Published in Research and Technology Management, Vol. 49, No. 1, January-February 2006, pp. 38-43.
A Systematic Framework for Implementing Concurrent Engineering New product development managers need to follow systematic implementation of a proposed framework to ensure success using concurrent engineering. Nadia Bhuiyan, Vince Thomson, Donald Gerwin OVERVIEW: The use of concurrent engineering (CE) and sequential engineering (SE) for new product development (NPD) was studied in one company over a two-year period. Various performance factors were measured. This paper points out the issues, benefits and barriers involved in adopting CE, and provides a framework for its systematic implementation. The framework is explained in the context of lessons learned. Concurrent engineering (CE) has been successfully implemented in many companies. Texas Instruments, Hewlett Packard, Motorola, and General Motors are examples of companies that have achieved success with CE (1,2). Despite the well-known practices and benefits that make CE a standard for product development, many firms still face difficulties putting CE into practice. Gerwin and Moffat (3) have noted that, assuming that the CE approach is worthwhile, then more studies of companies having problems putting CE into practice are needed. While there is an abundance of research available identifying the critical success factors of CE, relatively few authors have focused on its implementation in practice (4). CE can be defined as the integration of inter-related functions at the outset of the development process in order to minimize risk and reduce effort downstream in the process, and to better meet customers’ needs (5). Multi-functional teams, concurrency of product/process development, integration tools, information technologies, and process coordination are among the elements that enable CE to improve performance (6). In the traditional sequential engineering (SE) process, there is little or no cross-communication among various functions, and information generated from one activity is handed off to the next only after its completion. The commonly encountered problems with this type of process are increased effort, development time, and cost. CE, demonstrated in many cases to overcome the obstacles faced in SE, considers the inherent interdependencies that exist between product and process design (5). Though it is more challenging to coordinate a CE process, the potential benefits can be considerable. The implementation of CE was studied in a medium sized, high-tech company that designs, manufactures, and markets innovative networking solutions in virtually every sector of the telecommunications industry. At the time of the study, the company employed over 6,500 people worldwide and had revenues of $1.8 billion. New product development (NPD) was a very critical part of Telcom’s (pseudonym) business strategy, and as such, the company was intent on improving NPD performance. The company was therefore attempting to implement and formalize a CE environment throughout the organization. To do this, the company tried ad hoc approaches to implementing CE by undertaking various levels of multifunctional teamwork and overlapping of activities for different projects. There was also some use of design simulation and information technology tools. There was no formal process; rather, various groups applied their personal versions of CE. In practice, it has been found that CE approaches vary widely from company to company (2); we found the same within Telcom. The CE approaches taken by various groups within the company differed significantly. Telcom was interested in evaluating how well its isolated CE approaches were faring in
comparison to its existing SE process, and whether or not it was worth the time, money, and effort to formally implement a standard CE process throughout the organization. In this paper, implementation issues for CE with respect to process, people, tools and technology, metrics, organizational support, and buy-in are discussed. We focus on a framework for systematic CE implementation. Methodology In order to gather data, six historical and one ongoing NPD project were studied, each one consisting of 10-15 members, ranging from project leaders to team members. All projects were at the level of design of circuit board assemblies, and were chosen to be comparable in terms of design complexity, manufacturing requirements, and resource requirements. Over a two-year period, data was collected from company documentation, observation of the development and manufacturing processes, interviews of key personnel, surveys, attendance at project meetings, and many informal discussions. From these multiple sources, data was obtained on detailed descriptions of the development process, activities such as hardware and software development and their corresponding durations and probabilities of rework, team and process characteristics, level of information exchange between functional groups, team decision-making processes, tools and technologies, metrics, and organizational support. Study Findings Overall, study findings showed that the CE efforts at Telcom, though not consistent across all projects, were more successful in terms of overall project performance than SE projects, where overall performance included time to market (TTM), project development costs, and product quality. Despite the success of CE, a number of barriers to the best use of CE also existed. Figure 1 compares SE and CE projects in terms of process, methods such as team structure, tools and technology, communication, and the performance measures of TTM, rework, and overall project performance. The study showed that CE projects used high overlapping, multi-functional teams, made high use of tools and technologies, such as design simulation tools and other integrated information technologies, and had a high level of twoway communication between functions. Furthermore, the development schedule was reduced for all CE projects compared to SE projects by an average of 36%, and overall project performance was well above that of the SE projects. Since the seven projects took place within a two to three year time period, had product mandates with similar degrees of complexity, and had a similar level of resources, it is believed that performance comparisons between projects were based on the differences between the use of SE and CE methods, and not on uncontrolled factors. Process
Team Tools and Communication Time to Number of Project Structure Technology Patterns Market Respins* Performance CE High MultiHigh use High between 9 months 1 to 2 Above Projects Overlapping functional R&D and average teams Manufacturing SE Low Functional Low use Low between 14 3 Below Projects Overlapping teams R&D and months average Manufacturing * Respins – major iterations within the NPD process
Figure 1-Comparison of CE and SE projects.
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A framework was developed based on the study’s findings to help Telcom focus their efforts while transitioning into a CE environment. While some of the findings presented in this paper are not new, they confirm the results of prior research on the design and management of a CE process. Figure 2 shows an overview of the framework. In the following sections, discussion centers on the components of the framework: process, people, tools and technology, metrics, organizational support, buying into CE, and benefits and barriers to success.
• • • • •
Process Definition Overlapping Formalization Ownership Goals
People • Team definition • Multi-functional involvement • Scheduling
Tools/Technology • Enablers of CE • Shared environment • Training
Metrics Performance Measures
Organizational Support Decision making power, communication, reward mechanisms
Buying Into CE Figure 2-A framework for the successful implementation of concurrent engineering. Process A key implementation issue for CE is to have a single, well-defined process with clear ownership and goals. In order to properly implement CE, the following are our recommendations with regards to the process: • Define and formalize the CE process; • Define overlapping of activities; • Identify process ownership; • Set clear, quantitative goals. The first step in implementing CE is to define the process and the corresponding schedule of activities. The decision of how to manage the development process by overlapping activities must be carefully evaluated, that is, how and when which activities should be overlapped so that the design is completed as effectively and as efficiently as possible, and all foreseeable risks are considered early. While overlapping takes place in a CE process, the study showed that this proved to be successful as long as there was a high level of communication among functions. In one project, development time was reduced by two months through overlapping with a high level of communication. Very importantly, there are situations in which overlapping is not beneficial. For one project, there was a delay of 45 days because two activities were overlapped. This was because the changes in the upstream activity meant
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significant changes were required in the downstream activity, which had already been complete as a result of the overlapping. Therefore, it is crucial that the downstream impact on executing activities in parallel be considered carefully prior to overlapping. Once the CE process is defined, it must be formalized and standardized. A formal NPD process is a must and has been proven to separate the market leaders from the “dogs” (7). A standardized process delivers better quality projects, which in turn means better quality products (8). Without this, development is executed on an ad hoc basis, which results in similar projects following different steps. A process owner needs to be appointed for the CE NPD process. Lack of ownership contributes to a lack of project discipline. A single person needs to be responsible so that team members are clear on whom to address when facing a problem. This person’s responsibility is also to see that the process is used properly and that it is updated as needs change. Lack of ownership can create problems, such as team members not being held accountable for missing information. A process owner has responsibility for the end-to-end process along with all sub-processes. This results in better responsiveness to the customer and better learning for ongoing process improvement. Finally, vague goals tend not to lead to tangible improvements. Only quantified goals have been shown to lead to improved performance. For example, objectives such as 20% TTM improvement or a six month reduction in cycle time received the attention of project leaders and team members; qualitative or soft targets did not. Goals must focus on process improvement in addition to product quality and deliverables. People In a CE process, utilizing the appropriate human resources at the right time is critical and accelerates development by keeping rework to a minimum. A successful CE environment requires the following in terms of people: • Determine functional involvement and staffing requirements; • Establish multi-functional teams early. The key issue regarding project teams is having the right people up and running early in the process. It is important to evaluate how much upfront involvement is really required such that downstream functions are neither wasting their time nor causing extra effort to be expended due to their presence early in the process. By involving the manufacturing function early, design issues and process capability can be resolved in order to handle new parts. Long lead time parts can also be ordered early by integrating the purchasing agent early in the process, ensuring that no shortages occur, that new technology is available, and that project schedules can be met. While it is often thought that CE teams should include design and manufacturing personnel only, study results showed that external customers and suppliers and the marketing function should be integrated as well in order to finalize customer requirements more quickly. Often, CE teams are chosen to be composed of highly skilled individuals who could communicate well. Capturing the experience of these teams through a formalized process is important for transferring knowledge to teams that are less skilled. Finally, projects that have dedicated teams are more successful. Resource planning is a critical issue for completing projects on time and on budget. Early integration of various disciplines prevents downstream problems from occurring and recognizes risks and opportunities early in the process. CE teams should be created at project kick-off meetings to familiarize the members with the project and with one another.
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Tools and Technology An appropriate set of tools and technology should be chosen to help achieve maximum benefits that enable integrated product development. In the tools and technology category, it is necessary: • To identify tools and technology that enable CE; • To train people to use the tools. The use of integrated information technology (IT) tools enables the management of a CE process to be smoother. The use of effective data sharing techniques is key in the way information is stored, retrieved and transferred. Essentially, the use of IT helps to minimize the need for communication among team members by reducing and often eliminating the need to meet, speak over the phone, wait for mail, etc. Given the highly interdependent phases of the product development process, minimizing communication is appealing. Because of the complexity involved in coordinating many people’s activities, less communication results in less time spent and lowers the potential for confusion. Integrating these tools completely with a minimum number of user interfaces will improve productivity, which in turn will help to better realize goals. A project web site can also be very effective in providing access to project information. The use of simulation has proven to be very successful in the design of PC boards. Significant time reductions were achieved along with improved quality. By tradition, in some companies, there is an urgency in getting prototypes built early so that the hardware team can sooner tackle potential problems that are uncovered. Therefore the use of simulation is not emphasized because the time it requires delays building prototypes. However, although more time is required at the front end of the design cycle, simulation uncovers many design deficiencies not easily detected in the laboratory, and the resulting stability of the prototypes can reduce the time and the effort needed to complete development. Even if time reduction is not achieved with simulation, cost savings (fewer prototypes built) and higher quality can be achieved. To make effective use of all tools, training is essential. Metrics In order to successfully monitor progress and improve performance, it is essential: • To define relevant performance measures. Measuring performance can directly affect the behaviour of teams, and therefore, choosing metrics to encourage certain behaviour can help to achieve specific objectives. However, other unwanted behaviour can be generated as a result. For example, being rewarded on meeting goals does not mean that the process in achieving the goals will be productive and efficient. A CE process requires goal-oriented metrics (to monitor outcomes), such as static TTM, break-even time, and manufacturing costs, and process-oriented metrics (to monitor the process), such as dynamic TTM, rework, and degree of functional integration. In many companies, information for metrics is gathered on a product release basis rather than on a project basis, therefore it is important to begin extracting pertinent information early in the process and maintaining the availability of this information. To be effective, the number of metrics considered by teams should be small, on the order of four to six. A general guideline for measurements is that, if they change every week, they should be measured once a week, if they change every month, they should be measured monthly, and so on.
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Organizational Support Another key implementation issue is to ensure that the right structures exist to support and motivate CE teams. The organizational support required to ensure and to sustain CE success consists of: • Empowering teams; • Facilitating communication; • Implementing team reward mechanisms. The decision-making power that is granted to teams indicates the degree of team autonomy. Teams are the most knowledgeable about a project and are in the best position to make decisions. Teams work best when given the authority to make their own decisions (9). This also helps to speed up the process and avoid unnecessary delays in waiting for decisions to be made through layers of management. Accountability for any decisions must be upheld. “Communication is the cornerstone of success in CE" (10). CE needs to be carried out in an environment in which communication and collaboration among departments is facilitated. This requires shared data environments and open information exchange. Effective communication can be achieved through shared data environments and through the quality and structure of inter- and intra-group communication. Additionally, CE projects benefit from high frequency, face-to-face, and two-way communication among team members. Colocation of key functions and team meetings is therefore important. The study showed that communication is critical for closely coupled teams: as an example, the separation of hardware and software teams by a single floor was seen as a major obstacle. A system which will reward team performance in addition to the already-existing functional reward system is important in a CE environment. This implies that the team leader must have some say in the performance appraisal since s/he, or the team, is in the best position to evaluate an individual’s performance on the team. One specific suggestion is to let the team leader write a performance appraisal, and let the functional manager decide how much weight it should be given. Rewarding teams on breakeven time is one mechanism to tie team performance to long-range success, and to motivate members to be committed to projects. Buying Into CE It is crucial to get buy in from everyone involved in order for CE to work. This means that: • Executive support for CE is a must; • Continuous training is required. Buying into a CE approach does not always come easy for upper management (13). Top functional managers, for example, often feel threatened by the empowerment of multifunctional teams in a CE environment. Some managers fear that they do not have power over decisions being made, and that they will still be penalized for poor outcomes. To overcome this situation, an appropriate division of authority, responsibility and rewards between managers and teams is needed. In addition, for permanent change, the people involved must be trained continuously. Benefits and Barriers to Success Figure 3 presents a summary of the views from project team members on the benefits of and barriers to CE as well as suggestions to overcome the barriers. As can be seen, the barriers outnumbered the benefits, suggesting that transitioning to a CE environment is not without its challenges. However, the benefits show that the use of CE can produce highly desirable outcomes, among others, reduced time to market. Overcoming the barriers would likely further improve overall performance.
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Benefits of CE Schedules reduced for all CE projects Delivery of defect-free prototypes accelerated Production yields improved Time to market shorter Why Benefits Were Achieved Early involvement increased planning horizon and learning Risks identified and tradeoffs made earlier Specifications mostly correct since all functions present Constant involvement of operations delivered correct prototypes on time Operations and Testing assisted in finding design problems before layout began Production issues resolved early Barriers Lack of business unit and top management support Requirements hard to set at concept stage Lack of control of project resources Lack of interaction between hardware and software groups Lack of involvement by Marketing at project start CE not well understood Overcoming the Barriers Create a multi-functional team at project outset Define member responsibilities clearly Dedicate necessary resources Improve NPD process Define requirements earlier Improve team communication Improve interaction of hardware and software groups Train members better: skills, IT tools and CE methods Improve IT tools Increase use of simulation tools Figure 3-Benefits of and barriers to CE implementation. Conclusions The case study showed that implementing CE is complex, but that the potential rewards are significant. Based on the study's findings, we developed a systematic framework outlining key issues for successful CE implementation. Overall, the study at Telcom showed that CE projects were more successful than SE projects. Our study has shown that for successful CE implementation, process, people, tools and technology, metrics, organizational support, and buy-in, are all critical managerial considerations prior to and during CE implementation. References 1. Trygg, L., 1993. Concurrent Engineering Practices in Selected Swedish Companies: A Movement or an Activity of the Few? Journal of Product Innovation Management 10(5): 403-415. 2. Swink, M. L., Sandvig, J. C., & Mabert, V. A., 1996. Customizing Concurrent Engineering Processes: Five Case Studies. Journal of Product Innovation Management 13: 229-244. 3. Gerwin, D. and Moffat, L., 1997. Withdrawal of Team Autonomy During Concurrent Engineering. Management Science, 43(9): 1275-1287.
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4. Bessant, J. and D. Francis, 1997. Implementing the new product development process. Technovation 17(4): 189-197. 5. Winner, R. I., J. P. Pennell, H. E. Bertrand, and M. M. G. Slusarezuk 1988. The Role of Concurrent Engineering in Weapons System Acquisition, Institute for Defense Analyses, Alexandria, VA, USA, IDA Report R-338. 6. Blackburn J. 1991. New Product Development: The New Time Wars, in J. Blackburn (ed.), Time-Based Competition: The Next Battleground in American Manufacturing. Homewood: Business One Irwin. 7. Cooper, R. G. & Kleinschmidt, E. J., 1995. Benchmarking the Firm’s Critical Success Factors in New Product Development. Journal of Product Innovation Management 12: 374-391. 8. Bhuiyan, N. & Thomson, V. 1998. Formalizing and Evaluating the Concurrent Engineering Process. Proceedings of the Canadian Society for Mechanical Engineering 3: 1-6. 9. Gerwin, D., 1999. Team Empowerment in New Product Development. Business Horizons 42(4): 29-36. 10. Prasad, B. 1997. Concurrent Engineering Fundamentals - Integrated Product Development. New Jersey: Prentice Hall PTR. AUTHORS’ BIOGRAPHIES Nadia Bhuiyan is an Assistant Professor at Concordia University in the Department of Mechanical and Industrial Engineering and the Associate Director of the Concordia Institute for Aerospace and Design Innovation (CIADI). Previously, she taught at Queen's University’s School of Business, and McGill's Department of Management Science. Her research area is mainly in operations management, with a focus on new product development processes, and emerging tools and techniques for integrating design and manufacturing to improve process performance. She holds a Master's degree and a Ph.D. both in Mechanical Engineering from McGill University, and a Bachelor's degree in Industrial Engineering from Concordia University.
[email protected] Vince Thomson is the Werner Graupe Professor for Manufacturing Automation in the Department of Mechanical Engineering at McGill University. He has been involved in manufacturing and information technology related research for the past 25 years at McGill and the National Research Council (Canada). His research has ranged from shop floor control and production scheduling to the present interest in process management in manufacturing. In process management, research has focused on new product introduction, concurrent engineering and manufacturing support in terms of coordination, metrics, and process principles.
[email protected] Donald Gerwin is Professor Emeritus in the School of Business at Carleton University in Ottawa, Canada and now lives in France. At Carleton he held a research chair in technology management and headed the Research Program in Managing Technological Change. He has served as the Department Editor for Manufacturing Systems for the IEEE Transactions on Engineering Management and as an Associate Editor for Management Science. He is coauthor of Management of Advanced Manufacturing Technology: Strategy, Organization and Innovation. His current research interests are in managing new product development within and between firms.
[email protected]
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