The 11th Asia Pacific Industrial Engineering and Management Systems Conference The 14th Asia Pacific Regional Meeting of International Foundation for Production Research Melaka, 7 – 10 December 2010
A Conceptual Model for Development of New Product in SMEs by E-collaboration and Project Management Marjan Mohammadjafari † 1and Shamsuddin Ahmed2 Department of Engineering, Design and Manufacturing University of Malaya, Lembah Pantai, 50603 Kuala Lumpur, Malaysia Email:
[email protected] [email protected] Siti Zawiah Md Dawal Department of Engineering, Design and Manufacturing University of Malaya, Lembah Pantai, 50603 Kuala Lumpur, Malaysia Email:
[email protected] Hadi Zayandehroodi Department of Electrical, Electronic and Systems Engineering University Kebangsaan Malaysia, Selangor, 43600, Malaysia Email:
[email protected]
Abstract - Being excessive time for new product development is one of the problems in most of the industries. Usually the time for production is longer than the first estimation. Then the companies lose their customers. Therefore, they can’t be competitive in the global market; also the cost for production will be increased. Specially small and medium size enterprises (SMEs) can‘t successfully enter the market, unless they do the customer needs. In this study, we have proposed electronic collaboration between different sections in the company via project management is necessary for improving time and cost of new product. Other researchers already identified several factors are important for lead times in new product development projects like design, planning, product and procurement. We develop the model incorporation all these four factors, to estimate the time and cost. Keywords: Project Management, E-Collaboration, New Product, SMEs, Reduce Time, Reduce Cost.
1. INTRODUCTION Prior studies have illustrated small and medium sized enterprises (SMEs) have some problems inside their firms‟, one of them is the excessive time for new product development. “As the global competitive pressure increases and product life cycle grows shorter, SMEs have to shorten their product development cycles(Mohammadjafari, Ahmed et al. 2010)”. Usually the time for a new production is longer than initially estimated. Then the companies cannot catch-up to their customers. Therefore, SMEs cannot remain competitive in the global market. In this context, the authors propose that integration of different departments in one company is important for reducing time and cost in new product development. One way to integrate information is working under a web. The use of electronic collaboration (E-collaboration) technologies is essential for supporting projects (Qureshi,
________________________________________ † : Corresponding Author
Min et al. 2005). In addition, project management has been considered in many sciences (Kolltveit, Karlsen et al. 2007). The objective of this study is to reduce new product time and cost by establishing a relationship between a project manager and different departments of the company by E-collaboration. The main factors to be considered are department of design, department of planning, department of procurement and department of production. Previous researchers have discussed these items separately. In this study, these factors are combined to create and evaluate a new model.
2. E-COLLABORATION Collaborative in different industries is essential for supporting projects. “E-collaboration and collaborative tools bring geographically dispersed teams together for virtual meetings across great distances. These results in
The 11th Asia Pacific Industrial Engineering and Management Systems Conference The 14th Asia Pacific Regional Meeting of International Foundation for Production Research Melaka, 7 – 10 December 2010 tremendous time and cost saving, greatly decreased travel requirements, faster and better decision-making and improved communications flow throughout the organization (Bafoutsou and Mentzas 2002).”“The field of collaborative computing encompasses the use of computers to support coordination and cooperation of two or more people who attempt to perform a task or solve a problem together (Borenstein 1992).”Then in this research we consider to E-collaboration between different departments in one factory and project manager.
Also project management is used to describe an organizational approach to the management of ongoing operations. This approach called management by projects, treats many aspects of ongoing operations as projects in order to apply project management to them” (Guide 2004). “Project management is the manner of implementation, of expertise, paraphernalia, knowledge and modus operandi to an extensive range of activities for the fulfillment of prerequisite of the specific project(Qureshi, Warraich et al. 2009).”
3. PROJECT MANAGEMENT
4. THE MAJOR CHARACTERISTICS OF SMALL AND MEDIUM ENTERPRISES (SMEs)
“Project management is a methodology for managing a project.”(Ramaprasad and Prakash 2003) “Project management, including the tools, techniques, and knowledge-based practices applied to manage the creation of products and services, is becoming an increasingly accepted and applied discipline across industry sectors.”(Jugdev, Mathur et al. 2007) “Project management can be defined as the process of controlling the achievement of the project objectives”.(Munns and Bjeirmi 1996) “Project management is the application of knowledge, skills, tools, and techniques to project activities in order to meet or exceed stakeholder needs and expectations from the projects. Meeting or exceeding stakeholder needs and expectations invariably involves balancing competing demands among: Scope, time, cost and quality. Stakeholder with differing needs and expectations. Identified requirements (needs) and unidentified requirements (expectations).
For better understanding of SMEs actions, summary information of the SMEs characteristics is listed in Table 1. “SMEs are in a more advantageous position in terms of structure because it facilitates faster communication line, quick decision-making process, faster implementation, short decision-making chain, higher contribution as a source of ideas in their operations and innovation, unified culture and very few interest groups (Kraipornsak 2002).” “A majority of SMEs have simple systems and procedures, which allows flexibility, immediate feedback, better understanding and quicker response to customer needs than larger organizations(Deros, Yusof et al. 2006).” “SMEs employees are given the authority and responsibility in their own work areas that can create cohesion and enhance common purposes amongst the workforce to ensure that a job is well done.”
Table 1: Strengths of SMEs. Strengths
References
Easily adaptive to new market conditions, flexible to change,
(Mezgár, Kovács et al. 2000; Aragón-Sánchez and
developing customized solutions for partners and customers,
Sánchez-Marín 2005; Davis and Sun 2006; Ale Ebrahim,
dynamic in activities
Ahmed et al. 2009)
Knowledge creating
(Egbu, Hari et al. 2005; Ale Ebrahim, Ahmed et al. 2009)
Excellent at multi-tasking
(Schätz 2006; Ale Ebrahim, Ahmed et al. 2009)
Powerfully correlated and inter-related with respect to
(Huang, Soutar et al. 2001; Jutla, Bodorik et al. 2002;
innovation
Bhagwat 2006; Gray 2006)
Capable to answer quickly to customer requests and market
(Abdul-Nour, Drolet et al. 1999; Kim, Knotts et al. 2008;
changes, customers focused
Ale Ebrahim, Ahmed et al. 2009)
Quick decision making process
(Lawson, Longhurst et al. 2006; Schätz 2006)
The 11th Asia Pacific Industrial Engineering and Management Systems Conference The 14th Asia Pacific Regional Meeting of International Foundation for Production Research Melaka, 7 – 10 December 2010
(Gassmann and Keupp 2007; Ale Ebrahim, Ahmed et al.
Able of going global rapidly
2009)
Routine processes, flexible structures
(Haga 2005; Bhagwat 2006; Gassmann and Keupp 2007)
Useful
(Beck, Demirguc-Kunt et al. 2005) Table2: Weakness of SMEs.
Weakness
References
Lagging in the export, absence the resources necessary to enter
(Mahajar, Abdullah et al. 2006; Jansson and Sandberg
overseas markets
2008)
Fragile at converting research and development into effective
(O'Regan, Ghobadian et al. 2006; Ale Ebrahim, Ahmed et
innovation
al. 2009)
Limited manpower and resource
(Abdul-Nour, Drolet et al. 1999; Chou 2008; Kim, Knotts et al. 2008; Westerlund and Rajala 2008)
Policy formulation biased on what available, not have a long
(Yusuff, Chek et al. 2005; Ojeda-Gomez, Simpson et al.
run perspective
2007)
Imperfect degree of information technology achievement
(Sarosa and Zowghi 2003; Egbu, Hari et al. 2005; Eikebrokk and Olsen 2007; Chou 2008)
Lack of industrial engineers or right kind of manpower to
(Ahmed and Hassan 2003; Ale Ebrahim, Ahmed et al.
apply various statistical and managerial methods or tools
2009)
SMEs shy away from formal projects and long-term initiatives and instead only participate in small-scale, once-off initiatives
5. NEW PRODUCT AND SMEs “New product development is of high importance for both large and small and medium sized organizations(Pullen, de Weerd-Nederhof et al. 2008).” “Small- and medium sized organizations (SMEs) have a number of typical problems with regard to their innovation process, especially in the shift from the development stages to the commercialization stages(Hanna and Walsh 2002).” “They are more confronted with financial constraints, they have more manpower bottlenecks in terms of too few or unqualified personnel, and they often don‟t have the possibility to substitute for the lack of sales and profits through other products (cash cows) which makes it necessary for these companies to cooperate with other organizations dtling 2002).” “On the other hand, SMEs also have some advantages with regard to new product development, which makes them very suitable as network partner. SMEs are usually less bureaucratic, and
(Burke and Gaughran 2006)
generally have greater incentives to be successful than large firms(Michael and Palandjian 2004).” In these situations, “companies offer their customers the right products in terms of features and quality, at the right time and at the right price can expect market success (Kusar, Duhovnik et al. 2004).” “A multidisciplinary approach is needed to be successful in launching new products and managing daily operations(Meyer 2006).” “In the NPD context, teams developing new products in turbulent environments encounter quick depreciation of technology and market knowledge due to rapidly changing customer needs, wants, and desires, and technological „„know-hows” (Akgün, Byrne et al. 2007). There are a few investigators done to evaluate NPD performance. For example, (Cooper et al., 2004) discover different measures of NPD performance at the project levels and various plans(Cooper, Edgett et al. 2004). “Measures of the performance of the entire NPD program include the percentage of business profits from new products and the
The 11th Asia Pacific Industrial Engineering and Management Systems Conference The 14th Asia Pacific Regional Meeting of International Foundation for Production Research Melaka, 7 – 10 December 2010 success rate of launched/developed products. All of these measures show that NPD brings positive growths. With some exceptions, there is general agreement that the new product development (NPD) process is not adequately studied in small and medium enterprises (SMEs) and models and tools specifically focused for these units are lacking. This deficiency is particularly evident where SMEs located in industrial districts are concerned(De Toni and Nassimbeni 2003).”
6. METHODOLOGY By investigation in the literature review, we found that the long time required for new product is a problem in firms especially in SMEs. Four departments are influential in reducing new product time. This paper adopts a theoretical-conceptual research, and proposed that if these departments (design, procurement, planning and production) work together through project management, the time for a new product will decrease. The development of this model was based on empirical experience and interviews with 20 project managers in SMEs in Iran. The interview was done by voice chat and PC calls. Information on the respondent organizations is presented in Table 3.
7. CONCEPTUAL MODEL ORETICAL FOUNDATION
AND
THE
As indicated by the review of the literature, it is cleared that the long time that is needed for new product is a serious problem for SMEs(Roemer and Ahmadi 2010). However, an examination of the interdisciplinary literature (Xie, Huang et al. 2002; Lifang, De Matta et al. 2009; XiaBao and Li-Xi 2009) identifies four departments that affect the completion of projects in terms on time and within the budget: design, planning, production and procurement. The effects of these four departments have been studied separately under several theoretical perspectives in recent years. No studies, however, used these four stages together. To understand the importance of coordinating these sections with the project manager, we interviewed 20 project managers in Iran. The majority of project managers we interviewed stated that the lack of coordination between the related departments in production is major problem in reducing time and cost. Our interviews led us to the conclusion that the long time for new products resulted from a lack of coordinating mechanisms. Using the information from these case studies, we developed a conceptual model that characterized the major activities required for interdepartmental collaboration in new product development. However, the answers to the two
major questions that emerged from our case studies remained elusive: I. Are all four of these departments efficient? II. What is the relationship between these four departments and project management for development time? Table 3: Characteristics of the sample. Characteristics of the respondents
Percentage of
(n=20)
sample
Function Project manager / director
30
Project manager / senior advisor
25
Project manager / general manager
45
Education level PhD‟s degree
10
Master‟s degree
35
Bachelor‟s degree
55
Project management experience More than 20 years
5
15-20 years
20
10-15 years
15
5-10 years
60
Specification domain business
45
engineering
55
Our case studies suggested that companies that had reduced time for new products, had better interdepartmental collaboration. Four critical elements of this process are captured in the explanatory model as shown in Fig. 1. For this conceptual model, we consider five hypotheses: H1. The communication between a designer in the department of design and project manager is essential before starting the production. H2. Coordination between product manager and project manager is necessary for improving time of new production before the start of production. H3. Procurement manager has to report to the project manager about preparing equipment before starting a project.
The 11th Asia Pacific Industrial Engineering and Management Systems Conference The 14th Asia Pacific Regional Meeting of International Foundation for Production Research Melaka, 7 – 10 December 2010 performance." Journal of Engineering and Technology Management 24(3): 203-230.
E-Collaboration
Department of Design Department of Production
H1 H5a
H2 Project Manager
Department of Procurement
H3
Department of Planning
Reduce Time of Product
Production Line H5b Decrease Cost of Product
H4
Figure 1. Conceptual model for reducing time and cost in SMEs H4. The project manager has to know about the product plan and then the control project manager must report to a project manager before arriving at the project in the line of product. H5. Time (H5a) and cost (H5b) for manufacturing of new product will be reduced with E-collaboration among different parts of companies.
8. CONCLUSION We have presented some definitions of Ecollaboration, project management and SMEs for reduce time and cost in new product. Some concluding points deserve attention. First, the literature has established that new product development takes a long time, especially in SME. Second, the conceptual model reflects the need for collaboration between departments of design, planning, procurement and production in a company through project management via net. Consequently, incorporation of four factors are going to open a guideline for the future researchers towards effective improvement in terms of time and cost for a new product introduction.
REFERENCES Abdul-Nour, G., J. Drolet, et al. (1999). "Mixed production, flexibility and SME." Computers & Industrial Engineering 37(1-2): 429-432. Ahmed, S. and M. Hassan (2003). "Survey and case investigations on application of quality management tools and techniques in SMIs." International Journal of Quality and Reliability Management 20(6-7): 795-826. Akgün, A. E., J. C. Byrne, et al. (2007). "New product development in turbulent environments: Impact of improvisation and unlearning on new product
Ale Ebrahim, N., S. Ahmed, et al. (2009). "Virtual R & D teams in small and medium enterprises: A literature review." Scientific Research and Essays 4(13): 1575-1590. Aragón-Sánchez, A. and G. Sánchez-Marín (2005). "Strategic orientation, management characteristics, and performance: A study of Spanish SMEs." Journal of Small Business Management 43(3): 287-308. Bafoutsou, G. and G. Mentzas (2002). "Review and functional classification of collaborative systems." International Journal of Information Management 22(4): 281-305. Beck, T., A. Demirguc-Kunt, et al. (2005). "SMEs, growth, and poverty: cross-country evidence." Journal of Economic Growth 10(3): 199-229. Bhagwat, M. (2006). "Practice of information systems Evidence from select Indian SMEs." Journal of Manufacturing Technology Management 17(1-2). Borenstein, N. S. (1992). Computational mail as network infrastructure for computer-supported cooperative work, ACM. Burke, S. and W. F. Gaughran (2006). "Intelligent environmental management for SMEs in manufacturing." Robotics and Computer-Integrated Manufacturing 22(5-6): 566-575. Chou, C. (2008). "Entities' representation modes and their communication effects in collaborative design for SMEs." The International Journal of Advanced Manufacturing Technology 37(5-6). Cooper, R. G., S. J. Edgett, et al. (2004). "Benchmarking best NPD practices-III." ResearchTechnology Management 47(6): 43-55. Davis, C. H. and E. Sun (2006). "Business Development Capabilities in Information Technology SMEs in a Regional Economy: An Exploratory Study." The Journal of Technology Transfer 31(1): 145-161. De Toni, A. and G. Nassimbeni (2003). "Small and medium district enterprises and the new product development challenge." International Journal of Operations & Production Management 23((6)): 678-697. Deros, B. M., S. M. Yusof, et al. (2006). "A benchmarking implementation framework for automotive manufacturing SMEs." Benchmarking: An International Journal 13(4): 396-430.
The 11th Asia Pacific Industrial Engineering and Management Systems Conference The 14th Asia Pacific Regional Meeting of International Foundation for Production Research Melaka, 7 – 10 December 2010 Egbu, C. O., S. Hari, et al. (2005). "Knowledge management for sustainable competitiveness in small and medium surveying practices." Structural Survey 23(1): 7-21.
Kolltveit, B. J., J. T. Karlsen, et al. (2007). "Perspectives on project management." International Journal of Project Management 25(1): 3-9.
Eikebrokk, T. R. and D. H. Olsen (2007). "An empirical investigation of competency factors affecting ebusiness success in European SMEs." Information & Management 44(4): 364-383.
Kraipornsak, P. (2002). The Plastic Industry of Thailand.
Gassmann, O. and M. M. Keupp (2007). "The competitive advantage of early and rapidly internationalising SMEs in the biotechnology industry: A knowledge-based view." Journal of World Business 42(3): 350-366. Gray, C. (2006). "Absorptive capacity, knowledge management and innovation in entrepreneurial small firms." International Journal of Entrepreneurial Behaviour & Research 12(6): 345-360. Guide, P. (2004). "A guide to the project management body of knowledge." Project Management Institute, Pennsylvania, USA. Haga, T. (2005). "Action research and innovation in networks, dilemmas and challenges: two cases." AI & Society 19(4): 362-383. Hanna, V. and K. Walsh (2002). "Small firm networks: a successful approach to innovation?" R&D Management 32(3): 201-207. Huang, X., G. N. Soutar, et al. (2001). "Resource adequacy in new product development: a discriminant analysis." European Journal of Innovation Management 4(1): 53-59. Jansson, H. and S. Sandberg (2008). "Internationalization of small and medium sized enterprises in the Baltic Sea Region." Journal of International Management 14(1): 65-77. Jugdev, K., G. Mathur, et al. (2007). "Project management assets and their relationship with the project management capability of the firm." International Journal of Project Management 25(6): 560-568. Jutla, D., P. Bodorik, et al. (2002). "Supporting the ebusiness readiness of small and medium-sized enterprises: approaches and metrics." Internet Research: Electronic Networking Applications and Policy 12(2): 139-164. dtling (2002). "How effective is innovation support for SMEs? An analysis of the region of Upper Austria." Technovation 22(3): 147-159. Kim, K. S., T. L. Knotts, et al. (2008). "Characterizing viability of small manufacturing enterprises (SME) in the market." Expert Systems with Applications 34(1): 128-134.
Kusar, J., J. Duhovnik, et al. (2004). "How to reduce new product development time." Robotics and ComputerIntegrated Manufacturing 20(1): 1-15. Lawson, C. P., P. J. Longhurst, et al. (2006). "The application of a new research and development project selection model in SMEs." Technovation 26(2): 242-250. Lifang, W., R. De Matta, et al. (2009). "Updating a Modular Product: How to Set Time to Market and Component Quality." Engineering Management, IEEE Transactions on 56(2): 298-311. Mahajar, A. J. B., S. S. Abdullah, et al. (2006). "The Effectiveness of Small and Medium Development Corporation (SMIDEC) Export Assistance Programs on Malaysian SME‟s." Proceedings of Advances in Global Business Research Kuala Lumpur, Malaysia. Meyer, E. T. (2006). "Socio-technical Interaction Networks: A Discussion of the Strengths, Weaknesses and Future of Kling's STIN Model. Social Informatics: An Information Society for All? In remembrance of Rob Kling. J. Berleur, MI Numinen and J. Impagliazzo. Boston, IFIP International Federation for Information Processing." Springer 223: 37-48. Mezgár, I., G. L. Kovács, et al. (2000). "Co-operative production planning for small- and medium-sized enterprises." International Journal of Production Economics 64(1-3): 37-48. Michael, S. C. and T. P. Palandjian (2004). "Organizational learning and new product introductions." Journal of Product Innovation Management 21(4): 268-276. Mohammadjafari, M., S. Ahmed, et al. (2010). "The Effects of Electronic Collaboration in Reducing Production Time: Product Design Process in SMEs." Proceedings of the International MultiConference of Engineers and Computer Scientists 3. Munns, A. K. and B. F. Bjeirmi (1996). "The role of project management in achieving project success." International Journal of Project Management 14(2): 81-87. O'Regan, N., A. Ghobadian, et al. (2006). "In search of the drivers of high growth in manufacturing SMEs." Technovation 26(1): 30-41. Ojeda-Gomez, J., M. Simpson, et al. (2007). "Achieving competitive advantage in the Mexican footwear
The 11th Asia Pacific Industrial Engineering and Management Systems Conference The 14th Asia Pacific Regional Meeting of International Foundation for Production Research Melaka, 7 – 10 December 2010 industry." Benchmarking: An International Journal 14(3): 289-305.
AUTHOR BIOGRAPHIES
Pullen, A., P. de Weerd-Nederhof, et al. (2008). Configurations of external SME characteristics to explain differences in innovation performance.
Marjan Mohammadjafari is Industrial Engineering PhD candidate in the Department of Engineering Design and Manufacture, Faculty of Engineering, University of Malaya. She holds Master of Industrial Engineering from University of Zahedan in Iran and Bachelor of Electrical Engineering from university of Kerman, Iran and 7 years of experience in project manager in industrial companies in Iran. Her research interests focus on the role of E-collaboration in reduce time and cost by project management approach for new product development in SMEs.
Qureshi, S., L. Min, et al. (2005). A Grounded Theory Analysis of E-Collaboration Effects for Distributed Project Management. System Sciences, 2005. HICSS '05. Proceedings of the 38th Annual Hawaii International Conference on. Qureshi, T. M., A. S. Warraich, et al. (2009). "Significance of project management performance assessment (PMPA) model." International Journal of Project Management 27(4): 378-388. Ramaprasad, A. and A. N. Prakash (2003). "Emergent project management: how foreign managers can leverage local knowledge." International Journal of Project Management 21(3): 199-205. Roemer, T. A. and R. Ahmadi (2010). "Models for concurrent product and process design." European Journal of Operational Research In Press, Corrected Proof. Sarosa, S. and D. Zowghi (2003). "Strategy for adopting information technology for SMEs: Experience in adopting email within an Indonesian furniture company." Electronic Journal of Information Systems Evaluation 6(2): 165-176. Schätz, C. (2006). "A Methodology for Production Development–The Body of Knowledge Approach." Westerlund, J. and R. R. A. Rajala (2008). "Social capital in the growth of science-and-technology-based SMEs." Industrial Marketing Management 37(5). Xia-Bao, H. and Y. Li-Xi (2009). Setting lead-time in project manufacturing environment based on CCPM. Apperceiving Computing and Intelligence Analysis, 2009. ICACIA 2009. International Conference on. Xie, S. Q., H. Huang, et al. (2002). "A WWW-based information management system for rapid and integrated mould product development." International Journal of Advanced Manufacturing Technology 20(1): 50-57. Yusuff, R. M., L. W. Chek, et al. (2005). "Advanced manufacturing technologies in SMEs." CACCI J. Commer. Ind 1: 1-11.
Shamsuddin Ahmed is currently an Associate Professor in Manufacturing at the University of Malaya (UM), Malaysia. He obtained his first, second, and tertiary degrees from different reputed institutions of higher learning in different countries. He has been in graduate level teaching since 1986. He offered a good number subjects for both undergraduate and postgraduate studies and supervised a large number of students. At present, six PhD, several masters and undergraduate students are working under his supervision. He published more than 60 papers/articles in different international, regional and national journals, conference proceedings and bulletins. He assessed a good number of papers for a few journals including some Emerald journals. Siti Zawiah Md Dawal is currently an Associate Professor in Manufacturing at the University of Malaya (UM), Malaysia. She obtained his first, second, and tertiary degrees from different reputed institutions of higher learning in different countries. PhD, Industrial Ergonomics, University of Malaya, Malaysia, (2005) MSc., Manufacturing System Engineering, University of Warmick, United Kingdom, (1994) BEng. (Hons), Communication Engineering, Leeds Metropolitan University, United Kingdom, and (1992) .At present several PhD and master students are working under her supervision. Hadi Zayandehroodi is Power System Engineering PhD candidate in the Department of Electrical, Electronic and System Engineering, National University of Malaya. He received his B.Sc. degree in Power System
The 11th Asia Pacific Industrial Engineering and Management Systems Conference The 14th Asia Pacific Regional Meeting of International Foundation for Production Research Melaka, 7 – 10 December 2010 Engineering in 2003 from Azad University of Tehran, Iran, and his M.Sc. degree in Power System Engineering from Tarbiat Modares University, Tehran, Iran, in 2005 and 10 years of experience in power system companies in Iran. He is interested in designing protection systems for power systems, especially distribution systems including distributed generation as well as distribution system restructuring and developing software applications for electrical distribution systems.
