Executive Summary
Product development programs can take years to complete and consume lots of resources. We argue about the time and resources required. Global programs take even more. We want programs to be more efficient and effective, but struggle with how to measure performance and make improvements that can be measured. Benchmarks are only stories without hard data.
Engineering Excellence is a unique, comprehensive process for measuring and achieving benchmark performance in product development and cross-functional teams. It includes a unique and powerful method for measuring the output and productivity of engineering teams. Combined with other “True” Key Performance Indicators, this can be used to identify baselines, benchmarks and gaps. Best practices are identified, shared and turned into Roadmaps for Gap Closure. Future program budgets are based on expected improvements. After noise is reduced in the system, rigorous resource management can be deployed within and across regions and product groups.
Large global automotive suppliers are using it effectively: Adient; YanFeng Automotive Interiors; and Cooper Standard Automotive. Some non-automotive product groups in Johnson Controls International are using it also.
My presentation will explain the process based on more than a decade of real-life application across 20 product groups in large corporations.
Engineering Excellence is a unique, comprehensive process for measuring and achieving benchmark performance in product development and cross-functional teams. It includes a unique and powerful method for measuring the output and productivity of engineering teams. Combined with other “True” Key Performance Indicators, this can be used to identify baselines, benchmarks and gaps. Best practices are identified, shared and turned into Roadmaps for Gap Closure. Future program budgets are based on expected improvements. After noise is reduced in the system, rigorous resource management can be deployed within and across regions and product groups.
Large global automotive suppliers are using it effectively: Adient; YanFeng Automotive Interiors; and Cooper Standard Automotive. Some non-automotive product groups in Johnson Controls International are using it also.
My presentation will explain the process based on more than a decade of real-life application across 20 product groups in large corporations.
Target Audience
This is for PMO and Portfolio Management leaders seeking to improve their development process. Leaders, continuous improvement practitioners, project estimators, project controllers, and others seeking more from their product development organization will benefit.
What is it?
Engineering Excellence is a process for measuring performance (including productivity), identifying and sharing best practices, driving improvement through roadmaps, and improving resource management. Engineering Excellence is a unique and powerful combination of engineering, finance, and statistical analysis disciplines.
Benefits
Imagine a world where Productivity improves, and ‘extra’ resources can do more work in less time or execute more projects. Design quality improves, and re-design/re-test loops are reduced. Resources are available to start new projects on schedule. Timing plans and resource plans become more stable and soon deliver a steady stream of successful programs.
This is more than a theory. It was applied to more than 2,000 programs that spent $4,000,000,000 with 85-97% budget accuracy over 10 years.
The chart shows the improvement journey for a large technical center. After Engineering Excellence, productivity improved 38%, quality improved from 84% to 97%, and product safety concerns caused by engineering went from 50% to nearly zero.
This is more than a theory. It was applied to more than 2,000 programs that spent $4,000,000,000 with 85-97% budget accuracy over 10 years.
The chart shows the improvement journey for a large technical center. After Engineering Excellence, productivity improved 38%, quality improved from 84% to 97%, and product safety concerns caused by engineering went from 50% to nearly zero.
Bubbles are Programs. Bubble size is the size of the program in Work Units. The vertical axis is Hours per Work Units. Red horizontal lines are the average Hour/Work Unit by year and show a dramatic downward trend with reduced variation.
Engineering Excellence delivered 7% savings in Engineering, but this is only a labor savings. As the portfolio of programs becomes faster and more efficient, you can develop more new products and features for customers to grow sales and profits.
Engineering Excellence delivered 7% savings in Engineering, but this is only a labor savings. As the portfolio of programs becomes faster and more efficient, you can develop more new products and features for customers to grow sales and profits.
implementation
Engineering Excellence was developed, implemented, and sharpened to perfection over 10 years in a highly competitive automotive engineering environment. It has worked on many diverse product lines and in regions around the globe. Its enduring value has been proven during periods of rapid growth, financial crisis, and new business models.
Companies
The very best examples are Adient and Yanfeng Automotive Interiors (YFAI). They completely adopted Engineering Excellence and it has been operational since 2006. Johnson Controls International (JCI) has adopted some parts of the process in some of their product groups beginning in 2016. Cooper Standard began implementation in 2017. Toyota Motor Company started using some elements in 2014 in cooperation with Adient.
Products
Engineering Excellence has been successfully applied to many automotive products, including seats and components, interiors, electronics, and rubber products. It has also been applied to after-market batteries, fire suppression devices, and HVAC controllers. Software was successfully included in electronics and controllers.
Locations
Engineering Excellence has been implemented in more than 50 countries in North and South America; Asia, and Europe. I have trained and coached in all the locations below.
Companies
The very best examples are Adient and Yanfeng Automotive Interiors (YFAI). They completely adopted Engineering Excellence and it has been operational since 2006. Johnson Controls International (JCI) has adopted some parts of the process in some of their product groups beginning in 2016. Cooper Standard began implementation in 2017. Toyota Motor Company started using some elements in 2014 in cooperation with Adient.
Products
Engineering Excellence has been successfully applied to many automotive products, including seats and components, interiors, electronics, and rubber products. It has also been applied to after-market batteries, fire suppression devices, and HVAC controllers. Software was successfully included in electronics and controllers.
Locations
Engineering Excellence has been implemented in more than 50 countries in North and South America; Asia, and Europe. I have trained and coached in all the locations below.
Overview
Work Units
Productivity calculation requires measurement of inputs vs output. The universal engineering input is Hours. However, if you ask Engineers to measure their output, most will say it is too complicated and there are too many variables. Searching the internet gives no answers.
Measuring engineering output is possible in a simple, repeatable, numeric scale using the concepts of complexity, newness, and responsibility. It’s been done successfully on many product lines.
Work Units can be correlated with Hours spent on completed programs to prove model accuracy. The example below shows very good correlation with R2 = 87.8%. The regression equation shows 2,115 Hours / Work Unit.
Measuring engineering output is possible in a simple, repeatable, numeric scale using the concepts of complexity, newness, and responsibility. It’s been done successfully on many product lines.
Work Units can be correlated with Hours spent on completed programs to prove model accuracy. The example below shows very good correlation with R2 = 87.8%. The regression equation shows 2,115 Hours / Work Unit.
Gap Report and Targets
Productivity Baselines, Benchmarks, and Gaps are calculated using Hours / Work Unit.
Targets are set for closing the gap on future programs in reasonable increments over time. For example, if our Baseline is from 2018, then in 2019, we could expect a 30% reduction in the Gap.
We can plot the results in a chart. Programs that are completed, in-progress, and in the future can be compared to Target using the Estimate at Completion (EAC). EAC is the sum of the Actuals to date and latest Forecast to finish the program.
Future program budgets are planned based on Targets in the Budget Template.
Work Units X Target Hours / Work Units = Target Hours
Work Units X Target Hours / Work Units = Target Hours
Budget Template
If we have correlation, then we can use Work Units to accurately predict spending on future programs. Measure a new program in Work Units and plot the resulting Hours. The example below shows a 1.75 Work Unit program will need about 3,800 Hours.
We can also apply the regression formula to be more precise.
1.75 Work Units X 2,115 Hours / Work Unit = 3,701 Hours
Hours are spread over time based on a formula.
1.75 Work Units X 2,115 Hours / Work Unit = 3,701 Hours
Hours are spread over time based on a formula.
Hours are multiplied by Cost/Hour to calculate Labor Costs. Labor is often the largest cost. Expenses like Prototypes and Testing can also be added to the algorithm.
A Budget Template drives a standard process for quick and accurate budgets. Approval time approaches zero when teams follow the template. Teams and management can focus on more important things like developing products.
A Budget Template drives a standard process for quick and accurate budgets. Approval time approaches zero when teams follow the template. Teams and management can focus on more important things like developing products.
“True” Key Performance Indicators
“True” Key Performance Indicators (KPIs) are the foundation to show the entire company what is most important and how it will be measured. Correct KPIs drive the right behaviors. If they are wrong, we will loop back to the definitions instead of improving.
“True” KPIs are the critical few, long-term, strategic metrics that:
“True” KPIs are the critical few, long-term, strategic metrics that:
- Reflect what customers care about
- Reveal benchmarks, gaps, trends, and financial impacts
- Provide a balanced view of cost, time, quality, and people.
- Align top & middle management, and employees around the same metrics in the same way.
Deep Dives
Best Program Teams are selected based on productivity and quality metrics, confirmed through additional filters, interviewed and analyzed to find best practices.
Technical centers and product groups also contribute best practices based on their experience and successful improvement initiatives.
Technical centers and product groups also contribute best practices based on their experience and successful improvement initiatives.
Benchmarking events
Benchmarking events bring everyone together to share top best practices and plan to work together to develop new ones. Hundreds of best practices are captured. Leaders develop a deep understanding of opportunities to improve their teams’ performance.
Roadmaps
Leaders develop Roadmaps to close gaps using best practices from Benchmarking Events. Projects are listed. Owners and completion dates are set. KPI impacts are estimated and charted to show the plan and commitment to close gaps.
Resource management
With accurate program estimates, we can sharpen our focus on work vs resources. The chart below shows a business unit that is under-staffed. Work far exceeds the Resources. Without confidence in the Work estimate, management may hope the problem will solve itself and delay spending money to add people. When Work estimates are based on Gap Closure Targets, then the required action is clear and cannot be ignored or delayed.
The cycle repeats
The whole process repeats as baselines, benchmarks, and targets improve over time and new best practices emerge. Noise is removed from the system and long-term improvement begins.
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