The answer to this debate is not so obvious, given that the Products have been at heart of revenue generation for most of the last century. But as the last two decades have shown us, global engineering has found more and more acceptance across industries in product development strategies.
The reasons for this change are multi dimensional -]]> rise of services, role of ICT, economic leverage, technological leverage, new markets… but the most important one is the fact that the source of competitive advantage continues to evolve for all companies. Hence a blanket assumption that all activities of product engineering are at core does not hold good. The products are now bundled with services and require multi-disciplinary engineering for their development while the markets continue to expand beyond the shores. This means, there is a reconfiguration of value chain as newer skills are required to address these needs. This spawns partnering across the globe to develop and introduce new products. In this fast changing environment it is important to adopt new competence and maintain flexibility because What was relevant 5 years before may not necessarily carry us for next 5…Interestingly, India is beginning to emerge as Global engineering hub as Engineering services gain significance in product engineering strategy. This run-up has seen various factors that provide added dimensions to this “core to Business” debate….It includes not only the vast engineering talent availability in the country but also the fact that
· Companies are looking for suitable products for this fast growing market
· Application of new technologies especially play of electronics and embedded software has increased many times requiring access to new skills
· The Indian Engineering services industry has benefits of learnings from other services industries – IT & BPO success in recent times
· The understanding of working in multi-cultural environment has become part of the Indian work culture
· There is a move towards open innovation and these new players bring in a new perspective
Thus product engineering being at the core to business is true when considered with dimensions of business success in a given scenario. The need to leverage competence that provides the edge to products necessitates working with partners in a more open environment. This means we have to overcome the barrier of traditional thinking that all Product Engineering activities are core in the reconfigured value chains. With good governance, effective change management and IP compliance, the strategy of global engineering pays dividend…
]]>PLM solutions have been offered by technology vendors as a panacea for all product development ills. However, these solutions have seen limited adoption compared to enterprise applications for a variety of reasons:
Part of the problem with traditional approaches has been an emphasis on process, without considering other dimensions of change. There needs to also be robustness, collaboration, repeatability, and synchronization of effort by all product functions. Companies need a broader, perhaps transformation view to the product development process. The term Product Effectiveness has been coined to describe this multi-dimensional framework and approach. Business leaders seek to go beyond conventional product development to create better product value through multiple dimensions – new product introduction capabilities, dynamic management of products to generate profitable portfolio, ironing out post-sales product performance issues, and most importantly, Voice of the Customer. Some refer to this as Extended PLM, since it can be implemented in organizations with or without a PLM implementation in place.
The Product Effectiveness framework is made up of 12 components Product Effectiveness incorporating industry operations references models from the Supply Chain Council, PDMA, and leading academic institutions. The framework address a matrix of process (product management, product development and product sustenance) and domain (customer needs management, NPDI program management, product portfolio, and product performance). The following 12 components comprise the framework:
These 12 components are not meant to be all inclusive – rather, they are the areas to ‘get right’ when describing the product lifecycle and offer a starting point when defining and planning improvement initiatives.
Beyond the components, it is also useful to consider tools and aids for performance improvement. Tools can provide the rigor and consistency to drive change throughout the enterprise, and tools are needed to make the change permanent by enabling maintenance as things change over time. Following are standard tools that leaders should consider for performance improvement:
To bring these ideas together, companies should take a holistic approach. Many failed improvement initiatives have been caused by a piecemeal approach and lack of the bigger picture. Here are some leading practices for improvement initiatives in the area of product development and management:
- Assessment to determine NPDI maturity level to develop an initiatives roadmap
- Adhere to industry standard process models, product data models and KPI
- Reduce decision making time by enabling quick go-kill-hold decisions
- Improve enhance productivity through accelerators embedded as part of the new process model
- Determine product value and track portfolio profitability over periods of time
- Provide executive window into broader dynamics of cross-functional product development cycle
The ideas above may not be the total story. However, they should provide leaders in product companies a starting point to refine their existing approach or perhaps shape planned improvement initiatives. One thing is for sure: with the intense pressure to simultaneously increase innovation and reduce cost, anything that can improve product effectiveness will help companies compete more effectively and reward their stakeholders.
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Based on experience, I would highlight 3 top areas which should be monitored closely to accelerate New Product Introduction:
Forecast: It is hard to forecast demand when product is not even available in market. Managers will be tempted to create conservative forecast to avoid excess inventory, but this approach strangles the product supply once product is released. The initial phase of product lifecycle is the most profitable period, and supply constraint can create frustration throughout the value chain. The most practical process of forecasting in such cases is to identify existing comparables of the new product and setting up calls with direct partners and distributors and get existing sales of comparables.
Pricing: 3 ways a manager can set price: pricing by markup on COGS, pricing equivalent to competitive products or pricing based on values. In most of cases, pricing the new product equivalent to competitive products is the best way. Partners, distributors and end customers are very fast to compare newly launched product to its close competitors. Unless a product is revolutionary and unique, it is seen that new product experiences low demand if priced higher than a competitor.
Impact on existing Supply Chain: Lastly product managers should pay close attention to impact on existing supply chain for new product. Though most of manufacturing is completed in China or overseas, companies are increasing integrating channels in supply chain. For example, High Tech products are prone to obsolesce and these products command premium if lead time is shorter when compared with competitors. Companies are enabling their partners and distributors so that they can configure and create multiple variations of a base model leading to a short lead time. Whenever there is an impact on supply chain, product manages should ensure than partners and distributors are trained and certified for a perfect product launch.
]]>So how does idea management help a company effectively innovate?
Companies today recognize that the key to having a successful product or even a “blockbuster” is having more ideas as well as a better process to evaluate these ideas. If we dig deeper into the first area, the old model of hire the brightest minds and placing them into a think tank is dead. The new model recognizes that ideas can come from anywhere. They can come from anyone in the value chain from the tier three supplier to the end consumer, or even someone who historically has no connection to the company. The biggest challenge is how to gather and normalize the ideas so that they can be evaluated and prioritized objectively. Focusing on fixing this problem and setting up vehicles to gather a larger number of ideas will help yield the best results.
There is a lot more to idea management, such as the question of how to incentivize the broad set of idea contributors to increase submissions. Based on the fact that over 80% of the fortune 500 companies in the 1960’s went out of business because they couldn’t adapt, one of the worst things a company could do during a recession is to ignore R&D.
How many of today’s fortune 500 will survive and who will replace them on the list?
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...But as we end the year, the mood has changed, there is greater hope and some early signs of turnaround...the conversations again are shifting to view this downturn as an opportunity and capitalize on impending growth, prepare to launch new products, adopt more agile and lean business models...
The impact of recession was more in the developed economies. India and China as markets continued to register good growth. In fact this year auto sales in India were defying the economic crisis and bloodbath faced by Detroit, sales have been rising through February this year and recorded 61% growth in November. This all only went to prove that companies will always find new opportunities in this globalized economy.
"Global engineering" concept gained further ground in the recessionary times. I choose to call this year,a year of "prudence" in journey of global engineering, as it put to test the claims and helped to reign unrealistic expectations.
]]> This downturn provided an opportunity to test the "global engineering" paradigm and it is only clear that the companies that leveraged globalization in R&D realized the benefits during the downturn, when the R&D budgets came under axe. Many a companies did debate what is core to their survival and success - while many embraced globalization of engineering some got an opportunity to rationalize their roadmap and bring back into their fold engineering dimensions what they believed were important to their success, as is the case with some auto OEMs.The advantages are visible - expanding R&D bandwidth flexibily, sharing reasonable risks and taking advantage of reduced cost structure. Companies were seen exploring opportunities to leverage partner to penetrate the new market. The year also marked the importance of frugal engineering and better asset utilization. Various companies in Retail, Pharma were taking on initiatives to improve manufacturing efficiency and were ably supported by their partners in improving shop floor efficiency. The product portfolio and product lifecycle were also under scanner - Companies in consumer goods and manufacturing did leverage PLM systems to not only stream line the NPD process but also determine the profitability of product line, spread of portfolio, prioritize new programs and evaluate cannibalization impact of new launches. The companies in China continued to drive down the manufacturing costs, though product ideas were borrowed in many a cases.
The year also brought to fore the importance of engineering value chain. Boeing's global development of Dreamliner did exemplify the delay in time to market (against the expectation at he outset of program) due to issues in value chain. This brought into focus the growing role of the eco-system and need to fix challenges of collaboration and distributed design and manufacturing. The copy designs in China continued to raise IP concerns.
The innovation and technology knew no boundaries - Success of "Nano" a $2500 car by Tata in India. “LoCosto ULC” single-chip platform from Texas Instruments, "Flypp" mobile application platform from Infosys, hybrid technologies, mobility solutions impacted life of millions. The efforts for sustainability and message from Copenhagen continue to remind us of our interdependence...
This year "Global engineering" has gained more roots in the engineering strategy of the organizations and will continue to drive inclusive growth....
With these thoughts, I signoff 2009. Seasons Greetings! and a great year ahead.....
Read the article "Recovery Act Adds 6,500 Greener Vehicles to USPS Fleet". And was quite excited to see the big step taken by USPS. This shows the commitment of US Government towards Green. The agency USPS ordered 14,105 fuel-efficient vehicles last month at a cost of $210 million. Quite an amount to be spent and this kept me thinking how much does it cost to be Green?
In addition to automobiles, the common gadgets that we use in our daily life like mobiles, mp3 players, DVD players, camcorders and so on are all also built using materials which are currently under green compliance radar. Now, it makes me wonder that how much of compliance can we actually bring in to develop green components and will it be cost effective? Having experience of various manufacturing process my personal opinion is that we can actually make greener products however we may not be able to produce something completely environmental friendly. And that would be too hypothetical statement.
I thought about it and came to the conclusion that there are various ways where one can actually reduce cost and still develop a green product or rather I should say a cost effective green product. For example, while take back and dismantling the product it is easy to identify the components which can directly be reused, some other could be re-manufactured ( well trade-off has to be decided on cost i.e. whether it is cost effective to produce new one or re-manufacture the old one) and some can be disposed off responsibly.
This was at the end of life and the best part is if one can consider greener aspects while designing the end becomes more friendly and easy. That again re-instate the fact that trade-off at the beginning can actually give leverage at the end.
Bottom line: More responsible the producer is, the more greener and cost effective products can be expected from them.
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What was apparent is that the the potential role for India in Global engineering is very significant. The analysis by Booz consulting puts the number of 50 Billion USD by 2020 for Engineering services from India. Given this context, it is important to understand the dominant factors that will drive this new wave.
Provided the emphasis on "Domain knowledge" as one of the crucial parameters for accelerating the growth of Engineering in India, it is imperative to delve into the topic to understand it better.
]]> We all know that the Engineers continue to learn through their career and in process gain a lot of experiential know-how similar to other professions. My understanding of domain knowledge is that it constitutes of Product technology, its historical evolution, various design decisions made during the development of same/similar products, the processes used, the inferences drawn under particular conditions and in many a cases thumb rules concluded out of this experience. This understanding is much above the knowledge of basic engineering discipline (like mechanical engineering, electronics, automotive etc..), more so it is about the application of engineering principles to a given product family / industry. The question then emerges is - how this can be shared effectively and efficiently, knowing that not all of it is documented or can be documented.In my experience working with various clients across geographies, following are some of the practices which can enable build-up of domain knowledge faster for globally augmented team.
Technology has been a great enabler to deomcratize the sharing of knowledge....
The hunger for learning exhibited by young engineers in India is a great motivator to shorten this cycle of learning. Would appreciate your view/thoughts/learnings/anecdotal experiences which will help us to discover this thread more
]]>Further introspection and analysis would help to address this problem. The cost of maintenance includes both material and labor cost. In this labor cost can be reduced to sizable extent by using advanced technologies like knowledge based engineering (KBE). Let us look at more carefully the entire repair and maintenance cycle of airframe. Through knowledge based solutions, costs involved in activities given below can be reduced drastically
– Managing manuals like Structural repair manuals (SRM), Component Maintenance Manuals (CMM), Aircraft Maintenance Manuals (AMM) etc
– Finding and following the instructions given in manuals
– Diagnosing and assessing the damage
– Identifying repair solution from manuals
– Preparation of repair procedure and documentation
These activities consist of about 22% of the total labor costs of airframe maintenance. A conservative estimate shows that this can be reduced to about 5% by using knowledge based solutions. Hence, about 17% savings can be realized.
Knowledge based solutions and Knowledge Based Engineering (KBE) in particular is based on capturing repair and maintenance knowledge and embedding this knowledge into a web based systems (KBE system) and utilize such system in the repair and maintenance of aircraft. For example, if we look at the SRM manuals alone, there are voluminous documents. It is also not easy to interpret them to identify a repair solution for a typical damage. The situation is even more complex for composite based aircrafts whose documents will be much more voluminous compared to metallic aircrafts. Think of an equivalent web enabled, knowledge based system which can provide repair solution based on certain queries from the users. This will replace static voluminous documents with an expert system. In earlier days technology was not matured enough to create such advanced systems. Now this is certainly possible. There are many such scenarios where we are collaborating with our customers to leverage technology and in particular knowledge based solutions for enhancing effectiveness and efficiency of engineering and maintenance activities towards driving up the profitability of the industry.
Do you see any such trends in the industry you operate?
So how can portfolio management help?
Subtle changes to the budget and project planning process can have significant impacts to productivity. The two minor steps that are missed are:
Once each group compiles their prioritized list of budget requests both above and below the cut line, better informed cross group budget discussions occur. This is critical for companies that have dependencies across groups or business units. These changes can prevent future budget challenges such as a company having an ERP project as the number one corporate objective that requires resources from multiple groups. However one of the dependent groups puts the ERP project below the line because other projects in their list are perceived as more important. Once the primary ERP group gets funding they think their project will go smoothly until they ask for support from this other group who put it below the line. Therefore the overall ERP project goes over budget and results in another round of executive budget discussions.
As we approach Q4 many companies are in the middle of this struggle and can see vast improvements in productivity as well as other top line and bottom line benefits of portfolio management. Stay tuned for more details on how portfolio management can improve company margins.
]]>Value Stream Simulation (VSS) models built leveraging discrete event simulation tools provide closer to real-life representation of complex operations (and processes) enabling deeper insight into the process dynamics and interdependencies. This provides the lean implementation teams with more accurate representation of the physical system for better analysis and decision making. The ability to quickly run what-if scenarios with simulated stochastic variability as per real-life probability distributions provides close to real life mathematical model of the system for evaluating multiple scenario outcomes. Enhanced visualization capabilities of space and time (3D) help the users to quickly understand the behavior of the system. VSS helps in arriving at dynamically validated lean model of operations with very high confidence levels on proposed modifications and outcomes.
Hence, be it upfront planning of lean operations or lean implementation in existing operations, certainly Value Stream Simulation (VSS - dynamic VSM) approach provides deeper insights into the operations enabling better decision making than 2D, static VSM approach. We have recently applied the VSS approach for dynamic VSM and simulation of manufacturing shop floors; business processes (call center operations) of a fleet management company and the outcomes are very impressive. Of course, it involves additional tools and expertise for modeling through VSS. But, customers can leverage Global Engineering teams (like Infosys) for building the VSS model of their operations for their lean implementation initiatives, with minimum involvement during initial data collection and value stream understanding.A picture (VSM) is worth thousand words but a Dynamic Value Stream Simulation (VSS) is worth thousand pictures…
]]>We launch this blog with a strategic perspective: how can global engineering and product operations improve competitive advantage and ultimately shareholder value? Sustainable competitive advantage comes from operational effectiveness (doing what your competitors do, but better) or strategic positioning (delivering unique value to your customers by doing things differently than your competitors). Engineering and product operations drive both operational effectiveness and strategic positioning. These functional areas represent a significant portion of product cost, and they also are the linchpin for innovation and alignment to Voice of Customer.
Markets continue to exert extreme pricing pressure amidst the global economic slowdown. Executives now consider current conditions as a resetting of baseline expectations, not a temporary dip with an implied bounce back to former levels. Even with early signs of recovery, organizations need to take full advantage of both efficiency and effectiveness levers. The following product efficiency levers have demonstrated significant potential to reduce costs:
“Another aerospace company has set up a virtual engineering center at Infosys facilities in India. The relationship expanded from 15 Infosys engineers on a single project to a team of 220 four years later that are used on multiple programs. Management of design collaboration between the companies includes three team components. The customer has an outsourcing director that oversees their project leads and teams. Infosys then provides an on-site engagement manager that oversees the on-site Infosys team. Finally, there is an offshore team in the engineering center with its own leadership and program managers.
Even today, many organizations believe that Global Engineering is about ‘engineering off-shoring’ and the primary focus is to reduce costs through labor arbitrage. But this is NOT the case. The real benefit of global engineering comes from breaking down and distributing large complex tasks. Global engineering allows organizations to innovate better through access to a vast pool of global talent, which ultimately results in overall program effectiveness.
By demystifying Global Engineering, many leading organizations realize reduction in Total Cost of Ownership (TCO) that is many times higher than the mere labor arbitrage benefits. On the other hand, unfortunately, many global engineering initiatives fail due to the excess focus on labor arbitrage benefits. Some of the key factors organizations should focus on to be successful with their Global Engineering journey are: