"Streamlined from the Start," Feature Article, March 2006

D E S I G N

streamlined from the start

Some big guns are taking a shot at open-source product development.

by Scott Miller, James Richmond, and Aron Bowman

In the past 30 years, the idea of lean manufacturing has transformed the way many companies do business. The practice has had such wide influence that it seems most manufacturers have jumped onto the bandwagon. That means they are committed to transforming their operations for flexible, agile, efficient production.

What few seem to have realized, however, is that the principles of lean manufacturing apply to product development, too. Lean product development saves time and money, and contributes to the success of a new product.

Lean manufacturing is a concept developed by Toyota more than 30 years ago. It was motivated by the desire to build better and more innovative products with lower costs. The result was the evolution of what is commonly known as the Toyota production system. This system increases efficiency and reduces waste in each area of the production process by eliminating unnecessary efforts and empowering all levels of the workforce.

Lean product development is based on this theory of lean manufacturing. The processes focus on simplicity and effectiveness. During the process, every activity is critiqued to determine whether or not it adds value to the product. If the activity is not valuable to the development process, it is modified or eliminated.

This approach is a direct contrast to the conventional method in which organizations follow a series of steps to develop a product, starting in one department, and once that department has completed its tasks, rigidly moving to the next department. Using the traditional approach increases costs and time to market since one department must wait for the other to finish its work on the product. Lean product development allows for communication between multi-departmental teams, simplifying and keeping the development process moving forward.

When budgeting for new product development, most companies include the obvious costs. They include
expenses such as labor (for designing and developing the products), facility use, equipment, technology, and tooling costs related to prototyping the products. While these costs are fairly straightforward, there are other less tangible expenditures, neglected by manufacturers, that need to be factored into new product development.

New-product costs and delays in time to market can hurt a company. It's important to look at the reasons why these situations arise and then work to minimize the reasons they occur. When companies become aware of the common obstacles to lean product development and are committed to eliminating them, there is a dramatic and positive impact on the company and its resources.

The Hidden Cost of Waiting

There is a hidden cost in having one department wait for another. Waiting has its roots in the lack of collaboration. Time is wasted in traditional engineering environments as people wait for other departments to process tasks. Time can be wasted by chasing unnecessary board approvals or through the inefficiency of an overloaded facility. In other words, someone is always waiting for something.

Organizations encouraging teams that represent all applicable departments will reduce waiting time and move the product quickly from the planning to the production phase. One way to accomplish this is by gathering together all the experts and their data to speed up the decision process and ensure input from everyone.

An electronic billboard system allows for this process to be conducted in a timely and cost-effective manner. A real-time visual tool, such as eServOnline, for example, tracks information about a project, enabling the project manager to readily view data such as cost overruns or underruns, and timeline progression. Project staff each day enter completed work and a detailed description of time spent on project activities.

By reviewing the information, the manager can determine if the project is progressing on time and on budget. Many companies have experienced a 20 to 50 percent increase in efficiency by managing projects with tools and processes of this sort.

Inefficiencies are created when department silos exist, rather than a cohesive product development team. The silo model moves bits of product development tasks to separate departments and then reassembles the bits. For example, the engineering department will work on a design and then send it to the CAD department, which sends it back to engineering for refinement. The engineers make changes and send the modified version back to the CAD department, and this loop continues until the departments create an appropriate prototype.

The prototype is submitted to the testing department, which may or may not send it back to the previous departments. Finally, after several other departments have been involved, it is sent to the marketing department, which has no details as to how the finished product came about.

Time and money are wasted sending ideas back and forth between departments, and critical messages and information may be lost in the transport. Imagine the classic "telephone" game in which one person whispers a sentence to another, who whispers that sentence to yet another, and so on down the line until the message reaches the last one in line, who reveals it. In most cases, it is very different from the original sentence.

A similar scenario exists today in big business when there are complex products and an 18- to 24-month production cycle in a company of 60,000-plus employees. The staff within a department may be experts in their fields, yet they are often clueless about processes in other departments and how those processes affect results.

A more effective method is to include representatives from each department in every step of a project. Data can be stored and made available electronically. To protect confidential information, staff members can be given different levels of access to the database. Some may have an all-access pass, while others will be restricted in their electronic viewing capabilities. Using tools such as virtual private networks and secure Internet transfer ultimately allows staff to access information at any time and from any place with Internet access. Instant messaging can alert network administrators of changes in authorization to decrease waiting and collaboration time extensively.

TOO MANY COOKS

The old adage that "too many cooks spoil the broth" applies to new product development in the form of over-processing. Over-processing can show up as requiring too many approvals, preparing reports that are never used, or creating features that customers don't want or need. Engineers can spend too much time working on low-value portions of a product to make it perfect. Incremental gains for dollars spent are not justified.

The key to eliminating this source of waste is to insist on very disciplined project management. Create strict deliverables and scopes first, and keep the project moving forward instead of stalling in redesign.

Poorly organized projects, which may take too long to complete or may produce little value to the company, are not commercially viable. If there are five projects on the table and one is profitable, one is unprofitable, and three projects break even, many argue that only the unprofitable one should be cut. The reality is that only the profitable project should continue. Organizations are in business to make money and must abandon a product that has no hope of success, even if it is someone's pet project.

All companies have more projects than they have the resources to complete, so it's important to have criteria to determine which projects to cut. Companies must analyze the costs and benefits of each project along with the cost reduction and warranty threshold. They must also determine which ones are commercially viable and investigate the project's return liability. In other words, they must back the products that will bring the most bang for the buck.

Establishing a culture for lean product development challenges the structure of traditional engineering departments.

Lean product development works best when departments are set up in a project mode. Rather than becoming mired in the process, employees focus on the success of the project. This is a function of organizational culture and not just of procedural documents.

Take the production line, for example. Traditionally, a product is sent all the way down the production line, where the inspector examines it, and then discards it or sends it to be fixed if there is a problem. If employees have the authority to remove defective products at the point of failure, or to stop the production lines when problems occur, they will recognize that "lean" works because they are able to repair problems right away.

In this way, employees have ownership and responsibility for the project, and the downstream costs are reduced.

If this empowerment is evident at every departmental
level, from the marketing staff to the lead engineer, the lean product development culture will be able to prosper throughout an organization.

Using lean product development to manage projects puts accountability on the project owners. It also breaks down the walls of internal department issues related to multiple managers with many projects who focus on departmental measures rather than product success or failure.

Do's of Product Design

Understand what your customers want.

Don't assume you know customers' desires without asking them what they want in a product. Their version may be drastically different from the supplier's vision.

Produce features and technology based on customer input.

Strive to achieve low production costs by eliminating overproduction, overengineering, and the disconnect between engineering and manufacturing departments.
Develop and manufacture on time, and be the first to market.

The time to market is shrinking rapidly, especially with the growth of information technology. In the 1970s and 1980s, the time frame for a new vehicle design was between eight and 10 years. By the '90s, the time had decreased to five or six years, and now a new vehicle design is completed in three to four years.

Streamline the process to get to the product development stage.

Use an effectively managed structured process and a balanced team, including marketers, engineers, and suppliers. When marketing dominates, there are often numerous changes. When engineering dominates, the customer may not get a product that's truly desired, or the product may not be very innovative

Create high-quality information management.

Good collaboration will result in shared information at every step of development and will minimize overproduction and rework.

Scott Miller is chief operating officer of eServ LLC, a product
engineering company based in Peoria, Ill. James Richmond is CEO and Aron Bowman business developer for the company.