Factors influencing a product’s cost and how they interact © Steinbeis Consulting Center for Holistic Engineering

A holistic strategy for succeeding as a business

Digital technology can help product engineering to strike the optimal balance between cost, quality, sustainability, compliance and time-to-market

The demands in relation to product cost, quality and time-to-market are getting ever greater, as are the complexity of business processes, economic dependencies and statutory requirements, especially in relation to sustainability. To succeed in this environment, businesses need a holistic engineering strategy. A key requirement for effective implementation of the strategy is the systematic digitalization of all the individual steps in the engineering process, coupled with seamless connectivity between the various IT systems used. It is also vital to ensure that all the necessary information and parameters are available at the right time, in the right quality, at the right price and in the right data format. Three Steinbeis Enterprises have joined forces to help businesses address this challenge. The Steinbeis Consulting Center for Holistic Engineering provides detailed advice on developing a holistic engineering strategy. This is complemented by the Steinbeis Research Center for Virtual Testing’s virtual simulation and testing services and the analysis of fluid flow processes by the Steinbeis Research Center for Flow Analysis.

Topology, geometry and material choices as illustrated by the example of an electric motor
© Steinbeis Consulting Center for Holistic Engineering

 

Development, procurement, logistics, production, sales and legislation are among the many factors that influence a product’s total cost and time-to-market. Consequently, the goal of product engineering is to find the design that meets all the relevant requirements and can be delivered to the end customer as quickly as possible at the lowest possible overall cost to the producer.

In this approach, a design is a product-specific combination of topology, geometry, materials, manufacturing processes and production locations. It is often necessary to analyze tens of thousands of possible designs to find the most cost-effective solution. This is like looking for the proverbial needle in a haystack, and can only be successfully accomplished at a commercially viable cost and in a reasonable time by making extensive use of digital technology.

The example of the electric motor

The example of the electric motor provides an idea of the type of decisions involved. In terms of its topology, the choice might be between an asynchronous motor (ASM) and a permanent magnet synchronous motor (PSM). The main difference between the two is their rotor design. In an ASM, the “squirrel cage” is usually die cast, whereas in a PSM, unmagnetized permanent magnets are embedded in the rotor before all the magnets are magnetized together at the same time in a magnetizer. The choice of topology will be determined by factors such as the required manufacturing technology or the amount of space needed for the production lines.

Geometry refers to the specific dimensions of the product’s individual components. In an electric motor, these include the dimensions of the magnets, the rotor and stator diameter, the length of the motor, etc. The geometry choices have a major influence on the size of the finished product, as well as on technical performance characteristics and material use.

The choice of materials is particularly important in the product engineering process, since it can often have a major impact on a product’s cost. Most high-performance PSMs use rare earth magnets made mainly from neodymium, iron and boron (NdFeB). Dysprosium is added to the NdFeB magnets to increase their resistance to demagnetization at higher temperatures, and terbium is also added to high-performance magnets. The cost of the materials used in the magnets can be significantly reduced if the motor’s thermal design brings the maximum operational magnet temperature down to a level where terbium is no longer necessary. As well as affecting material costs, the choice of materials has an impact on various sustainability criteria.

Production costs and the product’s sustainability performance are also influenced by the choice of manufacturing method. This in turn depends on a variety of factors such as the desired batch sizes, existing manufacturing equipment, the availability of the necessary expertise and other strategic considerations.

The choice of production locations generally depends on several aspects such as the number of parts sourced from suppliers or labor costs. In addition, the transportation of parts, semi-finished and finished products is associated with direct and indirect costs (e.g. carbon certificates to offset the emissions) and can also be time-consuming. The most cost-effective combination of these different factors can vary significantly depending on the batch sizes produced and on current and future carbon certificate prices.

Sustainability law: an overview

A further factor that needs to be taken into account is the growing importance of assessing sustainability criteria. The best-known and currently most important criterion is undoubtedly the product carbon footprint (PCF). This is assessed by carrying out a product life cycle assessment (LCA) that uses the product’s bill of materials to calculate its footprint in CO2-equivalent. In addition to the PCF, an LCA may assess other criteria such as water and land use, recycled content of the materials used, where the raw materials come from (conflict minerals) or the avoidance of child labor.

Several German laws and EU regulations came into force in 2024, and more are in the pipeline. They include the German Act on Corporate Due Diligence Obligations in Supply Chains (LkSG) and the Corporate Sustainability Reporting Directive (CSRD) [1]. The CSRD replaces and expands on the Non-Financial Reporting Directive (NFRD). It requires companies to observe more detailed and consistent reporting standards regarding the impacts of their business on people and the environment and the impacts of Environmental Sustainability Governance factors on the company. More German laws and ordinances are due to follow in 2025, while the EU is also currently preparing new regulations. The Green Public Procurement criteria aim to promote sustainable public procurement. It is hoped that the introduction of product and service ratings will help public authorities to take environmental considerations into account in the procurement process. The 2013 Industrial Emissions Directive is being revised and its scope extended with the aim of achieving a continuous reduction of pollutants in water, soil and air, as well as lower resource consumption. The Packaging and Packaging Waste

Regulation (PPWR) aims to reduce packaging waste, promote reusable packaging and introduce minimum packaging recycling standards. Finally, the right to repair obliges manufacturers and retailers to offer to repair products within their warranty period and guarantee the availability of spare parts.

Overcoming the challenges with digital technology

It is clear from the sheer number and range of laws and regulations that sustainability is not just an optional add-on to a company’s day-to-day business, nor is it something that is easily evaluated. The first step is to ensure compliance with the relevant reporting requirements. This calls for an accurate assessment of the status quo. Since

these assessments are often still performed manually, they can involve a lot of work. To secure the business’s long-term competitiveness, this stocktaking exercise should be as fully digitalized and automated as possible and fed into the virtual product engineering process. This is key to enabling simulations of different scenarios long before any physical manufacturing equipment is acquired, identifying the optimal configurations, and using this information to make the necessary business decisions. The sooner the company’s decision-makers realize the need to do this and the sooner they act accordingly, the greater the chances of the company gaining a potentially critical competitive edge.

Even taking stock of the company’s status quo in relation to sustainability standards can be a barrier, especially for small and medium-sized enterprises that  do not have anyone with the necessary know-how or the relevant organizational structures. The same can apply to the virtual product engineering methods discussed above. Fortunately, the three Steinbeis Enterprises – the Steinbeis Consulting Center for Holistic Engineering and the Steinbeis Research Centers for Virtual Testing and Flow Analysis – offer a wide range of support services based on digital solutions. The first step typically involves carrying out an initial analysis of the existing sustainability and virtual product engineering resources and organization within the company. Once this has been completed, recommendations are made to management. Follow-up processes ensure that the identified measures can then be implemented step by step. The Steinbeis experts can also assist with carrying out sustainability performance assessments so that businesses can evaluate their status quo as quickly as possible. Virtual engineering and experimental testing complete the range of available services.

Contact

Dr.-Ing. Marc Brück (author)
Steinbeis Entrepreneur
Steinbeis Consulting Center for Holistic Engineering (Bondorf)

Prof. Dr.-Ing. habil. Uwe Janoske
Steinbeis Entrepreneur
Steinbeis Research Center for Virtual Testing (Schwäbisch Hall)

References
[1]  https://www.how-green-works.de/standards-und-regulierung/news/nachhaltigkeit-klimaschutz-gesetze-richtlinien-verordnungen-fuer-unternehmen-223
227255-32