4 Ways Engineering can Increase Profits

It’s amazing to me how many organizations have engineers and engineering departments that don’t contribute to the bottom line.  In fact when I discuss Engineering with Owners/CEO’s they think of it as more a necessary cost than a profit center.  Engineers should bring great value to your organization through continuous product and service improvement.  Not that you can expect this to happen without investing dollars in training and guidance, just like any other department, engineers need continued education.  But trained right and with the right environment, an engineer can have an exponential effect on benefiting products, services, and generating more profit.  At the end of this article you will find some tips on improving your engineering staff if you’re not getting these results, and make no mistake, you should be.


Lower the waste

Engineers should be focused daily on finding the waste in existing products.  There are two wastes that an engineering team can have a profound effect on, material waste and process waste.  Material waste can come in a variety of forms, be it an excess of drop material, parts that are designed with too much material cost, or parts designed with the wrong material.  Those engineers who are best at finding material waste will work closely with machinists and equipment operators.  

Just as with material waste, assembly or machining processes have an abundance of non-value added steps.  Operators and Lean practitioners have some control over how to sequence these steps or position jigs and equipment to try and build more efficiently, but the engineer who actually designs the product has the most control.  Products that are designed too complicated or with too many features and bells/whistles will require a lot of production time.  Engineers and designers have a huge opportunity on the front end to design products that do what they should, look great, and can be made in an efficient manner.

New Products and New Service

New products and services can have a dramatic effect on your business.  Look at the chart above.  Where do your current offerings stand?  Are they on the growth cycle? Or are they like most of today’s products and on a decline cycle?  Companies spend hundreds of thousands of dollars a year to try and improve products and services that are on a decline cycle.  However, making products cheaper, outsourcing labor, or trying to add flashy features is generally not a progressive use of time.  Instead, invest in finding that next great new thing, lean on your team to brainstorm these products or services, research the market, and then quickly prototype the ones that show promise.  Engineers, designers, and drafters should roughly split their time between making improvements to existing products/services and developing new ones.  


Repeatable processes and parts

Most of today’s American Manufacturing companies survive off different types of products and services.  What you build today, is probably a little different from what you’re going to build tomorrow.  Good engineering practices and procedures are key to succeeding in a multi-product environment.  "On the floor" changes have their place, but it’s rarely repeatable.  Many times operators “forgot’ what they did last time and have to start from scratch.  Engineers, however, can manage designs in a 3-D or 2-D digital environment and easily repeat a product and capture changes.  Product database software is important as well, revisions have to be tracked and document control is key.  


Quicker time to market with less cost

This could apply to both the custom side of your business or the new development side.  Software, calculation, and general understanding of processes/equipment can reduce the time it takes to flush out an idea, understand if it’s feasible, and then refine the design digitally before building physically.  I once worked with a company that had built nine working prototypes before deciding on a final design, and these where not cheap prototypes, nor was it a large company!  A well trained engineer can save you thousands of dollars in R&D cost.


Are you seeing these results?

If you have a highly effective, highly focused, staff of designers, engineers, and drafters you should be seeing the above results.  If you don't, look for these wastes: 

1) Non Value added steps are taking up too much time in a day.  Paperwork, ECNs, redundant approvals, firefighting, misdirected problem solving (problems that should be solved by someone else) are all examples of Non Value added steps.  Some of this is needed, but many organizations spend every day focused on these.

2) Your staff needs training.  "Sharpening the saw" is critical for a high technology, highly changing field such as engineering.  Engineers need industry training, machine training, and lean training to achieve the results above.

3) You live in a highly custom product or service environment, where each day something new is built from scratch.  Despite how many use this as an excuse, it's hardly the case.  Most manufacturers offer custom options, but the core product is much the same...a saying I like is "it's all the same, just different".  If you are in this world don't fret, you have capacity, your engineers and designers are probably spending too much time doing redundant tasks that have been done before and just need to be better organized.

4) You have the wrong staff...this option is least likely, engineers are proven intelligent or they wouldn't have the title.  Generally the fault lies in the way they are managed and trained, look there first.

Look for ways to challenge your engineering staff, find metrics that you can measure daily and live by these metrics.  We’ve all heard “what get’s measured, get’s managed”.  Use the metrics to find waste in your process and then eliminate (or at least reduce) the waste.

As mentioned in the beginning engineers need training, probably even more so than other members of your organization.  If you would like help with this training or need consultation on achieving the 4 Profit Increasing Benefits listed above, please give us a call (918) 212-4954 or email Andy at af@ryeok.com.