Cost Reduction

Change orders cost more than you think!

There are four primary determinants of change order cost: product complexity and interdependencies, catching errors early vs. late, the number of people that must review changes, and the type of process technology used to facilitate change orders. Leaving the latter two subjects for future discussion, the first two cost determinants are well documented and have not changed significantly with time.

Differences by type of industry and/or product complexity and interdependencies.

[Source: Joseph T. Yesey, The New Competitors: Thinking In Terms Of Speed To Market, Unisys Corp., Manufacturing Systems, June 1991]

Differences in earliness of catching errors for a simple product, a Ricoh copy machine.

[Source: Winston Knight, Boothroyd Dewhurst, Inc., SME/CASA Technical Meeting Presentation, September14, 1993

Differences in earliness of catching errors for a complex product, a major electronics product.

[Source: Dataquest, Inc., Business Week, April 30, 1990.]

Differences in earliness of catching errors for a complex product, IBM's AS400 minicomputer.

[Source: IBM Rochester, 1990.]