Today, every product development team is asked to:
- Do more with less
- Reduce program cycle time and finish on-time
- Improve product quality at launch
- Use more low-cost resources
Wait, aren't these conflicting demands? How can we do more with less? If we have less resources, then how can we improve quality? If we execute programs with less time and resources, then we will be late. Using more low-cost resources will save money per hour, but how do we know if productivity or quality suffers?
A recent survey (1) of automotive suppliers conducted by McKinsey & Company shows:
R&D costs increased 5% from 2010 to 2013 in Interiors, Powertrain, and Electronics, etc:
- 1/3 are not tracking time or productivity
- Nearly half miss their budgets and almost 2/3 miss timing
- 3/4 saw some value in using objective resource models, but only 3% use them.
- 65% companies offshore engineering primarily to reduce cost
The survey also showed that strong performers use KPIs, Objective Cost Models, and Benchmarks to find and share Best Practices for up to 10% efficiency improvement.
That’s a big opportunity, so why not apply Continuous Improvement to Product Development? (check all that apply)
a. too busy fighting fires
b. budgets have been cut already
c. benefits are not clear
d. costs are unknown
e. not sure how to do it
f. tried it before and it didn’t work
g. the development process is too complex
Close your eyes for a moment and picture a future state where…
- We accurately measure productivity and show improvement over time
- Program budgets are under control and we don’t argue about them anymore
- Programs are properly staffed up-front, so they finish faster with less problems
- We share best practices across groups and everyone is on a clear path to get better
- Product quality is better, so we stop fighting fires and focus on prevention
This sounds great, but can it really happen? The answer is Yes. I know because I helped create this reality in one of the largest automotive suppliers in the world with 9 Product Groups and 10 major Technical Centers.
The impacts were remarkable:
- productivity improved 38%
- quality improved 13 percentage points
- product safety concerns caused by engineering went to nearly zero
- quantified productivity concerns and changed our labor cost reduction strategy
- quantified the financial value of experienced development teams and changed our talent management strategy
Please connect with me if you'd like more information at: email@example.com
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The series continues...
This is part of a series of articles about applying continuous improvement processes to measure and improve the performance of product development projects. Here is the complete list in recommended reading order.
- Are you still "negotiating" your project budgets? is a true story about a journey from budget hell to using EQUs to accurately estimate costs of engineering projects.
- Engineering Productivity Measures shows how engineering EQUs can be measured and applied to a wide variety of products, globally.
- Show me the Money! shares how to leverage engineering EQUs to benchmark performance and set targets to close gaps over time with significant savings.
- A fast, accurate way to create project budgets on a large scale, demonstrates a powerful web-based software tool to calculate EQUs and program budgets in just a few minutes.
- Applying Continuous Improvement to Product Development explores reasons why more organizations should take this path, but may need help to get started.
- Seeing productivity in 3D shows how EQUs can be used to unpack the value of experience, true cost-savings from off-shoring work, and how to better balance resources on a global basis.
- "True" Key Performance Indicators vs metrics shows how the right metrics can enable a long-term Continuous Improvement process.
- Does Six Sigma = Continuous Improvement? explores how Six Sigma contributes to Continuous Improvement, but does not guarantee it, and may actually harm it if done improperly.
- Connecting the Dots shows how to create reliable roadmaps with multiple impacts from multiple initiatives on a complex process used by multiple groups.
Copyright 2018 Richard Crayne
1. Consistently Boosting Automotive Supplier R&D Performance, Kimberly Borden, Michael Boren, Liz Hempel, Russell Hensley, 2016. https://autoassembly.mckinsey.com/ourknowledge/all/all/view/Consistently_Boosting_Automotive_Supplier_RnD_Performance