Origin News & Events

    NIST Summit Takeaway #2 -- Model Based Enterprise Payback Is Tricky, Systemic Approach Required

    Posted on Fri, May 18, 2018

    Hadi Jafari of GE Baker Hughes shared his experiences implementing model-based enterprise and the surprises he encountered along the way.

    In Jafari’s experience, model-based design (MBD) is a tool that can be confused 


    with the goal. The goal is to reduce lead time and costs in the design-manufacturing cycle. MBD is simply tools and processes to achieve this goal.

    Working out the ROI is tricky when costs and benefits cut across organizational lines. That is, between the OEM and its supply chain partners. When costs and benefits are shared unequally, this adds to the challenge of introducing model-based enterprise.

    This is the situation that GE Baker Hughes faced. It does the design work, the supply chain handles manufacturing. Jafari said that his organization cut release costs by around 20% by adopting the model-based design aspects of MBE. He noted that this is a significant improvement, but it was not enough to justify the cost of the investment.

    They needed to figure out how to account for the impact of MBE on the supply chain. When MBD files arrive at suppliers, who have made their own investments in accommodating MBD in their workflows, supplier efficiency improvements were over 60%. The combination of the two ROIs enabled the investment to meet the company’s hurdle rate. How this was done was not disclosed.

    It seems likely that part of the ROI calculation -- the time savings -- can be passed back to the OEM in terms of faster delivery cycles. That’s the (relatively) easy part. The hard part is to work out how to measure the quality improvement and share the cost savings between the supplier and the customer.

    Jafari emphasized that it’s essential to align internal and external partners. This includes alignment of tool roadmaps. One of the big obstacles for Jafari and his colleagues is the fact that the maturity levels of suppliers vary. Jafari was accompanied in the presentation by Oboe Wu of Solidworks, which was closely involved in the project.

    Bottom line: model-based design requires a systemic approach to deliver the results.

    Tags: origin international, Origin, MBD, MBE, NIST