. In truth, there are inventory carrying costs and the capital commitment of warehousing expenditures. It’s the same with maintaining parts in a digital library, there are hard costs associated. Beyond the design of suitable adaptations of parts, maintaining and managing the cost of the existing legacy of parts in the system is one of the biggest challenges engineering departments face.

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But All is Not Lost

Digital parts management improves operational readiness and processes to reduce life-cycle costs by allowing for the use and reuse of standard parts. Consider the example of one manufacturer that reuses 70 percent commercial off-the-shelf parts in some of their designs. With 400 parts in the average top level assembly:

  • Reusing 70 percent of them equals 280 standard parts
  • It takes 6 hours on average for them to create a new part
  • Instead, they save those 6 hours per part for reusing each of the 280 parts

Saving 1,680 total engineering hours

 

Obviously, the cost savings to reuse standard parts is enormous.

Parts reuse powered by Rich-Data enables the reuse of existing parts rather than introducing new ones, providing tremendous savings in engineering and procurement costs. Costs to maintain your digital parts is controlled by effectively using digital libraries to house collections of standardized parts and components, and then tracking the singularity of those items. When a new part is required PARTsolutions’ Strategic Parts Management software automatically checks the parts library to find if the part already exists and ensures duplicates are not created.

 

Conclusion

The goal of parts management is to improve operational readiness and reduce life-cycle costs by promoting the use of common, widely available, reliable parts and processes. Most manufacturers do not have advanced data on their digital spare parts inventories. This leads to high costs for the company and low flexibility for engineers. Conversely, having an error free and complete parts database that allows for Digital Part Reuse ultimately decreases engineering and procurement costs and increases the value to customers.

Strategic digital parts management software is an end-to-end solution that aligns and integrates with the PLM and ERP systems. It finds and reuses CAD models and data to ensure design engineers and purchasing have a method to do their job quickly and efficiently without repetition.

Parts can be standardized by incorporating a parts management software that reduces the number of redundant parts in a design, which improves operational effectiveness, conserves resources, and avoids cost overruns. From medium to large industrial manufacturers, to consumer products companies, and the DoD, no one is immune to the costs to maintain redundant digital parts. If part proliferation occurs, the cost to maintain digital parts will continue to escalate. However, when implementing a parts management solution to control the costs of digital parts your engineering efficiency gets kicked into high gear.

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Shelby Huber

Content Marketing Manager at CADENAS PARTsolutions | A Strategic Communications graduate from the University of South Dakota in Vermillion, South Dakota, Shelby has years of experience in marketing and design for a variety of industries.