Operations Practice
Squeezing more ideas from
product teardowns
The authors would like to thank Fabrice
Le Garrec, Stephan Mohr, Lou Rassey, and Jim
Williams for their contributions to this article.
Dave Fedewa and Ashish Kothari are
consultants in McKinsey’s Chicago office, where
Ananth Narayanan is a principal.
Copyright © 2009 McKinsey & Company.
All rights reserved.
Dave Fedewa, Ashish Kothari, and Ananth S. Narayanan
Technophiles of all stripes love product teardowns—the time-
honored practice of dismantling products to their constituent parts
to spark fresh thinking. Yet few manufacturers get the full value
teardowns afford. Many senior executives marginalize the practice,
viewing teardowns as Skunk Works exercises for engineers
or cost-cutting tactics on the part of the purchasing department.
Such views retard creativity and ensure that the ideas generated
in teardowns go unexplored, moldering in functional silos.
But some companies go further. This interactive explores margin-
improvement opportunities from teardowns that we’ve identified
in our research and examines how companies are rethinking
their approaches to teardowns to save more money, break down
the silo mentality, and even improve the revenue potential of
their products.
1
Industrial: Redesign for lower costs A manufacturer of materials-
handling equipment was
developing a new forklift truck
with the goal of minimizing
both its own manufacturing
costs and the customers’ cost of
operating the product. Recognizing
that the vehicle’s weight was the
key design factor (a lighter vehicle
would require less fuel to run
and would have lower materials
costs) the company’s R&D
engineers conducted systematic
teardowns of competitor’s products
to study new design possibilities.
“clean-sheet” costing, and other
Front-tire diameter reduced, and front
axle moved closer to payload allowing
for lighter counterweight in rear of vehicle
Front-tire diameter reduced, and front
axle moved closer to payload allowing
for lighter counterweight in rear of vehicle
Counterweight
reduced,
repositioned to
support vehicle’s new
center of gravity
2
Counterweight reduced,
Meanwhile, executives brought The resulting vehicle con-
in marketers, who learned that sumed 4% less fuel than
customers would indeed value the its predecessor and emitted
lower cost of ownership—and eight tons less CO2 over
reduced CO2 emissions—brought its lifespan—making it more
about by the new design, but appealing to customers.
they would be unwilling to pay a
premium for them. This knowledge
spurred the company’s engineers
and purchasers to work together
to reduce the weight of the new
forklift truck by 7% (200 kg), while
ultimately lowering manufactur-
ing costs by 12% through a
combination of design changes,
sourcing from low-cost countries,
traditional approaches.
Front-tire diameter
reduced, and front
axle moved closer
to payload allowing for
lighter counterweight
in rear of vehicle
Engine, gearbox
moved
Engine,closer gearbox moved
to rear of vehicle,
closer
shifting to rear of vehicle, shifti
center
of center
gravity rearward
of gravity rearward
to support Front
newtocounterweight
support new counterweigh axle m
for ligh
High tech: Break down silos A medical-products company
planned a series of teardowns
to improve the design of its
therapeutic medical device. To
generate new ideas, executives
invited colleagues from purchasing,
marketing, engineering, and sales
to see how their product stacked up
against four rival ones.
Seeing the products together
was an “Aha!” moment for the
purchasers, who quickly identified
a series of straightforward design
changes that, while invisible to
customers, would significantly
Fewer printed circuit
boards (PCB): 14% reduction
in PCB cost
Self-tapping screws
versus threaded inserts:
50% cheaper
lower the cost of manufacturing
the device. Meanwhile, seeing the
configurations of competitors’
circuit boards spurred the
team’s salespeople, marketers,
and engineers to discuss the
manufacturing implications of
the company’s modular approach
to design. The engineers had long
assumed that being able to mix
and match various features after
final assembly was advantageous
and had emphasized this capability
in the product’s design. Yet the
salespeople reported that most
customers hardly ever ordered
more than a handful of modules at
purchase and rarely ordered more
after assembly.
3
The conversations ultimately
led to simplifications in
the product’s circuitry that
lowered purchasing costs
by 23% and helped marketers
identify a new customer
segment where the product
might command a higher
price.
Integrated plug and fuse
assembly: 12% cheaper; faster to
assemble
Changes in fan design
from blower fan to box fan:
35% cheaper
Elimination of metal
base-plate on product’s
cart: 4% reduction in cost
of cart
 weight ratio
For a typical 2
bottle of sham
Consumer goods: Reduce packaging costs The use of product teardowns marketers, given the importance In this example, based onwe observed v
extends to a product’s packaging of packaging in communicating a McKinsey research into packaging
tions in packa
Recycled materials. too. However few companies company’s brand to consumers. and manufacturing costs in the
weight of up to
White or clear-colored examine the cost of trade-offs Yet we have seen organizations European fast-moving-consumer-
45%—represe
plastics are more difficult implicit in their packaging reap considerable savings. One goods industry, we highlight
decisions, much less look to consumer goods maker we know about 50% pe
selected cost trade-offs associated
to manufacture with Packing density.
their competitors for ideas. Such reduced its packaging costs for with shampoo. bottle in mater
recycled materials than Rounded bottles are less efficient to transport
Recycled materials.
decisions tend to be the domain of a key product by 10% by making Recycled materials. costs.
darker ones. Substituting a in bulk than rectangular or square ones. Fordesign
straightforward two changes
Recycled
White materials.
or clear-colored White or clear-colored
dark-colored cap for a products of identical volume, more
that rectangular
allowed it to use less plastic in
plastics
Whiteareormore difficult to
clear-colored plastics are more difficult
clear one for saves up to manufacture with recycled packaging can increase packing density up
manufacturing thetoproduct’s
40%. bottle.
plastics are more difficult to manufacture with
20% per bottle. materials than darker
Recycled materials. ones. to manufacture with
Substituting a dark- Packing density.
recycled materials than
White or clear-colored recycled
colored cap materials
for a clear than Rounded bottles
darker are less
ones. efficient toatransp
Substituting
Optimize labeling.
onedarker
for saves up to 20%
ones. Substituting a Optimize
in bulk thanlabeling
rectangular or square ones. Fo
plastics are more difficult Printing labels directly onto bottle
dark-colored cap for a
per bottle.
to manufacture with dark-colored cap for a a mpo o Printing
products
Packing density. using offset, screen,labels directly
oforidentical onto bottle
volume, more rectang
Sh a mpo o a m p o hot-stamp
clear
printing is up
one
to
for saves up to
50%
recycled materials than clear one for saves up to
Sh h o
hampooSRounded bottles arecheaper
using to
packaging
less efficient offset,
can screen,
transportincrease
20%toper bottle.
or hot-stamp printing
packing density u
a m poo S than printing
Sh darker ones. Substituting a 20% per bottle. in bulk than rectangular is up to
or labels
plastic square 50% cheaper
ones.
that mustFor two than printing
be glued
dark-colored cap for a products of identical(and
volume, to plasticrecycle). that must be glued (and
labels
moretorectangular
are harder
clear one for saves up to packaging can increase packing are harder
densitytoup
recycle).
to 40%.
oo 20% per bottle.
a mpo o
Sh
a m p oo
Sh Volume-to-
weight ratio. a mpo o
Sh
For a typical 250ml
bottle of shampoo,
we observed varia-
a mpo o a m p oo
tions in packaging Sh Sh am p
weight of up to
Volume-to- Sh
weight ratio.
45%—representing
about 50% per hampoo
For a typical 250ml
S Volume-to- bottle of shampoo,
bottle in materials
weight ratio. we observed varia-
costs.
For a typical 250ml tions in packaging
Packing
bottle of shampoo, density.
weight of up to
Volume-to-weight ratio. Rounded bottles are less efficient to
we observed varia- 45%—representing
For a typical 250ml bottle of transport in bulk than rectangular
shampoo, we observed variations tions in packaging about 50% per
or square ones. For two products of
in packaging weight of up to weight of up to identical bottle
volume, more inrectangular
materials
45%—representing about 50% 45%—representingpackaging cancosts.
increase packing
Optimize
per bottlelabeling
in materials costs. density up to 40%.
about 50% per
Printing labels directly onto bottle
bottle in materials
using offset, screen, or hot-stamp printing 4
costs.
is up to 50% cheaper than printing