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Int. J. Product Development, Vol. 13, No. 4, 2011
On the application of lean principles in Product Development: a commentary on models and practices Torgeir Welo Department of Engineering Design and Materials, Norwegian University of Science and Technology (NTNU), Richard Birkeland’s veg 2B, Trondheim, N-7491, Norway E-mail:
[email protected] Abstract: Over the past decade, attempts have been made to apply lean principles to improve capabilities in Product Development (PD). However, methodologies from lean production are not directly applicable to PD. It is, therefore, desirable to establish a deeper understanding of lean PD as a basis for development of a generic framework. This paper gives an overview of lean PD followed by a discussion on its key component: defining (customer) value. Findings from prior art have been systemised into a framework that includes six key components, along with an assessment tool that has been used with select companies to identify areas where lean PD would provide the greater potential for payback. Examples of results from these analyses are given. Keywords: manufacturing; lean principles; PD; product development; value-added; core characteristics; model. Reference to this paper should be made as follows: Welo, T. (2011) ‘On the application of lean principles in Product Development: a commentary on models and practices’, Int. J. Product Development, Vol. 13, No. 4, pp.316–343. Biographical notes: Torgeir Welo is a Professor in Mechanical Engineering at the Department of Engineering Design and Materials, The Norwegian University of Science and Technology (NTNU), Norway. He holds a PhD within Structural Engineering. His experience includes applied research within product and production engineering, materials technology and metal forming as well as long industrial experience in different research, technology and product management positions in the automotive industry. His current research topics include metal forming and associated technology and product development. Over the past several years, he has been involved in several research projects on new Product Development (Lean/Knowledge-Based Product Development), focusing on the interplay between customer/user, design, function and performance, and manufacturability as an important enabler for value creation.
1
Introduction
1.1 Background Nowadays, manufacturers, customers and consumers are operating more and more globally in increasingly competitive marketplaces. This trend is expected to continue at Copyright © 2011 Inderscience Enterprises Ltd.
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increased pace, as the business world is gradually recovering from the recent financial crises. Although sourcing of production to low-cost countries may provide immediate benefits in terms of cost reductions and expanded market presence, this does not guarantee long-term competitiveness, though. For example, many automakers have been struggling financially for quite some time – despite their early globalisation efforts. In a broader perspective, there is sufficient evidence to state that cost reductions, say, by developing common (global) vehicle platforms and architectures, cutting labour and development costs, increasing outsourcing and subcontracting, enforcing stronger supplier competition, establishing new purchasing methods such as open E-bidding do not ensure sustainability in terms of profits, or even the future existence of a company. One key question is then how a manufacturing company should be positioned to become a winner as the markets gradually recover, particularly if this company is primarily based or operates in a high-cost country? The only meaningful answer to this question is to dramatically improve its capability in inventing, developing and producing new products, providing increased value to customers. In other words, a company must strengthen its focus on innovation such that more attractive products, ones that satisfy user’s requirements needs and desires, reach the marketplace earlier than competitors’ products, before new, better technology is available and before the market changes. Innovation represents in general terms a match between an unmet need or problem (customer want), its solution (technology and thing), the human knowledge needed, and the commercially successful use (of the solution) in the marketplace. Huthwaite (2007) defines innovation simply as ‘the process of creating new (customer) value with a minimum waste’, meaning that the practices of bringing ideas into high-opportunity concepts (inventions) along with the further process of developing and launching new products determine a company’s innovation capability and hence its viability in the marketplace. The application of concurrent (simultaneous) engineering (Prasad, 1996) practices over the past two decades have played a major role in drifting the conception of new-product development from something ‘mystic’ that belong to the product engineering group to a concern that involves the entire enterprise. Consequently, there is no longer such a clear distinction between an innovation process (maybe process is the wrong term since variability is part of the desired outcome in the front end of invention efforts) and a PD process, other than the fact that the latter is usually excluding high-risk efforts such as basic research and ideation activities. In fact, Toyota’s ability to manage risk by effectively integrating the research/concept phase (Kentou) and the conventional development phase is possibly one of the single most important factors to their history of success in the marketplace. Another success factor – nowadays when nearly all significant market players have introduced lean production systems with strong basis in Toyota’s Production System (TPS) – is Toyota’s Product Development System (TPDS), or in more catchy terms: Lean Product Development (LPD). However, manufacturing and PD are indeed very different matters, so are TPS and TPDS, and it is desirable to know to what extent, how, and with what potential lean principles and techniques can be applied on a more general basis to help improve PD efforts in other (Western) companies. In this connection, some of the typical characteristics that separate (and compare) PD and manufacturing are summarised in Table 1.
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Table 1
Characteristics that separate Product Development from manufacturing Characteristics of manufacturing
Characteristics of Product Development
Objective
To make a recipe of useful information To use material and that collectively reduce the risk of (by machineries or manually) make them to a physical producing a new product product that meets financial and strategic goals
Value-added
Clear, simple definitions of waste and value: proven tools available
No precise definitions to separate value from waste: no proven tools
(First lean principle)
High processing-to-total time (i.e., ‘value added contents’)
Low processing-to-total time (i.e., ‘value added contents’)
Value notion mainly linked to quality, delivery and costs
Value notion includes multiple user desires, preferences and meanings
Waste easily visible; may be approached at micro process level
Most wastes not easily visible; have to be approached at system level
Waste stems mainly from doing Waste stems mainly form doing activities unnecessary activities with wrong input Product/inventory
Tasks
People
Physical object
Information, knowledge
Visible
Invisible
One place at a time
Multiple locations at a time
Product requirements are constraints (or limitations); ‘must haves’
Product requirements represent opportunities (value); ‘could haves’
Outcomes are predictable and fixed
Outcomes are unpredictable, floating
Less tasks are better: actions that do not add value are to be removed
Less tasks not always better: apparent waste at action level may generate value at system level
Duration is consistent (within tight limits)
Duration is non-consistent (and unpredictable)
Done by machines and then people
Done by people and then machines
Practitioner and factory floor people with basic education level
Engineers and designers with college or university degree
Disciplined and used to comply Hesitant to unreservedly follow rules and with procedures and methods procedures made by others Humble belief that reuse (what has worked in the past) saves time and efforts, and reduce risk exposure
Reuse makes work dull and erode ‘signature’ from new products: i.e., not-invented-here syndrome
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Characteristics that separate Product Development from manufacturing (continued) Characteristics of manufacturing Characteristics of Product Development
People
Team culture that promotes the safe and well-established, avoiding risk
Individuals that promote entrepreneurship, creativity and risk taking
Process
Operational process within the stringent definition of a process (set of activities that creates an output from different inputs)
A process in a broader context – and partly a network – with ‘floating’ input, activities and output
Simple and linear with a number of repetitive, sequential steps dealing with physical objects
Complex and non-linear, generating, transforming and integrating information
Mostly independent operations Interrelated operations (no or low degree of ‘adaptivity’) (high degree of ‘adaptivity’) Duration of seconds and minutes
Duration of months and years
Variability prohibited (waste)
Variability a necessary means to add value, especially in front end
Requirements are fixed throughout all process steps
Some requirements are fixed but many change during the process (sometimes the entire context)
The objectives of the present investigation are listed as follows: •
to establish an overview of prior art within the field of LPD (and innovation) with the purpose of identifying commonalities and differences between different models
•
to discuss the applicability of lean principles and techniques, originally established for manufacturing processes, in PD – despite the apparently false premises associated with any attempt to transfer approaches directly from manufacturing up the value stream
•
to establish an LPD model that is suitable to the climate, culture and management style of typical norwegian (and many other western) companies, particularly those with a strategic focus on development and manufacturing of innovative products distributed in global markets
•
to identify areas within (lean) product development with the greater potential in helping enterprises that see product innovation capability as the primary driver for productivity growth in the future.
When referring to a PD process in the forthcoming, this translates into the following definition: ‘product development is the collective activities, or system, that a company uses to convert its technology and ideas into a stream of products that meet the needs of customers and the strategic goals of the company’. Furthermore, lean (PD) then means a company-wide PD system aimed at maximising value to the customer or user, within the constraints of value to other stakeholders (Browning, 2003); it should be noted that the present definition of LPD is somewhat broader than, say, considering the concept to be consistent with the Western world’s interpretation of the TPDS, see e.g., Morgan and Liker (2006).
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1.2 The three dimensions of lean in PD According to Mascitelli (2007), there are three distinct dimensions (or vectors) of design and development that must be addressed for a company to be competitive, see Figure 1: •
novel products that direct higher prices in the market price (lean innovation)
•
low production cost, i.e., costs associated with design, development, production and distribution (lean design) of products in the marketplace
•
time-to-market (traditional LPD).
Figure 1
Focal region of lean PD within the three dimensions (space) of design and development (see online version for colours)
Understanding and flow-down of customer desires into activities resulting in new solutions that can be successfully commercialised in the marketplace are basic characteristics of lean PD owing to its focus on value. However, it is hard to contradict the fact that current LPD practices are mainly applicable to companies that target incremental innovations. Companies that repeatedly develop new products with improved features, quality, cost, etc., with a strong basis in existing products and capabilities (Gautam and Singh, 2008) have had more success with lean methods in PD than those companies that target more groundbreaking innovations or novel products. One reason for this may be that lean has a strong basis in a known process with a somewhat predictable outcome, see Table 1, whereas the development of radical products is not necessarily a well-defined process since much learning, knowledge generation and adaptation have to take place along the way (Browning, 2000). As a consequence, LPD efforts have traditionally been directed towards the two other dimensions: time-to-market and production cost, despite the fact that the greater precompetitive potential may be within the application of lean principles for development of more innovative, differentiated products that offer new features and meanings to users. Production cost optimisation is another important dimension of new-product development. The development cost of a (volume) product typically constitutes less than 5% of the total product cost. However, the design choices made during the PD process may easily lock up more than 70–80% of the product cost. Therefore, LPD traditionally
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targets cost reductions associated with producing the product (‘Lean Design’) – and less the cost of developing the product.1 Moreover, lean is less about using more effective tools for microprocesses, i.e., operations that already add value, such as CAE, CAD, FEA, PDM and PLM and more about streamlining the PD process optimising batch sizes and by improving flow and quality of information (Reinertsen, 2009) since the latter has the greater potential for payback. Toyota’s philosophy (Morgan and Liker, 2006) in this respect is to tailor the tools to the actual needs of the people, rather than the opposite, i.e., tools become a means to improve standard work once the process is stable and standardisation has been enforced. Lead time, the third dimension of new-product development, is crucial to the competitiveness of many of today’s products. Shortening time-to-market has become increasingly important to companies’ competitiveness in today’s global market of extremely demanding and strong customers. In Lean innovation, Huthwaite (2007) discusses the importance of time-to-market in terms of the ‘three sharks of change’: market, technology and competitors; the topic is also discussed in wide terms in Blue Ocean Strategy (Kim and Mauborgne, 2005). In addition to reaching the market with attractive products before the competitors, reduced time-to-market will also ultimately reduce the overall development costs, according to Clark and Fujimoto (1991). Moreover, increased productivity in PD increases capacity; rather than utilising this as an opportunity for short-term gains in terms of immediate cost reductions, time saved by standardisation represents an opportunity to free up time for more deep thinking, knowledge generation, experimentation and innovation, according to lean thinking. It is also noteworthy that strategies to Accelerate Product Development (APD) do not necessarily need to be fully compatible with an LPD approach aimed at reducing lead time. Examples on general works within the field of APD are Crawford (1992), Towner (1994) and Bullinger et al. (2000) who defined APD (they used the term Rapid instead of Accelerated) as “an engineering process with short and iterative development cycles, which offer the possibility of high-quality products, cost-efficiently delivered to the market and meeting today’s tough competitive pressure.”
Lean PD has several common features with Concurrent Engineering approaches (Pennell and Winner, 1989), including a holistic product definition in the early stages of development, as well as performing concurrent subsequent design activities with the overall goal of increasing productivity and product quality, while reducing cost and lead time. However, lean PD goes beyond CE in aiming to create a total understanding of customer value and its underlying characteristics, assuming business performance follows as a consequence of delivering value, pulling customer needs back to PD activities and further up the value chain to production and material suppliers. LPD provides a systematic, basic approach to eliminate wasteful activities in PD. At operational level, waste can be separated from value by assessing whether a given activity provides (or contribute to) value to the customer or strategic value to the company in terms of new knowledge; otherwise, the activity is considered pure waste. In addition, lean PD more than CE is focusing on problem solving along with the systematic creation and capture of knowledge, and less on technology, assuming that the overall goal of new-product development is to commercialise knowledge. Since product innovation is closely linked to the ability to deliver value, i.e., through desirable products that provide new
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performance or meanings, LPD may provide an untapped potential for creating more differentiated products, see Figure 1.
2
Lean in a historic perspective
Development of innovative products combined with improved production techniques made the Japanese industry develop quickly after the World War II. Japanese companies adapted and optimised at that time already known manufacturing techniques and principles, many of them originated in USA and Europe. In this connection, flexible automation (systems for multi-item, small lot production), Kanban system (just-in-time and self-actuation) and Total Quality Control (TQC) were key success factors. These manufacturing techniques were commonly applied for production of high-quality, compact-size products, integrating mechanical technology and electronics (Hitomi, 1985). This technology-product-driven transformation along with possibly many other more cultural factors have been the basis for Japanese companies outperforming many of their Western competitors; one of the most successful ones in this regard has been Toyota Motor Corporation. Although the origin of Lean may be seen as the Japanese response to the crude oil crisis in the 1970s (Schoenberger, 1982), the TPS has been the main originators of what we know as Lean Manufacturing today, also see Haque and Moore (2002). TPS represents a demonstrator of lean processes in action and has become the benchmark for competitive manufacturing throughout the world. Lean manufacturing is an operational process management strategy derived mainly from TPS in the 1980s (Womack et al., 1990; Karlsson and Åhlström, 1996; Womack and Jones, 1996; Baines et al., 2006), focusing on waste reduction in the factory. The term Lean Production was introduced by researchers of MIT’s International Motor Vehicle Program in the late 1980s, describing an approach that used less of everything and did it faster and cheaper than traditional production techniques. Womack et al. (1990) published their famous book The Machine that Changed the World, which covers a set of techniques under a common heading used to explain the success of Japanese auto manufacturer in the 1980s. Many of the techniques were already well known at that time but looking at lean as part of an overall production strategy was new – and somewhat confusing since there was no detailed description of how to apply it in practice. Lean methods (in manufacturing) are often linked with the Six Sigma (quality) methodology (Karlsson and Åhlström, 1996) because of their emphasis on reducing variability. Lean is generally considered as a set of tools that assists in the identification and elimination of waste, the improvement of quality and production time, as well as cost reduction. In the mid-1990s, the Lean notion was extended to the Lean Automotive Factory and later to the Lean Factory, focusing on costs, quality and delivery, with major contributions from researches at the University of Michigan (Sobek et al., 1999; Morgan, 2002; Liker, 2003; Liker and Morgan, 2006; Ward, 2007). In the late 1990s, the lean concept was extended to the Lean Enterprise, and during the past decade it has been introduced to new areas such as PD, engineering, design, software development (agile) and accounting. Over a 20-years period, the focus of lean had drifted from waste elimination to cost, quality and delivery and then further into customer value at the turn of this century. More recently, the Lean notion has also been used within management and leadership, healthcare and hospitals, military and even other public and governmental
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organisations. The TPDS has been the main source to what many, right or wrong, consider synonymous with LPD (Morgan and Liker, 2006). Womack and Jones (1996) published their book Lean Thinking, defining five principles essential to a lean organisation. They described a lean organisation as one that understands •
the value of the customer
•
the value stream
•
the process for generating value, and eliminating waste
•
the pull system
•
the power of continuous improvement, striving for perfection.
However, the application of these somewhat general lean principles in, say, PD is not straightforward. The use of concepts and tools originally adopted from lean manufacturing may even be questionable, if applicable at all. For example, innovation in new-product development is a basic characteristic that involves focus on maximising value, rather than eliminating waste, and this may include adding activities rather than removing activities. Moreover, variability is the declared enemy in lean production whereas variability is a necessity to come up with those very few exceptional opportunities in PD (Terwiesch and Ulrich, 2009).
3
Value and waste in Product Development
3.1 General The single most important principle in lean is the understanding of value. In production, a generally accepted definition of value generation is when a specific operation meets all three of the following requirements (Fiore, 2005): •
the customer is willing to pay for the activity
•
it transforms the physical shape of the object or product
•
it is done correctly first time.
Thus, waste occurs when an operation fails to meet just one of these criteria. Waste is usually divided into two main categories, including Type 1 waste (‘enabler’ or ‘necessary waste’) and Type 2 waste (‘pure waste’). Type 1 activities are not creating direct value but are still considered necessary to enable value generation, e.g., administration, support, coordination, (some types of) testing, validation, (quality) documentation and checks, etc. Pure waste (at operational level in production) is commonly divided into seven (or eight) subcategories, including defects, over-production, transportation, waiting, inventory, motion and processing (and underutilisation of people).
3.2 Definitions of value The understanding of value is the most essential part of an LPD strategy. Separating value from waste is far more complicated in PD than in manufacturing since there is no
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physical object, the process is iterative, and the cycle time is months and years, not seconds and minutes, see Table 1. PD is a problem-solving and knowledge generation process where the ‘product’ is information and knowledge aimed at reducing the risk of taking a new product to market. Its primary goal is thus ‘to produce a recipe for producing a product that conforms to the requirements stemming from customer or market needs’ (Reinertsen, 1999). The input, processing and use of information must be correct to generate new, valuable information that increases the confidence in the ‘recipe’ (Browning, 2003). To maximise value, therefore, it is essential to get the right information in the right place at the right time. According to Mascitelli (2007), all the values in PD are embodied in the essential deliverables needed to launch a new product.2 He defines value as “any activity or task that transforms a new product design (or the essential deliverables needed to produce it) in such a way that the customer is both aware of it and willing to pay for it.”
Every activity that does not confirm to this definition (or similar ones) is thus considered non-added value. An alternative approach for separating waste (Type 1) from value is simply asking the following question: Does a specific activity increase the confidence in the product concept such that the customer is willing to pay more for it after the activity is completed than before? For example, if a specific test is mandatory, or confirms what is already previously known, or does not provide new information that is useable to make the product better, the activity is considered Type 1 waste at best. If the test generates new information that can be utilised to make the product better, exceeding prior assumptions, however, the activity is truly value added. Value starts with the ultimate customer, i.e., the user or consumer, and the perception of value based on his or her needs, wants (spoken and unspoken) and meanings of a product, and is passed on up the chain of successive customers. Customer value represents all the benefits that a customer, explicitly or implicitly, acknowledges with a product relative to its price, i.e., Customer Value =
Benefits Benefits = . Price Cost + Margin
(1)
The above-mentioned relationship is consistent with the more general definition of value used in later Value Engineering (VE) approaches, a methodology that was developed at General Electric Corporation during World War II. Nowadays, VE approaches usually focus on elimination of all unnecessary cost elements, ones that provide no benefits to the user or other stakeholders throughout the product lifetime, rather than providing the necessary functions at the lowest possible cost, which was the original approach of VE. The most straightforward strategy to make a product more attractive – i.e., increasing customer value and hence its attractiveness in the marketplace – is reducing the price of a product (= cost + margin) by either cutting costs or reducing margin. The former can be accomplished by cutting internal costs or enforcing cost reduction to (lower tier) suppliers, who typically respond by slashing their own margins (sometimes without establishing an internal VE or improvement programme). Hence, reduced cost does increase customer value, but cost (part of denominator in equation (1)) is interrelated with the benefits acknowledged by the customer (the nominator). For example, downsizing the R&D staff may reduce the cost in a short-term perspective. However, with the same new-product introduction ambition level and no productivity improvements in PD,
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this means that less development hours are available per project. Again, this may lead to multitasking and inefficiency, corner cutting and mistakes, product quality problems, undershooting of product features (those that the customer would actually pay extra for), multiple design loopbacks, suboptimal design solutions, etc., all factors that contribute to reduce customer value. When further cost creeping is difficult, or when there is imbalance between supply and demand in the marketplace (as frequently seen during the recent financial crisis), the next reactive step is typically reducing margins. Customer benefits associated with a product are related to numerous complex multi-dimensional characteristics (features, attributes, properties) as well as meanings of a product in everyday life (Verganti, 2009), representing the most difficult and precompetitive part of the customer value definition. These may be broken down into two different categories, see Figure 2, including •
Product-related characteristics such as requirements, features, attributes, performance, functions, capacity, dimensions and size, quality, finish, durability, strength, stiffness, power and weight.
•
User-related characteristics such as second-hand value, cost of ownership, scarcity (availability) and more emotional ones, including (self-)esteem, design, style, fashion, as well as the meaning of the product and its use in the context of the user’s life and environment.
Figure 2
Schematic illustration of product-focused and user-focused characteristics that forms the basis for customer value
Some products are selected by customers purely based on (trade-offs between) hard data, this being speed, weight, price, size, etc., ones that are quantitatively more attractive than the characteristics of competitive products within the same category. Other products are chosen simply because the customer feels well (be seen) wearing or using the product.
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More generally, however, products are selected on the basis of a difficult trade-off between sets of hard product data and features and more user-related, emotional characteristics that could be qualitative and sometimes not even that. Understanding customer value means knowing the instant customer preferences and underlying factors, even better than he or she does himself or herself, realising that these do change over time (sometimes during the course of a development project) and may be of implicit or tacit (unspoken) character. For many products, lead time is a major part of the customer benefits proposition. Although development cost is related to lead time, indirectly or directly (Clark and Fujimoto, 1991), the time at which a new product is available in the marketplace has usually a stronger influence on customer benefit than on cost, see equation (1). Passing on customer value along with the accumulation of various needs and wants from intermediate customers up the value stream, and transferring these into activities and tasks (at microprocess level) that provide the maximum impact on the ultimate value proposition, is an extremely challenging business concern in itself. Extending the value and waste notions to strategic business concerns, such as project selection and portfolio management (Cooper and Kleinschmidt, 1995a, 1995b; Cooper, 1998) does not make the challenge simpler: i.e., selecting the right project where the company’s capabilities (technology, skills and market) have the best chance to maximise customer value, within the constraints of value to other stakeholders. Many companies tend to select projects with the higher estimated net present value relative to R&D investment and risk (reliability), often based on a weak understanding of customer values at a time when relevant data are highly uncertain, in favour of projects where the company has the best chance to satisfy customer wants and needs (validity). According to lean thinking, however, the understanding of what brings value to the customer or user of the product, this being hard data, needs, wants, spoken or unspoken ones, represents first priority – financial return and sustainability in this respect will result as a consequence.
3.3 Additional reflections on value A common but somewhat questionable conception is that leanness in PD is achieved by removing Type 2 activities and making Type 1 activities as productive as possible. Browning (2003) suggests that a discussion on added value in relation to Type 1 waste is not very useful since all activities will include both (and Type 2) once the activity is decomposed into a hierarchic structure of smaller and smaller subsets of activities. Moreover, removing waste at microprocess level may fail to address the true sources of waste; PD is a complex system of interrelated activities where the integration between these, and possibly other elements within the enterprise, could be a major source to waste. Browning (2003) also states that in many cases lack of value stems less from doing unnecessary activities and more from doing necessary activities with the wrong information. Therefore, the architecture of the PD process has a large impact of value, regardless of the value of the individual activities and the deliverables themselves. In other words, focus must primarily be placed on improving the way different activities work together to ensure that they use (input) and produce useful information (output) rather than aiming to remove apparently ‘unnecessary’ activities at microprocess level. As discussed earlier, value is added in PD if the generated information contributes to the generation of the ‘recipe’ for producing a specific product. However, many activities
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do not generate information that can be used to create instant benefits for the customer. If an activity creates learning and new knowledge without contributing to reduce the risk of producing a product, is then this activity considered waste? Not necessarily; if the information is made re-useable this represents a strategic value to the company, although it is not value within the stringent definition of value. However, a process must be in place to capture, generalise and reuse information and knowledge for the development of new products in other projects. Design cycles in the PD process are another example of activities that may provide value or waste, depending on how to look at it. Iterations in the design process are indeed essential for the creation of value since they provide a basis for variability. However, the specific iteration that can be eliminated without loss of useful information (value) is waste since only information that contributes to reduce risk (Reinertsen, 1999) provides value. Paradoxically, calculated risk-taking may be a mechanism for innovation and hence added value in PD – unlike in manufacturing where risk-taking is prohibited. Guidelines for the application of lean principles in the development of novel products, in which the process and desired output are lacking or unknown in advance, are less known, though. The understanding of value also includes having a clear perception of value flow and the role of the intermediate customers in the value chain. Making trade-offs between requirements stemming from internal and external customers are quite complicated. For example, should manufacturing be considered (and treated as) a customer of product development? Manufacturing is the direct (internal) customer of PD in the chain of successive customers starting with the consumer (or end-user) as the first point where needs and wants are defined. Each immediate customer in the value chain must then pass on the demands defined by the downstream consumer, along with the additional requirements of the specific operation. It is up to the executor in each step of the value chain to balance and make trade-offs between the requirements, or values, of the end-user and those of the direct and immediate customers. Lean thinking in this respect can be illustrated by quoting a commonly referred statement from Toyota: “the end-user always has the highest priority, the dealer has second priority and the manufacturer third priority”.
4
Comparison of core components of lean PD models in prior art
4.1 The Toyota Product Development System (Morgan and Liker, 2006) According to Kosaku Yamada (2001), Former Chief Engineer of the Lexus ES300, “the real difference between Toyota and other vehicle manufacturers is not the TPS, it is the TPDS”. Assuming this statement is correct, and that TPDS is one of few successful examples of Lean principles put into practice in PD (despite the fact that the word lean does not exist within Toyota), it is appropriate to give a brief summary of Morgan and Liker (2006), which is already a classical book, representing the summary of multiple studies of the Toyota system made by the authors, and others (Sobek et al., 1999; Morgan, 2002; Kennedy, 2003; Ward, 2007), over a 15-years period. The authors outline how the management principles of TPS is applied to PD, using a socio-technical model that includes people, process and technology and 13 management principles, see the summary in Table 2.
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Table 2
The Toyota PD System (model) as proposed in Morgan and Liker (2006), including 13 ‘principles’ within the areas of process, technology and people
Area
‘Principle’
Description
Process
1
Establish customer defined value to separate added value from waste
Waste is non-value added as defined from customer value. The traditional definition of waste in manufacturing cannot be used in PD; focus must be placed on information and knowledge
2
Frontload the PD process to thoroughly explore solutions while there is maximum design space
Defining the wrong problem or selecting a premature solution will have large cost implications throughout the product life cycle. Problems must be solved at the root cause, and all solutions must be carefully evaluated using set-based design methods
3
Create a levelled Product Development process flow
Stabilise the PD process so that workflow can be predicted and planned. Resource capacity should be planned at a level that maximises efficiency. Manage workload in a project and between projects, using process and resource planning and flexible labour pools
4
Utilise standardisation to reduce variation, and create flexibility and predictable outcomes
Continuous improvement requires standardisation, which represents the foundation for all process principles in Toyota’s model. Follow the implementation sequence of stabilising, standardising and continuously improving
5
Develop a Chief Engineer (CE) system to integrate development from start to finish
The CE ‘owns’ the product with final authority and responsibility for the entire PD process. He is the customer representative, managing integration and decisions
6
Organise to balance functional expertise and cross functional integration
Functional expertise combined with project goals and CE system provide the balance of the matrix org. Functional Managers (FM) owns functional knowledge, and are in charge of resource planning /allocation to serve the CEs
7
Develop high High competence and superior specialised knowledge technical competence represents the basis; and these have to be established at in all engineers the places where actions take place
8
Fully integrate Suppliers must be integrated into the PD process and suppliers into the PD their competence, capabilities and culture must be system compatible. Define long-term supplier relationships
9
Build in learning and Organisational learning represents the basis for cont. continuous improvements, and build on all the other principles. improvement
10
Build a culture to support excellence and relentless improvement
11
Adapt technology to Technology must be customised to fit people and fit people and process, and is always subordinated to the people and process the process
People
Tools and technology
Excellence and Kaizen in the final analysis reflect the organisational culture
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The Toyota PD System (model) as proposed in Morgan and Liker (2006), including 13 ‘principles’ within the areas of process, technology and people (continued)
Area
‘Principle’
Description
Tools and technology
12
Align organisation through simple, visual communication
Aligned goals must be flown down in the organisation, and problem solving is enabled by visual communication
13
Use powerful tools for standardisation and organisational learning
Powerful tools can be simple. Their power comes from enabling standardisation, which is necessary for organisational learning
Toyota views PD as a process but in a broader context than manufacturing. Each project starts with visionary objectives, directing the strategic focus. A chief engineer is given the responsibility of developing a product that provides maximum customer value and ultimately meets profitability targets. Toyota aims at standardising, refining and improving the PD process, reducing waste and cost from programme to programme. Encouraging and motivating people to work hard as a team to meet common goals are considered important. Developing people with high skills, awareness to variability, and a culture to reflect on ways to improve are key elements of the Toyota philosophy. In The Toyota Way, Liker (2003) describes a knowledge-driven approach used to solve and learn from problems, using the systematic LAMDA approach (a PDCA, plan-do-check-act problem solving approach for knowledge workers originally proposed by the late A. Ward). Toyota views technology as a set of tools that enable people execute and improve the process. Tools and technology are adapted to process and people to make them work more effectively. In many cases, however, technology may hide or prevent the identification of problems and root causes. Thus, Toyota does not ‘subordinate good thinking and knowledge to technology’.
4.2 A brief overview of lean PD models using TPDS as reference It is desirable to review different Lean PD models in the literature to identify similarities and differences with the key characteristics (‘principles’) in TPDS. This approach is aimed at establishing a general overview, not some least-common-multiple type model, assuming that achieving leanness in PD requires much more than just copying a set of principles or key characteristics since every business environment is different. In Table 3, lean PD characteristics reported in a number of significant publications are compared with those identified in Morgan and Liker (2006). Although the considered publications cover a 15-year period, and having different focus, common characteristics are recognised between many of them. Customer defined value, for example, is not surprisingly recognised as a key characteristic of lean among all but one of the authors: Cooper (1998) who takes a more conventional business approach primarily driven by maximising profits. Moreover, the chief engineer position and organisation for
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cross-functional integration as well as developing a culture for engineering excellence and continuous improvement are key characteristics that are recognised among many of the published works. Morgan and Liker (2006) describe the process of understanding lean as peeling away the layers from an onion, each layer revealing new and critical insights. In this connection, a brief discussion on underlying factors that give additional perspectives to the key characteristics is given in the following, considering common characteristics in the literature in addition to those 13 principles in Morgan and Liker (2006), see “others characteristics in the areas of process, people and tools and technology” in Table 3. In the following, a description of ‘other characteristics’ in Table 3 will be given (ones that are not among the 13 principles identified in Morgan and Liker (2006)).
Process
■
■
■
■
■
■
■
■
■
■
■ ■
Other characteristics in the area of process
People
(Schipper and Swets, 2010)
Standardisation for predictable outcomes
(Yoshimura, 2009)
4
(Kennedy et al., 2008b)
Levelled PD process flow – work leveling
(Huthwaite, 2007)
3
(Morgan and Liker, 2006)
Front loading the PD process (set-based)
(Baines et al., 2006)
2
(Fiore, 2005)
◘
(Kennedy, 2003)
Customer defined value
(Browning, 2003)
1
(Haque and Moore, 2002)
Key principle
(Cooper, 1998)
Main field
Key characteristics in different lean PD models found in the literature (Karlsson and Åhlstrom, 1996)
Table 3
■
5
Develop a chief engineer system
■
6
Organise for functional expertise and cross functional integration
■
7
Develop high competence in engineers
8
Integrate suppliers into ■ the PD system
9
Build in learning and continuous improvement
◘
■
■ ■
■
■
■
■
■
◘
■
◘ ■
■
◘
■
■
■
◘
■
■
■
■
■
◘
■ ■
■
■
◘
■
■
■
■
■
■
◘
◘
◘
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Other characteristics in the area of people
Tools and technology
11
Adapt technology to fit people and process
12
Align organisation through simple, visual communication
13
Use powerful tools for standardisation and organisational learning
Other characteristics in the area of tools and tech
■
■
◘
(Schipper and Swets, 2010)
■
(Yoshimura, 2009)
■
(Kennedy et al., 2008b)
■
(Huthwaite, 2007)
◘
(Morgan and Liker 2006)
■
Culture to support excellence and improvement
(Baines et al., 2006)
10
(Fiore, 2005)
(Haque and Moore, 2002)
People
(Kennedy, 2003)
Key principle
(Browning, 2003)
Main field
(Cooper, 1998)
Key characteristics in different lean PD models found in the literature (continued) (Karlsson and Åhlstrom, 1996)
Table 3
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◘
■
■
■
■
■ ■
■
■
■
◘
◘
■
■
◘
■
◘
■
■
◘
◘
■ Full match/included; ◘ Partly match/included; blank No match.
4.3 Additional core components and aspects 4.3.1 Assigning value to knowledge One common, indisputable observation is that the primary goal of PD is to produce information. In other words, knowledge is the enabler for producing the ‘(sub)product’ in PD: useable information. In Ward (2007), it is stated that “almost all defective products (…) results from not having the right knowledge in the right place at the right time. Therefore, useable knowledge is the basic value created during development. Useable knowledge prevents defects, excites customers and creates profitable value streams.”
The late A. Ward suggested further that the process of creating useful knowledge is a value-adding effort – equivalent to value creation associated with the production of the actual product. Thus, a lean enterprise is one that spends a larger fraction of its development effort generating, capturing, generalising, standardising and reusing knowledge. The value in PD, and hence competitiveness of a company, are closely linked to the capability of generating and capturing knowledge faster and better than its competitors. In this connection, Martin (2009) recently suggested that the capability of moving knowledge down the funnel from ‘mystery’ to ‘heuristics’ to ‘algorithm’ will be the important characteristic of successful companies in the years to come.
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Kennedy (2008) prefers to use designations as ‘Knowledge-Based Product Development’ and ‘Learning-First Product Development’ instead of LP D. He suggests that PD must be viewed as a ‘world of knowledge’, rather than a ‘world of tasks’. In every company, there is one conventional value stream for products and one additional value stream for knowledge. The latter represents the flow of useful knowledge across different projects, products and functional areas – which is a characteristic that most enterprises fail to leverage. The outcome of focusing on the knowledge value stream is twofold: •
minimising waste of knowledge, which is not one of the seven (eight) wastes in lean manufacturing but still the most important waste in PD
•
fundamental management of risk, which is the primary goal of every PD effort, according to Reinertsen (1999).
4.3.2 Keeping a system perspective Browning (2003) states that lean is commonly applied to PD with insufficient understanding and lack of system perspective. If improvement efforts in PD are too biased towards removing waste at microprocess level, this fails to address the wastes caused by the system or the integration of the individual activities. Lack of value is typically associated with doing (and redoing) activities with the wrong input information. No matter how effective and value-adding an individual activity is in itself, high-value deliverables require right input, meaning that value in PD is embodied in both the essential deliverables (input and output) and the activities. Therefore, the architecture of the PD process (the PD system) has a great impact of value. As discussed earlier, unlike manufacturing, maximising value in PD commonly involves doing more, and not less. Seen from a system perspective, the PD process should produce more value than the total value of the individual activities. A system perspective on how the PD activities work together is, therefore, necessary to effectively introduce Lean principles in PD (Browning et al., 2002). If all the activities in the PD process are adding value, this does not necessarily mean that the overall result is value-adding, if the PD system is less-than-optimal.
4.3.3 The importance of culture relative to systems and rules Yoshimura (2009), a senior executive with 32 years of experience from Toyota and four years from GM, claims that most publications fail to identify the important aspects of lean PD since they represent an outside perspective of TPDS. He argues that the main reason to Toyota’s success over time is its strong culture for people at different organisational levels to use facts to proactively create value: ‘all-the-people-all-the-time’. The first step in adding value, according to Yoshimura, is to use ‘creative knowledge’ to identify problems and change them into value of products by ‘good dissections and discussions’. The identification of problems is done by the action of people, not a system or tool or organisational structure, meaning that a culture of awareness among all people is the single most important factor for adding value.
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Using a model consisting of three fundamental qualities, including •
people’s awareness
•
system/tool
•
rule/responsibility
Yoshimura illustrated the fundamental differences between Toyota and General Motors (GM). GM has excellent systems and superior tools, combined with a rigid organisational structure and clear responsibilities; GM are in many respects more ‘lean’ than Toyota. The main difference between the two companies, however, is the strong awareness culture that exists among people at Toyota. Awareness more than system, tools and rules or responsibility is important in maximising value by using creativity for identifying problems. Yoshimura states that system, tools and rules or responsibility are keys to LPD, i.e., for doing correct job, eliminating waste (‘Good Design’). However, paying attention to those elements only will not lead to excellence in PD unless they are combined with ‘Good Discussions’ and ‘Good Dissections’ as a part of a awareness culture, i.e., the so-called GD3 model.
4.3.4 Strategy, tactics and management practices In LPD, the business strategy is the basis element for stabilisation of the PD system (infrastructure, process and organisation). In other words, the strategic deployment represents the direction and long-term commitment to build excellence in PD. When thinking of the PD process as a hierarchy of activities, from microprocesses (activities) to strategy, nothing is more wasteful than selecting the wrong PD project. It is, therefore, important to consider value and waste at business level as well. If targeting the wrong market or product, where the company does not have the fundamentals (size, presence, organisation, technology, competence, resources, etc.) for becoming successful, all underlying activities are non-value added. This type of organisational and strategy type wastes is surprisingly not given much attention in the lean literature, despite its undisputable importance to value. An exception is Cooper (1998), who provides an excessive study of the importance of different characteristics – some that would fall within the category of lean, others not (see Table 3) – on business performance. Haque and Moore (2002) presented an overview of characteristics of lean product introduction based on a study as a part of the Lean Aerospace Initiative (LAI) in UK. The PD introduction system is discussed in terms of the five Lean principles proposed in Womack and Jones (1996). Their investigation identified the need for a hierarchy of key characteristics from strategy to operations, see Figure 3. They identified 10 operational wastes within the new-PD process combined with several additional wastes at strategy and organisation level. Examples on ‘strategy-related wastes’ include: too many new products and projects in the pipeline, leading to multitasking and ‘over-production’. Inappropriate processing, e.g., selecting wrong projects and failing to identify and manage risk, along with lack of common prioritisation across enterprise are other examples on wastes within this category. Organisational-related wastes include wrong organisational structure, lack of resources, inappropriate training and competence, poor utilisation of people as well as less-than-optimal supply chain processes.
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Figure 3
Hierarchy for analysis of wastes in New Product Introduction (NPI) (see online version for colours)
Source: Reproduced from Haque and Moore (2002)
5
A proposed model for lean practices in Product Development
5.1 General In the following, a brief description of different core characteristics of a model for lean practices model in PD will be described. The model shown in Figure 4 has strong basis in various interpretations of the TPDS – and like-minded ones (also see Table 3) – combining this with new thinking, views and practices captured from various sources. The model consists of six core components with different sub-characteristics, which will be presented in brief in the continuation. The first component, defining customer value, is already discussed in broad terms mentioned earlier, and is, therefore, left out from the review later. Moreover, since the present work is a part of a project aimed at establishing lean PD practices in Norwegian manufacturing companies with strategic focus on high-value-added products, the characteristics are to some extent adapted to the specific climate, culture, organisation and management (style) believed typical in these and similar western companies. Figure 4
A proposed model for Lean Product Development aimed at companies with a strategic focus on high-value-added products (see online version for colours)
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5.2 Core components 5.2.1 Culture In a hierarchy of core, values and practices, Lean belongs to the first category representing a main element of a company’s culture. LPD is part of a total business system, including all organisational levels and functional areas. A lean culture builds on trust, respect and responsibility where everyone’s opinion is equally respected, valued and considered. Responsibility is delegated to the lowest possible level, the one closest to the problem, and decisions are output from a process of involvement. Fact-based decision making, combined with a desire for learning and use of knowledge to solve problems at the root cause, are key elements of a lean PD culture. Experimentation and outside-the-box thinking are important seeds to innovation and new products. However, innovation is more than new-to-the-world type products; it also includes identifying and finding new solutions to small and large problems on a daily basis. In this connection, system, organisation and tools have less impact on the outcome when compared with the awareness of people, focusing on problem-identification and deviation from standard. Finally, simplicity is a major part of a lean culture, and visual communication is an important means to create understanding, involvement and commitment of people.
5.2.2 Management, infrastructure and organisation The PD system must secure a fundament for continuous improvement and standardisation, thence allowing for experimentation (innovation) under predictable conditions and environment. This involves defining a technology and product strategy (with basis in business model and strategy), product leadership and portfolio management, and a design reuse strategy. Moreover, the organisational infrastructure must represent a balance between project and functions with clear responsibilities and roles. Management at all levels should focus on deliverables – rather than process, activities and tasks – since most of the value is embodied in the deliverables. Resource and workload planning are key elements in securing predictable conditions in the PD environment. This has to take place at business level, as an overall commitment to PD, in addition to at tactical and operational levels on a day-to-day basis. The authority and role of manufacturing as a direct customer of PD, as well as integration of manufacturing early in the PD process, are keys to proactively prevent design loopbacks, resource squeezes and overruns. Defining core and strategic products, along with the company’s and supplier’s strategic roles in delivering value, are key elements in establishing a design strategy as a solid fundament for lean PD practices.
5.2.3 Standardisation Standardisation is not primarily a means to enforce discipline but to provide a fundament for allowing more experimentation and innovation. It is firmly believed that customer values can only be consistently and repeatedly delivered from multidisciplinary work with the basis in the same knowledge standard. Moreover, a stable, standardised PD process is fundamental for variability testing in design and engineering, and hence creativity and entrepreneurship. Standardisation is multidimensional and has to be driven by pull with the basis in (customer) value, and not rigid corporate processes and systems. The main goals of standardisation include reduced time, risk, errors as well as minimised
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output variability from PD. Focus is to be placed on standardising output deliverables, not on enforcing a rigid structure of activities between phase gates and integration points.
5.2.4 Knowledge The traditional business philosophy includes the one and only focus on the product value stream. In a lean PD philosophy, however, it is assumed that there exists a separate value stream for (organisational) knowledge; any PD activity must deliver value to both these value streams. This implies that knowledge is an important asset and competitive factor of any company. Moreover, knowledge truly belongs to the company, and not to a department, functional area, group or individual. When lacking a company-wide system for generating, capturing and standardising knowledge for reuse, losing people (downsizing) means a dilution of company market value, and not the opposite as commonly seen in the stock market. The ability of integrating the two value streams is a prerequisite for long-term competitiveness since collective knowledge generation and learning are the only permanent advantages as markets, technologies and competitors change. Organisational learning requires long-term commitment, strong motivation and the right attitude since it takes attention and time away from other, more short-term PD activities.
5.2.5 Continuous improvement Pursuit for perfection includes an underlying belief in the potential for doing better in terms of performance, quality and cost by working to continuously improve processes and operation, despite the lack of ability to influence changes in market, competitors and technology. Continuous improvement is a cultural concern that requires commitment along with a deep understanding of value added and waste in PD, otherwise waste removed could create waste elsewhere in the system. Waste removal may start at micro-process level but must be considered from a system perspective since the quality of information is more essential to value in PD that the activity itself. Continuous improvement work is systematic exercise and practice over time, and not quick fixes. Use of productivity measures (performance indicators) across the company is important in continuous improvement work in PD. Likewise, the understanding of relationships between lead time, product performance, development cost and product cost, and business performance (profits) is required to prioritise improvement work.
5.3 Assessment tool A questionnaire for assessment of lean practices in PD, with basis in the model presented earlier, has been developed. The main structure includes core and underlying characteristics and is illustrated in Table 4. Each individual core characteristic (from the model) is divided into from two to five underlying characteristics (totally 22). Each underlying characteristic (heading) is divided further into three sub-characteristics assigned with situational descriptions on a scale from 1–5, to which the assessment is done. The rating includes both an estimate of the current (C) and the desired (D) state based on the specific business conditions and environment of each company. The situational description serves as a guide to help make an objective choice of current and desired state based on the three subcharacteristics. In this connection, it is worth
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noting that the main purpose is to identify gaps between C and D, and not the ‘score’ (C). On the basis of the assessment, an overall gap for each of the sub-characteristics is estimated. Table 4
Summary of questionnaire used to identify areas for introducing lean in PD
Core character
Underlying character
Main question to be answered (sub character)
Customer value
Role and values
What role has the customer in the company’s strategy and practices?
Interface between customer and E&D
How do customer desires and requirements reach design engineers?
…
Trust, respect, and responsibility
To what extent are trust, respect, and responsibility core values in org.?
…
Fact-based decision making
Rate culture to make fact-based decisions in the organisation at all levels?
…
Creativity and entrepreneurship
Is creativity encouraged, valued and part of in product and technology strategy?
…
Digital tools in product D&E
Assess the role tools in achieving business and PD improvement goals?
…
Simple and visual communication
To what extent is use of visual communication anchored in the culture?
…
Management
Resource planning and management
Do functional departments and projects get the resources they need when needed?
…
Infrastructure
Product and portfolio management
Is there a systematic approach to prioritise projects with resource allocation?
…
Organisation
Communication between org. levels
Rate the communication practice and info. flow between organisational levels?
etc.
Manufacturing’s role in PD
What role (authority and responsibility) does manufacturing take in projects?
…
Supplier’s role in What is the role of key suppliers and how are PD/company they utilised in the organisation?
…
Standardisation of the PD process
Assess the Product Development process from its focus on quality of deliverables?
…
Standardisation for flexibility
Does your company standardise skill sets for flexibility in resource management/staffing?
…
Design strategy
Is there a design strategy (reuse), and is it integrated as a part of the design practice?
…
Culture
Standardisation
Rating
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Table 4
Summary of questionnaire used to identify areas for introducing lean in PD (continued)
Core character
Knowledge
Underlying character
Main question to be answered (sub character)
Rating
Standardisation of problem solving
Assess company’s process for solving problem at the root cause and org. learning.
…
Knowledge value stream
Rate role of knowledge in terms of capturing new markets and growing the business.
…
Knowledge owner-ship and management
Is knowledge ownership defined, and is capturing process systematic managed?
…
Cross-functional knowledge Flow
Assess practices for transferring knowledge between functional departments
…
Set-based Concurrent Engagement
To what extent is front loading and SBCE used in design and knowledge generation?
…
Continuous improvement in PD
Is CI and systematic waste elimination in PD deeply rooted in company philosophy
…
PD productivity measurements
Asses the way company actively uses metrics and productivity measures in PD
The model development and assessment process are illustrated in Figure 5. The main objective is twofold: •
to identify and select areas for implementation of lean practices in PD at the companies
•
to generate knowledge as a basis for academic learning and further studies.
Figure 5
Model development and assessment process for learning/research and improvement of PD practices in Norwegian manufacturing companies (see online version for colours)
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The assessment is conduced as a two-day workshop and includes people from all functional areas who are stakeholders in PD, typically 8–10 people. After introducing and discussing the core characteristics and true meanings of lean PD, the questionnaire is completed on an individual basis. The results are collected and processed into a format suitable for further discussion and evaluation. In case there are large variations between individual answers, these form the basis for discussion before reviewing the overall results. Prioritisation of focal areas is done collectively based on evaluations of gaps, importance to business performance and efforts required to close those gaps. Typically, 2–3 high-potential areas are identified, representing a kick-start of a journey towards more lean practices in PD.
5.4 Applications Company A is developing and manufacturing (extremely) high-technological niche products for the world market with main production located in Norway. The company is a leader within defined product areas and exports currently 70% of the products. The R&D content is high, representing 12% of the turnover, and lead time for some of the products may be five years or more. A major part of the activity is related to development and implementation of new products in the existing manufacturing system and infrastructure. On the basis of the assessment process explained earlier, Company A selected to establish a design strategy that maximises the (internal) reuse potential without limiting the product variations offered to customers. This includes structuring and visualisation of existing product programmes, using A3s, etc., with the basis in common characteristics within the products and production system. The product programme visualisations will form a framework for a future design strategy with a strong basis in requirements of new products in relation to existing capabilities and capacities of the company. Because of its high focus on R&D, it is strategically important to the company to integrate Research (R) with Development (D). The second deep dive project that was prioritised by the company includes development of methods and practices for improved knowledge flow between research (technology) projects and development projects, using the LAMDA process as a means to analyse the problem and establish a future state that better integrate these two project types. Company B designs, develops, produces, markets, sells, maintains and services performance products for consumers in the upper segment of the leisure market. One of the main elements in the business strategy is making attractive designs, while maintaining a long-term supplier base network for selected components. The company has a modern, streamlined manual assembly line (separate lean manufacturing programme) with a production capacity that corresponds to a market share of only 0.5% in the defined niche segment. A review of the practices in relation to lean PD revealed a need for more advanced, systematic methods to better understand customer desires (spoken and unspoken), using these to influence the design of future products and services, i.e., combine a user-driven approach with a design-driven approach (Verganti, 2009). Hence, a research project was established to determine the potential of using lean principles in early phase PD: Method for identification of customer needs – A case study of high-quality leisure products produced at low volumes. In this connection, approaches such as design anthropology and outcome-driven innovation methods were used.
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Company C has production facilities located in Norway, Sweden and Denmark and a development hub in Norway. Product designs are primarily driven by product characteristics such as ergonomics, design, quality and sustainability (environmental concern). The company has a well-positioned product portfolio with a solid fundament, promoting three brands with a clear differentiation strategy. Average lead time in PD is 3.5 years. Company C is among the top 10% most profitable companies in its business segment, despite its localisations in high-cost countries. Productivity and precision in PD are focal areas, rather than lead time. An assessment workshop with company C resulted in two prioritisations: •
Design of a lay-out standard for Knowledge-briefs (A3s) combined with implementation of visual project boards (Oobeya)
•
Development of a methodology for capturing customers desires with the purpose of designing products that maximise value to customers. The methodology shall focus on high-value products with both functional and emotional requirements produced at relatively high volumes (>20000 p.a.).
6
Conclusions
On the basis of the present investigation, the following conclusions can be drawn: •
Lean techniques, originally developed for manufacturing processes, cannot be used in PD without major modifications owing to the basic difference in ‘product’ and ‘process’ concepts between manufacturing and PD.
•
Several authors and researchers have made important contributions to prior art by transforming lean principles into a number of characteristics applicable to PD; however, since lean is more a basic philosophy than a technique or method – especially when applied to PD – there exists currently no common model or recipe for application in PD.
•
The most important aspects for the understanding of lean in association with application in the PD environment are •
the understanding of value
•
a holistic perspective on PD as a system to produce value by means of information being the work product.
•
The lean PD model along with the assessment tool presented herein represent the result of combining TPDS with new thinking, views and practices to make it more applicable to the climate, culture and management (style) in Norwegian (and many other Western) companies that develop high-end products.
•
Considering the application of lean principles in PD, the greater potential lies in extending lean principles into methodologies for more radical product innovations, focusing on knowledge as the common denominator.
Further work includes continuing the work with implementing lean PD practices in selected companies, and documenting the effects on business performance. The latter
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may also include companies not currently undergoing lean PD initiatives; the core components in the model and the assessment tool presented earlier may be used as basis for more general research with the goal of documenting effects between PD practices, these being called lean or not, and new-product business performance. Since lean PD suffers from documenting its capability outside Toyota, the results from such a research would be valuable input for development of more suitable models and practices. There is also a need to establish more fundamental understanding of the underlying characteristics associated with the core components of an effective PD model – whose outcome should undoubtedly be lean. Here, research is required for establishing a better understanding of customer values, especially when it comes to softer, less quantifiable characteristics such as product meanings, as well as interpretation and its application in the ‘fuzzy’ front end of PD to create more valid, desirable new-product concepts.
References Baines, T., Lightfoot, H., Williams, G.M. and Greenough, R. (2006) ‘State-of-the-art in lean design engineering: A literature review on white collar lean’, J. Engineering Manufacture, Proc. IMechE, Vol. 220, Part B, pp.1539–1547. Browning, T.R. (2000) ‘Value-based product development: refocusing lean’, Proceedings of the IEEE Engineering Management Society, IEMC Conference, 13–15 August, Albuquerque, pp.168–172. Browning, T.R. (2003) ‘On customer value and improvements in product development processes’, Systems Engineering, Vol. 6, No. 1, pp.49–61. Browning, T.R., Deyst, J.J. and Eppinger, S.D. (2002) ‘Adding value in product development by creating information and reducing risk’, IEEE Transactions on Engineering Management, Vol. 49, No. 4, pp.443–458. Bullinger, J., Warschat, J. and Fisher, D. (2000) ‘Rapid product development – an overview’, Computers in Industry, Vol. 42, pp.99–108. Clark, K.B. and Fujimoto, T. (1991) Product Development Performance, Harvard Business School Press, Cambridge, MA, USA. Cooper, R.G. (1998) ‘Benchmarking new product performance: results of the best practices study’, European Management Journal, Vol. 16, No. 1, pp.1–17. Cooper, R.G. and Kleinschmidt, E.J. (1995a) ‘Performance typologies of new product projects’, Industrial Marketing Management, Vol. 24, pp.439–456. Cooper, R.G. and Kleinschmidt, E.J. (1995b) ‘Benchmarking the firm’s critical success factors in new product development’, J. Prod. Innov. Management, Vol. 12, pp.374–391. Crawford, C.M. (1992) ‘The hidden costs of accelerated product development’, J. Prod. Innov. Management, Vol. 9, pp.188–199. Fiore, C. (2005) Accelerated Product Development – Combining Lean and Six Sigma for Peak Performance, The Productivity Press, NY, USA. Gautam, N. and Singh, N. (2008) ‘Lean product development: maximizing the customer perceived value through design change (redesign)’, Int. J. Production Economics, Vol. 114, pp.313–332. Haque, B. and Moore, M.J. (2002) ‘Characteristics of lean product introduction’, Int. J. Automotive Technology and Management, Vol. 2, Nos. 3–4, pp.378–401. Hitomi, K. (1985) ‘The Japanese way of manufacturing and production management’, Technovation, Vol. 3, pp.49–55. Huthwaite, B. (2007) The Rules of Innovation – Products, Services and Systems, Institute of Lean Innovation, MI, USA.
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Notes 1
For example, cutting 40% of the design and engineering organisation will reduce the product cost by less than 2%, but at significant risks owing to the large impact of the outcome of the design process on the product cost. 2 It can be argued, however, that the total value of the product as an overall deliverable must be higher than the sum of value of all individual deliverables since the system (how the deliverables work together) has a value in itself.
