man companies was already reached by Dyas and Thanheiser in their ...... Herrigel, G. (1997): The Limits of German Manufacturing Flexibility, in: L. Turner (Ed.):.
11
Toward New Product and Process Development Networks: The Case of the German Car Industry
Ulrich Jürgens
11.1
Germany as a Latecomer
Most German auto manufacturers were late in reorganizing their new product creation (NPC) systems. It is true that they began with wide-ranging programmatic considerations about reorganizing, and actually implanted individual measures at around the same time as their American counterparts at the end of the 1980s. However, German manufacturers held back with their changes until the mid-1990s, apart from BMW, which had already taken into service a center for integrated technical development and rearranged its NPC system back in 1990. These adjustments were then carried out during a recession that hit the automobile industry with great force in 1992 after a long high-flying phase, becoming the trigger for a multiplicity of programs of change and restructuring. NPC sequence restructuring was thus only one part of the overall business of re-engineering activities. A multitude of changes took place simultaneously, a simultaneity which was particularly marked in Germany. These included –
– a product offensive with a range of all-new products and versions, – changes in supplier relations, with greater order volumes and responsibilities transferred to suppliers, – changes to company structures with business responsibility decentralized. In the 1990s, European auto manufacturers, and the Germans and Italians in particular, had started a product offensive with a particularly high proportion of “allnew” car projects. According to a survey carried out in the fall of 1996 by the industry journal “Automotive Industries”, out of 82 of the “all-new” car projects announced by the major car makers world-wide for market entry in the period 1997 - 2001, almost half came from Europe, with more than a fifth coming from Germany (Figure 11.1). Against this background, it becomes clear, that changes to the NPC systems were not just a matter of catching up again with the leading competitors in terms of increasing effectiveness and time-to-market performance; it was also a question of coping with the massively-increased workload. Under these conditions, it was a matter of measures for both rationalizing the NPC process, as well as increasing their capacity.
2
Index
Table 11.1: Global Future Products 1997 – 2001* No. of car All-new Redesign Freshen/ Add. Total no. of Drop lines facelift variant projects Audi
8
4
3
–
6
BMW
8
3
2
–
Mercedes-Benz
9
5
4
–
Opel/Vauxhall
10
3
6
–
2
1
1
Porsche Volkswagen
13
–
3
8
1
4
13
–
3
12
–
8
5
5
2
1
10
–
45
18
21
2
17
58
1
122
39
54
30
25
148
3
70
15
38
34
5
92
5
Japan
120
12
96
79
5
192
6
Korea
28
16
12
11
5
44
2
Total
340
82
200
154
37
473
16
Germany Europe North America
* Note: The figures are based on surveys in the fall of 1996; other new models were announced at the same time, but for the period 1997-2001 and are thus not included. Source: Own calculations based on a chart developed by the editors of Automotive Industries in cooperation with AI Insider and Delco Electronics Corporation, AI December, Vol. 177, No. 12, 1996 supplement.
Capacity-increasing measures included, in particular, shifting tasks and responsibilities to suppliers of product components and production equipment, and to engineering service firms. These measures complement others affecting product policy and NPC organization which aimed at cutting costs, shortening the timeto-market and, of course, successfully competing in the market place. A survey carried out in 1994 indicated that German car makers had already implemented all the “best-practice” methods, i.e. shortly after that point in time when the research project being reported upon here started. Thus, according to Gentner (1994), the German car industry had introduced simultaneous engineering, interfunctional team meetings, personnel transfer, and many other measures more or less on par with Japan and the USA (Gentner, 1994, p. 44). But quite clearly, such surveys about the spread of new concepts say nothing about their real meaning in everyday work in the new product creation process. Here, in the mid-90s, a number of research reports came to the conclusion that the product creation process of German companies exhibit major weaknesses, especially in terms communication and cooperation beyond functional interfaces and as regards the work of cross-functional teams (Lincke, 1995; Grabowski and Geiger 1997). This chapter is concerned with current practice in cooperation in process chains at work level and differences in designing the NPC system.
Index
3
It is primarily based on results from the WZB-coordinated project from the case studies of NPC projects at German automobile manufacturers and supplier companies. Aims, methodology and survey sample have already been introduced in Chapter 6 of this book.1 Both companies which will be looked into in the next section, Deucar and Gecar, are automobile manufacturers with their headquarters and development centers in Germany, both are major companies with annual turnovers of tens of billions of US Dollars and tens of thousands of employees. The companies concerned cannot be described in any further detail because of the risk to their anonymity. The empirical surveys in both companies were carried out between 1994 and 1996, with the lion’s share in 1995. In line with the research concept, the surveys concentrated on the process chain from the concept phase to the start of mass production of new models of passenger cars, with special focus on the two “slices” of side doors and instrument panels. In total, interviews were held with 39 managers and rank-and-file employees in Deucar, and with 24 in Gecar, there were also a further 35 sets of interviews with a total of seven components’ companies (cf. also Figure 6.1, p. 113). The research was related to the existing structures and procedures at the time of the survey. Since the current development projects were in different phases, various development projects had to be examined in order to cover all phases of the process chain. However, the focus was on a development project for a vehicle from the same product segment in both companies. The surveys were related to changes and problem situations in the four fields of action: formal organization, supplier relations, CAx systems, and personnel development/human resources. However, the following report does not aim to systematically compare the companies in all these four fields. Rather, the main point of emphasis is intended to lie on the question of balancing the relationship of functional organization and project organization – and the consequences for communication and cooperation beyond function and company boundaries arising from this. Our findings suggest, that this is where the key lies to understanding the specific German approach and specific German problems in the product innovation process. The quantitative results of our survey were already presented in Chapter 6, consequently, the emphasis in the following will be placed on the qualitative findings. In the following section, the initial focus will be on the strategic importance attributed to the time-to-market-targeting in the company (11.2). After that, the organization of structures and processes for new product creation in both companies will be examined (11.3). That will be followed by two sections concentrating on approaches and problem definitions regarding the aim of early involvement of manufacturing (11.4) and suppliers (11.5). In connection with this, a separate section will be devoted especially to the increasing importance of engineering service (ES) firms (11.6). That will be followed by two sections summarizing the 1
The project “Comparative Product Development and Production Networks – A Comparison of Countries and Sectors” was carried through between 1993 and 1996 at the Social Science Center, Berlin, together with partner teams in Japan, the USA and Italy.
4
Index
project observations on the fields of action of CAx technologies (11.7) and personnel policy and human resources development (11.8). In the last step, causes of problems with the production launch will be discussed (11.9), followed by our conclusions (11.10).
11.2
The Importance of Time to Market
The goal of just compressing time in order to shorten the time-to-market for new products was clearly not a priority in the past. In the face of the traditionally strong position of engineers in German companies and the widespread technological orientation (Lawrence, 1980), it was to be expected that this would not be a very popular target in comparison with improving the products’ quality and performance. A survey from 1990 among German machine tool, electrotechnical and automotive companies demonstrates this in a nice way. Only 10.3% of respondents regarded the shortening of time to market as the focal strategy by which they generally tried to differentiate their product from that of the competitors; 6.6% opted for a lower price, and 92.7% opted for superior quality and functionality in key product characteristics (FHG/IAO, 1990, p. 53). In both companies investigated, too, shortening time-to-market was not considered to be one of the principal strategic parameters in either of the two companies looked into. At Gecar, the following targets were stressed as being of equal rank in connection with reorganizing development:
– – – – –
shortening the time for product development and process preparation; lowering the costs of product and process development; improving the maturity of the product at launch time; improving the manufacturability of the product design; implementing more cost-efficient process technology. How important is the time-to-market target in the view of the participants? A leading manager at Gecar indicates the connection between model cycles and sees no dramatic pressure even where the Japanese competition is concerned: “Model cycles will not be able to be arbitrarily shortened as we have to give capital an amortization period. That means, we will probably come to lie between six and eight years on average. And development times will also move somewhere within that framework, if the pre-development phase and the serial development phase are included. That means, the whole sequence will lie somewhere within the same range of five or six years. As a whole, we see no reason to go clearly below the model period.” (WPO 1, 1, 15) Naturally, the cost advantages and the advantages for improving market presence caused by shortening the time-to-market are seen and emphasized in both companies. Simultaneously, with an eye on Japan, skepticism is expressed about development times reported from there, in particular the point of the formal start of the project is “often readily concealed” (WPO III, 4, 34). It is only really from that point in time when the list of specifications is released, that one can truly
5
Index
assume the same criteria. However, if one calculates from the time of specification release to production start up, 32 months, then one lies completely within the range of lead times for the Japanese automobile manufacturers. One step towards shortening development times was taken with the revision of standard procedure including a standard time plan carried out in both companies at the start of the 1990s. The periods here were reduced by one year or 8 months respectively compared with the earlier standard plan. Fig. 11.1 shows the new standard time plans. Also shown are the time points for the most important milestones and project phases. According to the standard plans, the project start thus occurs 63 or 72 months before the start of production (SOP) in Deucar and Gecar respectively, that means the complete sequence still takes more than five years. Concept development finishes 17 months later at Deucar and Gecar. For the development and test phase, 14 months are envisaged at Deucar, and 21 at Gecar, styling approval and thus the start of serial development starts 34 months before the start of production at Gecar and 31 at Deucar, here Gecar takes up several months of additional time until the design is released to the operative sections and suppliers. Concept Development
Deucar - 63: Project Start
- 60: Target Release
- 72: Project Start
- 69: General Framework Specifications
- 46: Concept Approval/ Specification Release
Confirmation Phase
Concept Phase
Gecar
Concept Confirmation
- 55: Concept Approval
- 49: Spec. Release
Launch Phase
Series Development -32: Styling Freeze, Design Release
SOP
Launch Phase
Series Development - 34: Styling Approval
- 29: Design Release
SOP
Months before
-72
-60
-48
-36
-24
-12
0
Figure 11.1: Master Plan for New Car Projects at Deucar and Gecar
In the face of the still only relatively small reductions in the whole time taken for product creation, the priority in working out the new standard plans clearly lay not with reducing time-to-market, but in increasing the precision of the tasks and responsibilities in the respective phases. Thus no conclusions can be drawn from the standard plans for individual vehicle projects, since these can deviate from the standard plan, as also happens in practice. According to comments made by the product manager of the development project being investigated by us there, the plan timing is only an “ideal”, in practice the two time points of the project start and the launch are given, with the aim being to “squeeze in” the standard procedures between them. This also happened with our project. In this case, the times of the standard plan were shortened by 11 months in
6
Index
total when the dates for project start and start of production were fixed. The standard procedure was then adapted to match this via a process of negotiation and co-ordination within and between the functional areas: “That means each functional area went back again into a closed meeting with its ideal curve, saying where they can achieve something with a minimum of time and effort. One section head says I don’t need the twelve months for that step like it says in the standard procedure book, I can manage with nine. And then the next comes along and says: if you’ve got nine months, then I can have the first prototypes or test vehicles then and then, so I won’t need fourteen months, just eleven.” (WPO III, 11) The project we examined at Deucar was thus planned for 52 months, but subsequent changes and problems in the production preparation did later lead to a shifting of the start of production by three months. The reduction compared with the standard procedure was even greater still with other development projects. It is clear, that the time framework for the projects is being handled flexibly. The rigidity of time conditions, and thus time-to-market goals, is also placed in question from a different aspect. Here, a leading project manager of the technical development section (R&D) at Deucar pointed out the target conflict: wanting to keep within the time plan on the one hand, and on the other, to be able to carry out customer-relevant changes. In this, a clear barrier is razed towards the procedures of other companies: “If I compare us with some of our competitors, which are very strongly financially-driven, then sometimes I have to say, the products are not what we would expect them to be. (...) We are more technology-obsessed ...” (WPO III, 12, 35). This aspect is also emphasized by another leading project manager at Deucar in connection with the topic of engineering changes: “That is, of course, one of our strengths here at Deucar, that we can react relatively quickly to changes in the market, until just before launch.” (WPO III, 11, 29) In precisely this point, it can be seen that there is the ability to compete with the Japanese where time-to-market capabilities are concerned. “I would even like to say that we are just in front because we deal with many things far less bureaucratically than the Japanese. The effort undertaken there to reach consensus is far greater than with us. The advantage there, is that when a decision is made, it sticks. We have the advantage that we are the ones who change! We do that in the time given, in other words, we put more money into the project phase. The cycle of change may be there with the Japanese, but it is only around half the volume. We make more changes, for sure, but in a relatively short time in relation to this volume.” (WPO III, 11, 29/33) However, this openness to change also simultaneously contains a major difficulty for time-to-market. “There are clearly no mechanisms and routines for separate the desirable from the undesirable. The most important influence on time-tomarket, according to the technical development function project leader is getting the unlimited creativity of design under control in terms of time such that the following areas can dock on cleanly without having to redo everything five times over. The eternal loops in there ...” A second factor of influence also points in this direction: “The second topic is decision consistence with regard to the develop-
7
Index
ment process, because when you have a lot to choose between the target release and specification release, and beyond that as well, then you just go round in eternal loops, something costing an incredible amount of money and energy. ...” Further negative factors named include problems with organizing cross-functional engineering teams, something which will be discussed in the next section (WPO III, 12, p. 64ff.). It can be concluded, that where time-to-market is concerned, no dramatic sense of urgency could be felt in either of the German companies after the pressure to shorten the lead times had been coped with by the measures taken up to the mid 1990s. However, there is one point of concern, affecting the ability to provide onthe-shelf solutions through advanced development. In the eyes of the managers interviewed, here lay the key, to coping with the time-to-market pressure, on the one hand, and to maintaining technological competence on the other, and in addition, an important problem which is emphasized at Deucar in particular: time-tomarket pressure and product offensive use up precisely those potentials, which in the early phase could lay the foundations for a sustainable reduction in the NPC process. Instead, the departments use up their potentials for advanced development in ongoing development projects. In the next step we will be turning to the question of organizing the NPC sequence.
11.3
The Organization of Structure and Sequence
With the German companies, the reorganization of structures and sequences impacted upon a tradition of exceptionally strong functional orientation. In hardly any other country was this orientation able to remain so strong like in Germany. This finding about strong functional orientation in the enterprise set-up of German companies was already reached by Dyas and Thanheiser in their international comparative survey in the 70s (Dyas/Thanheiser 1976, pp. 291-298); in the 90s, Braun/Beckert still certified German automobile companies in particular as having strong functional orientation in their organizational structure (Braun/ Beckert, 1992, p. 643). This strong functional orientation lead in Germany to particularly developed boundaries between functional areas and groups of specialists each developing a distinct working culture, language and mind-set, and this became a fertile ground for bureaucratic and hierarchical structures within the functional areas (Herrigel and Sabel, 1999; Herrigel, 1997; Jürgens and Lippert, 1997). The findings concerning the three dimensions of organization discussed in Chapter 6 confirm the expectation that functional organization and the corresponding attitudes proved to be especially prevalent in German companies. It may well be that project organization and cross-functional teams were formally introduced as organizational principles in around 1994 via organizational measures. However, in the new matrix-structures, the functional areas are given a strong to
8
Index
dominating position. Nevertheless, when evaluating this finding, a difference must be made between strategy and unintended consequences. The strong position of functions is by all means wished for, but naturally not the rigidities and blockades for cross-functional cooperation arising from it.
11.3.1
Gecar
In this company, a particularly fine balancing of project and functional responsibility was carried out in a very conscious manner. In contrast, a model completely dissolving the functional areas altogether in favor of a purely product and project based organization was purposefully rejected. A leading manager of product development explained: “We are a company that is not primarily characterized by efficient project handling, but by high technological competence. That is what we live from, that is what characterizes our make, and we believed that the pure project model did not match up with our brand. As before, we are technically and functionally organized so as to maintain a high technological competence. That means, we have centralized engine development, continue to keep headlight development together, and transmission development, in order to develop good transmissions, good headlights, and good engines. If we had purely project organization, then we would share people out all over proportionately, and thus we would no longer have the direct exchange, the own momentum of functionspecific capability development.” (WPO I, 1, 13) The NPC process takes place at Gecar in interplay between the following organizations:
– a pre-development center; this center has two tasks: first, it is in charge of coordinating the activities for concept development; its second task is advanced development, i.e. the development of on-the-shelf solutions, unrelated to a certain NPC project; – the design center whose task is to style the vehicle exterior and interior; – several product line centers, each performing particular product line tasks of designing, testing, building prototypes and pilots, affecting the whole vehicle, thus having an integrating function; – the development centers for components (body, chassis, etc.) and for engines and transmissions, which have the task of serial development, in other words, the traditional functional areas in development, and finally – the other functional areas in the company like purchasing, sales, finance, and production. As a whole, a very complicated organizational structure arises from this, something which cannot simply be categorized using the classification scheme from Clark and Fujimoto now generally used in the debate (cf. also Chapter 2 from Fujimoto in this book). Helpful in understanding this, is the metaphor of building a house that Gecar’s management likes to use in explaining its organizational structure:
Index
9
Let’s assume that someone wants to build a house. First he starts looking for an architect, whom he asks to draft blueprints. If he approves the design, then he engages a general contractor to implement everything. The general contractor, in turn, chooses the specific firms, defines the task allocation for the individual firms, but is also responsible towards the owner for completing the job. It has to be looked upon in a similar way when a new product is being developed. Here, we have a committee for model policy for passenger cars, composed of all passenger car related members of the executive board and a small number of directors, and they have suggestions made for them by a body called the strategic product planning group. Analogous to the architect, this group makes suggestions, starting with general framework specifications (“Rahmenheft”). After that, the pre-development section takes over and works out a concept with all functional areas affected, in order to then make a final suggestion: the detailled design specifications (“Lastenheft”). After the design specifications have been approved, the owner, the executive board, looks for a project manager, that is the general contractor. The general contractor receives the blueprint, the design specifications, personally, and is told, now go and search out for your “artisan shops” and divide the work out in parcels and the “artisan shops” should then carry out the work. But you watch out for us that what comes out at the end is precisely that what we described in the cost framework, the time framework, the quality and requirements profile, that we defined. That is the so-called general project leader. He then has a team of functional project leaders, one in development, one in production etc., who in turn break down the task and pass it on to the individual centers in development, but also production and external suppliers. (stylized quote from WPO I, 1, 6) There are, then, two phases: (1) conception, moderated, coordinated, and leadmanaged by Pre-Development, and (2) realization, managed by the general project leader. In the first phase, under the leadership of Pre-development, “concept teams” are formed, responsible for the concept development of various car sub-systems. Representatives are sent to these teams from the various functional areas from both centers for serial development, from the remaining functional sections in the company, and from those supplier companies already chosen at this point in time. The second phase is that of serial development. Here, the general project leader takes over the leadership of the project. He has to co-ordinate its tasks, dates and costs, but has no authority in technical matters. However, he does have a vetoright on line management decisions in the functional areas and can thus help ensure that controversial questions are negotiated and, if need be, decided upon by the board. The general project leader has “function project leaders” (FPL) assigned to him for the functional sections. These FPL, in turn, organize the project-specific activities in their functional areas and form a number of function teams. In contrast to the general project leader, however, the FPL in their functional areas are usually already named at the start of the project and so, as a rule, already incorpo-
10
Index
rated into the upstream activities of the strategy phase and concept phase. A special role in the strategy phase is played by the FPL of the Sales/Marketing section. This FPL have been given the title of product manager and he or she is responsible for coordinating the strategy phase. A similarly particularly pronounced position is that of the FPL for Research and Development. On principle, this position is occupied by representatives from the product line centers of the corresponding vehicle class. Given that product line centers have an integrative function regarding the product as a whole, they are regarded as the principal customer for all other development activities. They also have the budget and award contracts to the functional departments in development. Because of his pronounced position, this FPL is also known informally as the chief engineer. Serial development finally takes place within the responsibility of the functional cost centers. The managers here are the ones responsible for technical matters with decision-making competence. Cross-functional engineering teams (CFE teams, often also referred to as chunk teams in American companies) are formed in the functional areas of development for serial development. The other functional areas and supplier companies send representatives to the CFE teams. The CFE teams continue the groundwork of the concept teams from the preliminary phase. What has proven to be critical in practice is the switch from the concept to the series development phase and the transfer of the concept teams’ work on to the cross-functional engineering teams. Much of the experience and solutions from the previous stage is lost during the transfer because of staff changes and a different cut in the size of the product subsystem for which the teams are in charge. In the case of the NPC project we studied, special emphasis was placed for this reason on as many concept team members as possible continuing to work in the CFE teams. The task area for the CFE teams has been reduced because of the now more strongly in-depth work tasks for the concept teams.2 The CFE teams contain between 15 and 40 people and are coordinated by a team speaker. The CFE teams, in turn, are generally composed of five sub-teams processing partial tasks. The CFE teams primarily serve to inform and co-ordinate between the activities in the functional areas. They are, as a team speaker explained to us, “basically an information exchange. Otherwise, however, the line is a sequence which works well and functions as an autonomous unit The CFE team does nothing in the way of operative work.” (WPO II, 1, 5) Team members remain employees of their home function and perform their real work for the team there. For them, these tasks represent just one part of the total tasks organized for them by functional management. The team speaker just quoted is himself responsible for the task section of doors for four current vehicle development projects, along with caring
2 The projects went through a process of learning with the CFE teams’ size, culminating in them covering a greater range. Thus there were some 20 to 30 CFE teams in the first project with the new organization, already far fewer in the second, and just 19 in the third.
11
Index
for models and normal alterations in serial production. (Along with the tasks relating to current production models and usual engineering changes there.)
Research Center
Sales
Procurement
Production
etc.
FPL
FPL
FPL
Function Project Leader (FPL)
Predevelopment Center CF CF CF Concept Concept Concept TeamsTeamsTeams
General Project Leader FPL
R&D I
FPL
FPL
FPL
Product Policy Committee
CEO
Finance
FPL
Design Center
II
Component Development Center
III
Body, Chassis, etc.
Product Line I Center FPL R&D
CFE Teams
CFE Teams
CFE Teams
CONCEPT OEM Supplier
CFE Teams
Subfunction Teams
Operative Level
Manufacturing Plant
Engine & Transmission Center
CONFIRMATION
SERIES DEVELOPMENT CFE Team
Subteams
Figure 11.2: Project Organization and Cross-functional Engineering (CFE) at Gecar
Figure 11.2 attempts to represent this complicated structure of interplay between the project organization and functions in an overview. If we follow the distinction between the dimensions of governance, cross-functionality and involvement of functions from Chapter 6, then it can be seen that with regard to governance (1), there is in fact a complex balance of functional and project “power”. It’s true, that those responsible for the functions retain a veto over critical function-related questions; the project management, however, has the responsibility for the project budget. For managing the project, two strong leadership roles have been created with the general product leader and the chief-engineer-like function of project leader from R&D, between whom it is better if no rivalry arises. As a whole, a highly complicated matrix structure has arisen, in which the responsibilities of project management, functional management and those managers representing product-line-interests overlap. (2) Cross-functional teams are actually formally installed, but simultaneous engineering forms the exception. For the most part, the role of the CFE teams is limited to the coordination of meetings and to information exchange, but with regular work primarily taking place in the home base. (3) The functions are intended to be involved via the function project leaders and the introduction of function teams in the functional areas. At the time of our
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Index
survey, this had been realized to very different extents in the individual functional areas.
11.3.2
Project Organization at Deucar
The organization resembles that at Gecar in many aspects, though here it is oriented even stronger towards the functional areas of technical development (R&D) as its pivot and hinge. There is no two-phase model, like at Gecar. The project organization is formed with the formal start of the development project, with the general project leader being named at the same time. The general project leader’s task is to look after the product project, including all versions of the model; from the milestone of target-setting right up to the start of production. Accompanying him is a product team, to which each of the company’s functional areas sends their function project leader (FPL) for the relevant development project. Represented in the product team are the functional areas of Technical Development, Production, Quality Assurance, Procurement, Sales, Finance and Overseas. The general project leader does not have the authority to give instructions to the function project leaders. He also has no budget responsibility. His task description is both universal and unspecified in relation to looking after the project. He thus has an integration role for all functions. Despite this, at the time of the survey he reported to the Head of Research and Development. The general project leader’s most important counterpart is the function project leader of R&D. The latter coordinates the activities of the six functional areas of R&D – Body, Interiors, Electric Assistance, Chassis, Engine and Transmission. He too has no authority to give instructions to the line managers in these areas and no budget responsibility. Specialist, personnel and budget responsibilities thus all lie solely with the functional management. A function group is set up in each respective functional section of R&D to coordinate the operative activities. Thus, there is one function group for the body section, the interiors section, etc. The other functional areas from R&D and the other company functions send representatives to each of these function groups. The general project leader also sends his staff members to function groups meetings and is thus informed about activities at the operative level. The line managers of the functional sections act as speakers of the function groups to which their section belongs. Finally, the real execution level is formed by cross-functional engineering (CFE) teams. Normally, all company functions are also represented at this CFE level, in contrast to the function groups, and so include rank-and-file employees at the work level (these teams include rank and file employees from the work level of the respective functional areas of R&D and from the other functional areas). The teams are lead by speakers, who again have no authority in budgetary or personnel matters. Generally, these speakers are senior product development staff, as a rule, if not on principle. They report about developments in their teams
Index
13
to the function groups, who’s speaker – as mentioned – is usually also their line manager. The CFE teams are seen as the unit for carrying through simultaneous engineering. Representatives of the supplier companies are also integrated into these teams, as soon as it has been decided, which company will receive the contract. The CFE teams thus reach considerable size. The chunk team “doors”, for example, in the case of the development project being looked into, contained 40 people, including a speaker and his deputy, seven representatives from Production (from methods planner for press dies up to production planner assembly), two representatives from Finance, a representative from Procurement, three representatives from Quality Assurance, one from Sales, 22 from Series Development – for mirror design, for the central interlocking system, etc. – and one representative from project management. In a similar way to the chunk teams at Gecar, the CFE teams generally form their own sub-teams for dealing with partial tasks. As at Gecar, the CFE teams serve to coordinate and inform about current work, the real operative tasks being carried out in the functional areas. Decisions reached in a team are, in principle, subject to the line manager’s right-of-veto. For the team speaker and team members, development project tasks represent just one part of their regular activities, alongside the tasks which must be fulfilled for other development projects and for the regular series. In the case of the development project studied by us, there were only a few teams cooperating right away in the form of co-located simultaneous engineering units. However, even the members of these teams could not fully dedicate their time to focus on this work – at the most 30 to 40% - the rest of the time they work separately in their functional areas on various tasks, project- related and other. The general project leader does not have any opportunities to intervene in decisions of the CFE teams, since these are just responsible to their respective function group. In this way, the line managers in the corresponding functional areas have the real key positions in the process, they are the only ones who have their own budget. The position of the function project leaders in the functional areas is similar to that of the general project leader towards the whole project. They also have no decision-making competence in technical questions, personnel or budgetary questions. Their role is limited to informing, coordinating, and the informal possibilities of preparing decisions and persuading. In general, the situation is characterized by
– limited influence for project management with line management, the latter having, in principle, a veto right on project decisions; in the CFE teams it is complained that “ruling is from outside, from the hierarchies”. – problems of line management, in part substantial, with allocating personnel to a multiplicity of CFE teams participating in the various development projects; – a weak position for the CFE team. A contributory factor in this is the lack of a project budget for the team. This difficult situation is then worsened precisely because of the fact that in the wake of reorganization in the 90s, the functional areas were assigned the status of cost centers, giving them budget responsibility and making them responsible for costs. As a consequence it becomes diffi-
14
Index
cult, for example, if a team finds a solution which is more favorable for the task as a whole, but is more expensive in the design work it requires and thus may be opposed by the cost center which has to pay for this design work. – the lack of a personnel development system which is supportive to the new NPC approach. One indicator of the secondary importance allocated to project organization can be seen in the fact that personnel evaluation is still undertaken by line managers, a source of conflict for CFE team members, according to a representative of the personnel function at Deucar: “We can assume, that if an employee is in not just in one, but three or four, then he may become invisible or possibly even contentious for his line manager because he will orient himself to how we can optimally solve the vehicle project finding the optimal solution from the perspective of the project and not which solution is optimal for the line. (...) And that can mean, since the responsibility for personnel appraisal lies in the line, that he will be punished here for behavior which is functional for the project.” Fig. 11.3 describes the interplay of the various actors’ roles and the organizational units at Deucar.
CEO Finance FPL
Sales Procurement Production FPL
FPL
FPL
Product Policy Committee
FPL
etc.
Product Team
Research General Project Leader
R&D
FPL
Body
Interior
Electr. System
Chassis
Engine
Transmission
Function Group
Function Group
Function Group
Function Group
Function Group
Function Group
Function Project Leader (FPL)
CFE Teams
Manufacturing Plant
CFE Team
OEM Supplier
Subteams
Figure 11.3: Project Organization and Cross-functional Engineering (CFE) at Deucar
To summarize, under the three aspects of governance, cross-functionality, and function involvement it can be concluded that: (1) Project management at Deucar clearly corresponds with the light-weight product management according to Clark and Fujimoto’s classification. Their roles
Index
15
are limited to informing, coordinating and preparing decisions, it is management in the functional areas which has the key positions in the principal questions of the project. (2) Cross-functional engineering teams have been formally established, they primarily help with coordinating tasks, which as before are carried out in the functional sections. (3) The functional sections themselves are linked up with the development project via function project leaders. As a rule, there is no clear assignment of staff to projects. For rank-and-file employees, as for most function project leaders themselves, the tasks carried out for the project are only one part of their regular work tasks, the prioritizing of which is decided upon within the functional areas. If one compares the NPC organization at Deucar with that at Gecar, then there are a multiplicity of differences in the details. Common to both is, however, the weak influence of the cross-functional teams, which are expected to operate simultaneous engineering.
11.3.3
Effects of Project Organization at Shop-floor Level on NPC Work
As has been illustrated, nothing has changed decisively in either company through the introduction of project organization at the working level of the individual product engineer, process planner, etc. The clearest change, initially, is for a number of rank-and-file employees to be named a CFE team member or, in some individuals cases, speaker. In this way, these employees are more strongly tied into the decision-making process with other activity and functional areas at the CFE team meetings and also in function-internal meetings, in order, if needed, to prepare the function’s position in what are important questions for them, and to be better able to push them through in the CFE team. For both companies, major problems can be identified at the working level with the new NPC organization described, albeit with gradual differences: (1) There is little feeling of empowerment and ownership with regard to the work performed by the team. Its members and speaker regard themselves as the level at which work is carried out, but not that at which it is defined and determined. This is in stark contrast to our findings about CFE teamwork in the American car companies. (2) The fact that the CFE teams are firmly locked into the product development function, and that the members of the other functions see themselves (and are seen) more as representatives than as team members. If a function sees its interest in danger, then they sometimes turn up armed with experts to overwhelm the team speaker and the rest of the team. (3) The narrow work focus of the CFE teams at the operational level makes it difficult for the other functions to provide the teams with members. Thus, some functional representatives are members of a multitude of teams. This arrangement creates problems with scheduling, with continuity of participation on the part of the function representatives, who occasionally have to send representatives, and
16
Index
with competence, such as when functional areas are still structured internally according to a completely different logic (e.g. when Purchasing is still organized under the aspect of types of material and not function modules). (4) The role of the team speaker rests on informal authority, he or she cannot make decisions. This is a particular problem for suppliers. They prefer to go where decision-making authority is located, i.e. the functional departmental managers, and do not see the team speaker as their primary contact. On the whole, team members and suppliers regard the CF teams more or less as just a “clearing house” of information. Criticism, particularly from the supplier side, was that team meetings were too crowded, poorly prepared and inefficient. At the time of our investigation, this was aggravated by the fact that most team speakers had not received special training to prepare for their new role. They had little experience in managing meetings. Some complained about the lack of systems support (electronic time planners, PC, or even simple telephone access). These disadvantages were strengthened by the situation that apart from a few individual CFE teams, in both companies, there was no co-location of the principal process chain activities. According to our observations, in part substantial problems of communication and cooperation were due to this circumstance, along with partly inadequate equipping with communication technology, and a situation with regard to the position and length of working hours, which often brought with it individual absences. In the following section, the question of how manufacturing is incorporated into the development process under the changed conditions will be looked into.
11.4
Manufacturing Involvement
The early consideration of assembly aspects in the upstream phases of the NPC process is an essential precondition if the aims of cutting costs, improving quality and reducing time are to be achieved, aims precisely connected with the introduction of the new NPC systems (Adler, 1992; de Meyer, 1992). In the past, the long development times and sequential organization of the NPC process have also led in the German companies to the Product Development and Production becoming autonomous and forming their own worlds. Under the changed circumstances, the aim here was to form, swiftly if possible, organizational practices, structures and forms of behavior for close communication and cooperation, starting in the early phase of product creation. In the German context, the conditions for this seemed, on the one hand, more favorable than in comparable countries. A whole number of factors are at play here: there is no demarcation problem between union and non-union organized sections, as in the USA; union membership and the works council system are valid for blue- and white-collar employees, production and development; furthermore, the discrepancy in the qualification level of product engineers and process engineers is not as great as in the USA or Italy, where process engineers are more likely to be recruited from the blue-collar sections,
Index
17
whereas in Germany, product engineers and process engineers, including manufacturing engineers in the production companies, go through similar university training (Lundgreen and Grelon, 1994). On the other hand, there were also problems, arising from the strong functional orientation in the organizational structures and ways of behaving, but also problems, which could not be essentially lessened with the new organizational forms. A contributory role was played here by the fact that at the time of our research, neither Deucar nor Gecar had established integrated technical centers for the co-location of product- and processengineering activities, aside from smaller pilot sections. A further factor also supports the view that striving for early manufacturing involvement could hit problems. The discussion about simultaneous engineering, parallelisation, and task overlapping is often restricted to the relationship between product and process engineering, in other words, to the parallelisation of product and process engineering. However, manufacturing involvement also means including the manufacturing plants itself, production engineers involved with the plants, and the production workers who later manufacture and assemble the products on the machines and belts. The strong expert-orientation in the German context lead one to expect, that German automobile manufacturers are more cautious where incorporating the latter is concerned (cf. in contrast, the spectacular case of Uscar where manufacturing plant employees were included, described by Haddad in Chapter 12 of this book). Basically, manufacturing was included in a more strongly systematized form than in the past via the formation of cross-functional engineering teams in both companies. Nevertheless, a multiplicity of problems, old and new, showed up. A general problem arises from the size and differentiation of company function “production”. Thus, within the framework of our study, many production sections viewed themselves as being inadequately tied into the cross-functional teams. This appeared to be a problem, especially for the tool and die section. Such as, for example, when the tool and die department at Deucar complained about only being represented indirectly in the CFE team via the methods planner. Or when problems with manufacturability were reported from the sections of doors, and instrument panels in the assembly plants at Gecar, problems which could have been reduced if one would have consulted workers in these production areas earlier on in product design . Another difficulty, which is represented differently in both companies thanks to differences in organizing the NPC sequence, resulted from a delay in setting up a CFE team. The large number of teams meant that the functional areas had difficulties choosing personnel to represent them, causing delays in many teams’ composition and constituting. This appeared to be less of a problem, at Gecar, because in the phase of concept development only a relatively small number of concept teams are being formed, albeit with a larger task area to cover. A further problem in the practice of cross-functional teamwork arises from the question of where the presence of manufacturing representatives can be guaranteed in the face of the multiplicity of team activities. For the Assembly section for
18
Index
example, in the case of Deucar’s development project, the representative responsible covered different components and was thus represented in a multiplicity of chunk teams. As a consequence, he often still was not able to take part in all team meetings because of scheduling problems. At the same time, it was possible to give the necessary feedback about what happened in the various CFE teams to all assembly areas. Of course, he would inform the assembly areas, seek opinions, and inform others of decisions, but feedback and consultation meetings in production usually involved the manager and supervisory staff only. Consequently, supervisors and workers in the production plants received too little information about ongoing development of new products and were confronted with its result only at a later stage. Gecar had developed a more structured approach to linking the involvement of the manufacturing area’s process planners and their rank and file colleagues with the product development process within the plant. At the beginning of series development, a project leader would be nominated to coordinate plant involvement in the project. The project leader would coordinate with the function managers in nominating the delegates for the various cross-functional groups and teams in charge of developing the car’s subsystems at the development center. These delegates were usually process planners or quality experts. At the same time, a “multiplier” was nominated for each production section of the plant. This person was in charge of voicing shop-floor concerns at the development center, participating in building the prototypes, and feeding information back and forth to his or her area in the production plant. When the pilot stage was reached, the number of multipliers increased to one per production team (around 15 workers). These persons would often be the team leaders (in this company, a nonsupervisory position whose incumbent was elected by the team members) or experienced workers who could master all tasks within the team. The number of multipliers who spent most of the week at the R&D center during this time amounted to up to 10% of the plant’s production work force. The multipliers work together closely with the process planners sent from the plant into the cross-functional teams, which were in charge of engineering the specific components at the technical center. In this way, process experts and shop-floor workers were able to represent plant interests more forcefully while bringing their knowledge and experience to bear. A considerable number of regular shop-floor workers became involved in the program at an early stage. Additional training measures and a series of public events were instituted when the program was handed over to the production plant who rounded off the picture. (cf. Jürgens, 1999). The cases just described differ particularly in the way the shop-floor work force is involved early on in the new product creation process. How far consequences arose from this in the end, in terms of degrees of trouble during the phase of starting mass production, cannot be followed up here. Anyway, in order to comprehensively handle the topic of manufacturing involvement, one would have to follow up the whole NPC process along the individual phases right up to the
19
Index
phases of pilot building and the pre-series production at the plant itself, i. e. those phases, in which production has become the main actor in the process itself. However, problems arising in connection with the production launch of new car models in the second half of the nineties, have shown, that there is an Achilles heel here in the new product development system, one targeting the reduction of time-to-market. Section 11.7 returns to this point.
11.5
Supplier Relations
The traditional supplier relations of German auto manufacturers were shaped by long-term supplier relations, often based on close personal contact networks between the companies, and by an industrial structure consisting of a multiplicity of “medium-sized” family-owned companies, aside from a few early multinational large concerns. This structure differed from the Keiretsu System of the leading Japanese automobile manufacturers above all in the way that no closed systems with an exclusive alignment towards individual OEMs were formed. At the same time, the vertical degree of integration of the OEM was far higher than that of the Japanese companies (Boucsein et al., 1998; Meinig and Mallad, 1997; Doleschal, 1991). However, at the time of our research, these traditional supplier relations were being radically questioned. The present was a turbulent process of change, impulsed and oriented by a multitude of often-contradictory targets and driven on by a development dynamism, which radically changed the company and industrial structures in a far-reaching way, a process which still continues at the end of the 90s (Deiß and Döhl, 1992; Jürgens, 1999). The auto manufacturers’ strategic considerations in relation to realigning their supplier relations in this situation, were primarily influenced here by two factors. First, the goal of achieving savings in this largest cost block and improving purchasing conditions through competition. Second, by binding to oneself technologically-efficient suppliers with the potential to develop into system-partners and who could provide them with valuable input in developing the new modular concepts and develop the new product architecture which was regarded as crucial by the auto manufacturers with regard to a future product strategy and supplier relations (Göpfert, 1998; Hoffmann and Linden, 1995). Both targets suggest a phase of opening up existing supplier relations in favor of possibly cheaper or more powerful suppliers through very careful selection procedures. Here, though, there was a clear trade-off relationship: the stronger the priority was placed on selecting the world-wide best supplier, based on competitive bidding and hard contract negotiations, the greater the time delay and sometimes the personal bitterness of the suppliers involved, a factor potentially damaging for the process. The alternative was to do without a lengthy selection process and to accept early on a close cooperation relationship with a particular supplier, even if this meant not necessarily opting for the strongest and best value partner.
20
Index
Both German automobile manufacturers did not differ fundamentally in their goals, but they did choose very different ways of tackling the restructuring of supplier relations. Whereas both manufacturers tried to link competitive bidding with simultaneous engineering aspects, Gecar’s effort was more intended to receive idea inputs on the part of the supplier already at an early stage, before and parallel to the selection process. In Deucar’s case, the procedure was more sequentially laid down, first selection and then cooperation. Figure 11.3 shows schematically the interaction between the project team and suppliers over time, in Gecar’s case, with the efforts on the part of the project team to link together both elements of early idea inputs on the part of the supplier and competitive bidding . Gecar
Supplier
Project start
Internal search for ideas Ideas, trends Framework specifications Early information, rough system conception Round table talks Evaluation Targets Bid announcement for concept competition
System reflections Make offer Tender
Task negotiation Commitment Producing design specification list System design specifications
System development
Specification release
Figure 11.3: An Approach to Aligning Early Supply Involvement and Competitive Bidding
Index
21
Ideas and statements on trends were already discussed with suppliers during the period between starting the project and producing the general framework specifications (“Rahmenheft”). For each system, such as a cockpit module, production of the general framework specifications is followed by round-table orientation talks with the two or three supplier companies, each invited to separate discussions so as to talk over various concepts together with the project representatives. The orientation talks are followed by an assessment of the supplier’s capabilities by purchasers together with development. After that, the phase of concept competition with evaluation of offers and definite order negotiations starts straight afterwards. As a rule, the supplier chosen is simultaneously the supplier of the design for the part as well as the supplier of the part itself for series production. Nevertheless, the winner of the concept competition is initially just awarded one development contract.. The route followed is usually one of involving these development suppliers in producing the design specifications. The design specifications are taken on to the market and the development supplier is asked to bid along with other competitors to become supplier for the actual series production. The company which was involved in producing the design specifications is obviously highly advantaged and consequently it is likely (but not certain) that it will also receive the order for the series. The suppliers selected after the concept competition are integrated as development partners, if possible, already into the concept team. In the phase of serial development, this is the case for an increasing number of CFE teams during the course of the process. At the time of the study, the suppliers were represented in about 30% of the CFE teams of the development project investigated. The cooperation with the suppliers also includes the presence of guest engineers. These guest engineers are subordinates to the team leader of the automobile manufacturer, they are paid by their own company. Despite the efforts for an early decision on suppliers, their real integration in the cross-functional engineering teams takes place according to our findings, in many cases still too late. “Too late” from the view of the CFE team speaker and team members of the automobile manufacturers, and above all, “too late” in the view of the supplier, who precisely promise themselves advantages from the early inclusion in the cross-functional team activities with the final producer with regard to the manufacturability of their components in their own production facility. In the case of the other automobile manufacturers, the main point of emphasis initially lay on selection and only afterwards on cooperation.3 Here, a bidding process is initially planned for establishing the best-value supplier world-wide. In this, supplier companies world-wide are asked to participate through a systematic screening process. Beyond that, internal company sections are also invited to participate in the bidding process and work out an offer. The offers and hearings make selecting the suppliers a multi-stage process, and reach far beyond into the 3
The procedure is different in the case of advanced development projects which is not being dealt with here in this account. (see Diehlmann, 1997)
22
Index
phase of serial development in the phase of our survey. Consequently, the suppliers cannot be included in the concept-finding phase. An early tapping of supplier know-how is also made more difficult in as much as the company reserves the right, on the basis of the offers of the suppliers, to carry out another round of tendering, whereby, under the underlying of concepts, worked out by a particular supplier, it is determined how far these can be produced by other suppliers under better conditions. An early tapping of supplier know-how, according to a leading project manager, the suppliers are mostly only ready for that, “if he knows, that he will be a supplier. Through the selection process this has been completely placed in doubt and we have discovered, that with the start of this process, some suppliers hold back, because they are afraid, that we will burn their know-how and make it the with somebody who can do it cheaper in Spain, Portugal or Mexico. (...) That is the topic for me, long-term contracts, the supplier knows, I am one of the Deucar Group....On the other hand, they also naturally have a problem, if they have entered long-term arrangements to deliver with someone, then he can also boot them out skillfully and exploit monopoly situations.” (WPO III, 12, 34) Under these circumstances, the inclusion of suppliers in the simultaneous engineering activities is delayed even longer than in the case of the first manufacturer. “Too late”, so the statement from the cross functional engineering teams in the case of the development project being studied – where for the most part the supplier decisions had not yet been reached – and “too late” the unanimous statement on the part of the program managers for the corresponding project with the suppliers. To resume: clearly, we were with our research on including suppliers in the new NPC processes with the two German producers witness to first attempts at adapting and restructuring supplier relations; the new procedures were still untried and the practices still unusual, but in relation to future development projects, generally the pressure would lie on even earlier inclusion and even less rigid and drawn-out selection processes.
11.6
Engineering Service Firms
As already explained in Chapter 6, it is necessary, to incorporate the increasingly important role of the engineering service (ES) firms in order to assess developments in the area of supplier relations. Engineering service firms – or in their more modest form, engineering bureaus – have made an enormous upswing in Germany since 1990. It is due, in part, to the fall of the Iron Curtain, which set free many engineers in Eastern Europe who could be recruited as employees, or as subcontractors. Another factor is the capacity and flexibility required by car makers for their product offensives. Some ES firms offer an almost complete spectrum of activities, from the early design stage to prototype production, and, in some cases, include production, as do the body makers in the Japanese automotive industry. Most ES companies
Index
23
specialize in either product or process engineering, and either the engine/drive unit or the body/interior parts of the car. Many such firms are located close to the engineering complex of the car maker. Thus, in the immediate surroundings of Deucar’s technical development, five major ES companies with more than 800 employees were located. Thus, the ES firms have become an integral part of the networked NPC process in the German automotive industry. Supplier companies having to deal with a greater share of the engineering cake have also made use of ES firms, but to a lesser extent in the case of our company sample. We found three different situations of networked development activities: (1) Joint development activities on site, at the car maker’s engineering complex, and within the framework of the CFE teams. (2) Joint development activities at the site of the engineering service firms, with visiting engineers from the car makers and from the car makers’ OEM suppliers and, in some cases, also suppliers of process equipment. (3) Joint development of modules of components between two and more OEM suppliers, joining at one of the companies including, in some cases, process equipment makers and engineers leased from ES firms. Two observations shall be made about the effects of involving ES firms in communication and cooperation: On the one hand, ES firms offer a neutral and deregulated ground for common work in this period of simultaneous engineering. We found this to be the case with both process chains we investigated at Deucar. The work situation at the ES company was often described quite positively by the product engineer of the car maker coordinating activities, as well as by the supplier representative taking part. Despite the time lost through driving back and forth, the advantages named were, first and foremost, the possibility to focus on the real work – no interruption by other urgent assignments, phone calls or queries of whatever kind. Second, there was the feeling of satisfaction and empowerment resulting from progress made and solutions developed by the group. Third, there was the flexibility and freedom offered by the neutral terrain of working according to one’s own rhythm rather than according to work time or other regulations. We found a very similar situation in the two American cases, where even more emphasis was put on the last point. On the other hand, it is not all roses with this practice. The interface between car maker and ES firms also created problems spatially and organizationally: staff from Styling complaining about the frequent trips to ES firms where the clay model is being built and meetings take place; ES employees usually have no experience or connections to the car maker’s production plants; finally, the fear of the hollowing-out of competencies brought up by engineers of the car makers. We will come back to the last point in the next section.
24
11.7
Index
CAD Systems
The general finding was: CAD systems were no primary concern for German car makers when they restructured the NPC process. Characteristic was a heterogeneous software “landscape” with many interrupts in the data flow. At the time of our research, measures to introduce a unified software platform were about to be implemented, however. In the past, German car makers defended the heterogeneity of software systems internally and externally by making great efforts to develop neutral interfaces and postprocessors for data translation. In fact, we found that data exchange via postprocessors was no major concern at the operational level in the process chain, but neither was it negligible. Suppliers were settled with the responsibility of data transformation. They were required to invest in systems and manpower in order to convert the data they received from the car maker. As a consequence, they carried the bigger problem load in the external data exchange. Despite the fact that problems with “data translation” had been settled by the lack of a uniform software platform, and the fact that in some areas CAD was used only to a limited extent, the internal data flow at the car makers showed quite a complicated structure with some noticeable flow interruptions. At the German car makers in the past, the emphasis was put on utilizing the CAD data for NC programming/machining purposes and on supporting the design with special software development. At the time of our survey, CAD systems for supporting upstream activities of styling, simulation, rapid prototyping and digital mock up, were still at the stage of pilot use when implementation possibilities are being weighed up, but they are not part of regular practice in the process chain’s everyday work.
11.8
Personnel and Human Resources
One finding which is noticeable is that at the time of the research, a large gap exists in terms of the measures, held to be necessary for supporting project work and process chain communication and cooperation by the participants in the companies, and that what was actually done. Project and process orientation received little support from personnel/HR measures. Career implications of product work were unclear, personnel evaluation systems had not been adapted, and training measures for developing social competencies and capabilities were underdeveloped, despite the fact that it was obvious that the traditional German emphasis on functional and disciplinary knowledge led to particular problems with communication and cooperation in networked development systems. The new role model of a team speaker, in particular, lacked support. special competencies were required for the capabilities of running effective meetings, coordinating staff interfunctionally, and linking up to suppliers. Beyond that, team speakers who were interviewed underlined the necessity to get some basic
25
Index
training in business administration and cost calculation to understand the economics of the job. For team speakers, as well as team members, career implications of the CFE teamwork were not clear. Personnel evaluation was still on a functional basis. Job rotation and the opportunity to gain some experience in other task areas upstream or downstream received theoretical support rather than practical. At the same time, expectations and willingness to rotate were high among interviewees at the operational level. A trainee system introduced at Deucar for high potentials was regarded as a step towards a better understanding between functions, but it encompassed only a few people. One last point to be discussed here, concerns problems regarding role expectations and professional expectations of engineers of product- and process development which were addressed as a concern by quite a few interviewees during the course of our research in the German companies. With work being increasingly outsourced to suppliers and subcontracted to engineering firms, engineers at the car makers increasingly become “distracted” from what they regard as their real work, i.e. designing parts or tools. More and more, they become coordinators or managers of internal and external networks with the consequence of a loss of proficiency in handling CAx systems. Some of the engineers interviewed regarded this as a serious threat to the development of their personal skills. Some addressed the fear that if their own jobs were ever cut they would have to seek jobs at engineering firms where CAx proficiency would be required. Their lack of practice with the new systems, so one fear, meant they would in the end also loose the ability to check the design work delivered by the subcontractors. There were also clear worries of a hollowing-out of individual competencies with the outsourcing of company functions was concerned.
11.9
The Start-up of Production as an Achilles Heel
Experience shows, that the problems in the NPC process which we noticed, such as delays in the early involvement of manufacturing and suppliers, untapped knowledge and motivational resources, lack of focus on project tasks, nonempowered teamwork, lack of support through personnel development and human resource measures, take their revenge at the latest in the phase of production start-up, when all work has been finished according to the specifications and all theoretical concepts must prove themselves in the harsh reality (Hultink and Hart, 1995). The fact was, that the NPC projects we surveyed had major problems with the launch. It really does seem that there is an Achilles heel here for the new NPC approaches of the manufacturers. Further details will not be divulged here for reasons of anonymity. Three factors influencing these complications are briefly discussed below: (1) Loss of manufacturing competence. The attempt to develop everything new at the same time (a new car model, new manufacturing technology, new produc-
26
Index
tion control and logistic systems, and new organizational structures) is an effective recipe for trouble (Bungard and Hofmann, 1995, p. 22). With the NPC projects surveyed, the car manufacturers did introduce completely new processes together with the new products. In this way, projects for developing new products became part of change dynamics, the result of a particularly intense effort to manage change. Difficulties were compounded by the loss of old hands, experienced managers, and staff in the wake of sweeping early retirement programs, and by the loss of expertise in process technology because of downsizing and outsourcing. In the framework of their general outsourcing policy, businesses have not just externalized tasks in connection with product development, but also in connection with the development of production facilities. And just as much as in the case of product part suppliers, efforts at the process equipment suppliers are directed towards integrated system solutions. In this way, production facilities are ordered at turnkey equipment manufacturers, who in turn subcontract out to other firms. The whole process of bidding, contract negotiation, subcontracting took up a great deal of time, time which was no longer available later for testing and optimizing the new facilities. (2) Downstreaming unfinished tasks to the preproduction and launch stage. With the shortening of time schedules and pressure to reduce time and costs, problems with unfinished tasks have accumulated in the downstream phases of the development process. Consequently, manufacturing had little chance to establish reliable, robust processes optimized to produce according to the specifications developed by the product designers. This tendency could be observed in the pilot stage, when all parts should have been, in principle, produced by massproduction tools and dies, a point that marks the end of the product-engineering work and the beginning of production preparation. The reality was very different. Many parts, including a large number still at the preproduction stage in the plant, came from preliminary processes in which many manual corrections and adjustments were made to both the components being manufactured and the tools and dies producing them. It was impossible to optimize production processes under these conditions. Worse yet, the process equipment for mass production at the plant had to be broken in and adjusted so that it could deal with parts that come out of preliminary processes. Such adjustment frequently required the delicate removal of metal here or filling in of metal there, intricate operations often executed by the local maintenance staff. When the number of parts coming from more fully optimized production processes later increased, the equipment had to be readjusted. In the meantime, other parts had matured and began triggering new changes. Even without design changes from product engineering, manufacturing activities seemed to go through endless ripples of change in this way. The ad hoc and uncontrolled character of changes lead to the progressive loss of the original database, which could not be reinstalled without considerable measuring effort. Attempts to produce parts that strictly conform to design specifications were frustrated. The tendency to lose the database because of incomplete homework in
27
Index
previous processes accounted for many delays and for the intensity of the problems that had beset many recent product launches. (3) The lack of a controlled approach to launching new products. The preproduction and launch period is an intense and difficult time for manufacturing. These conditions require fire-fighting on many fronts. Indeed, many plants have developed great fire-fighting capability. However, they often lack the ability to improve processes in a gradual and controlled manner, an approach that requires the whole shop floor to check parts continuously, monitor tolerances closely, and record improvement and deviation. Whereas effective fire-fighting is mainly possible through relying on experts, a gradual and controlled way of dealing with problems requires the broad involvement of the shop floor. It also necessitates metrics, benchmarks, procedures based on experience with previous launches, and a work force with high problem-solving potential (e.g. statistical process control capability). Such capabilities were not asked for in the era of Taylorism, however, and the heritage of that era particularly hurts during the launch period.
11.10
Summary and Conclusion
The NPC reorganization at the German automobile manufacturers studied was clearly influenced by the goal of not endangering technological strengths which were localized in the functional areas of the companies. In this way, reorganizing the companies’ internal sequences occurred incrementally, full of compromises as regards the existing organizational structures. In the process, highly complex solutions were realized individually. As a whole, it became clear, that at the time of the research, the companies did regard the field of operation “formal organizations” as being important, but not overwhelmingly so. By contrast, a greater vigor and a more radical approach could be seen in both companies with the reorganization of supplier relationships. This reorganization was closely linked with new concepts of product structuring and the expansion of supplier responsibility in the sense of system supplies. Compared with both fields of action named, measures in the area of information and communication technologies and personnel/human resources policies in both companies were clearly of secondary importance. This has in the meantime changed fundamentally as regards the implementation of information and communication technologies for improved process support and for computer-aided engineering, as the contributions from Tegel and Okamuro in this book show (Chapters 16 and 17). At the working level, the attempt to use organizational design to maintain a careful balance between functional competence and project dynamism represented a clear hindrance of the project dynamism. Project focus, team empowerment and co-location, factors, which according to our findings especially to the enthusiasm for the project work in the new NPC structures, that we partly found in our surveys of the American companies, remain undeveloped in these structures. Beyond this, these organizational solutions made more difficult the goal of
28
Index
an as early as possible involvement of manufacturing and suppliers in the new product creation process.
References Adler, P. S. (1992): Managing DFM: Learning to Coordinate Product and Process Design, in: Susman, G. I. (ed.), Integrating Design and Manufacturing for Competitive Advantage, Oxford University Press, Oxford/New York, pp. 140-156. Boucsein, K. et al. (1998): Outsourcing und erhöhte vertikale Kooperation bei sinkender Fertigungstiefe in der Automobilindustrie als Herausforderung für die Industriepolitik, in: Proff, H. (ed.), Strategien für die Automobilindustrie, Gabler-Verlag, Wiesbaden, pp. 147-177. Braun, G. E., Beckert, J. (1992): Funktionalorganisation, in: E. Frese (Ed.): Handwörterbuch der Organization, Stuttgart, pp. 640-655. Bungard, W., Hofmann, K. (1995): Innovationsmanagement in der Automobilindustrie. Mitarbeiterorientierte Gestaltung von Modellwechseln, Beltz-Verlag, Weinheim. de Meyer, A. (1992): The Development/Manufacturing Interface: Empirical Analysis of the 1990 European Manufacturing Futures Survey, in: Susman, G. I. (ed.), Integrating Design and Manufacturing for Competitive Advantage, Oxford University Press, Oxford/New York, pp. 69-81. Deiß, M., Döhl, V. (eds.) (1992): Vernetzte Produktion. Automobilzulieferer zwischen Kontrolle und Autonomie, Campus-Verlag, Frankfurt/New York. Diehlmann, G. (1997): Vorentwicklungsmanagement in der Automobilindustrie, Peter Lang, Frankfurt a. M. etc. Doleschal, R. (1991): Daten und Trends der bundesdeutschen Automobil-Zulieferindustrie, in: Mendius, H. G., Wendeling-Schröder, U. (eds.), Zulieferer im Netz – zwischen Abhängigkeit und Partnerschaft. Neustrukturierung der Logistik am Beispiel der Automobilzulieferung, Bund-Verlag, Köln, pp. 35-62. Dyas, G. P., Thanheiser, H. T. (1976): The Emerging European Enterprise. Strategy and Structure in French and German Industry, London/Basingstoke: The MacMillan Press. Fraunhofer-Institut für Arbeitswirtschaft und Organization (1990): F und E – heute. Industrielle Forschung und Entwicklung in der Bundesrepublik Deutschland, gfmtVerlag, München. Gentner, Andreas (1994): Entwurf eines Kennzahlensystems zur Effektivitäts- und Effizienzsteigerung von Entwicklungsprojekten, dargestellt am Beispiel der Entwicklungs- und Anlaufphase in der Automobilindustrie, Munich: Franz Vahlen. Göpfert, J. (1998): Modulare Produktentwicklung. Zur gemeinsamen Gestaltung von Technik und Organisation, Deutscher Universitätsverlag, Wiesbaden. Grabowski, H., Geiger, K., Eds. (1997): Neue Wege zur Produktentwicklung (New Approaches to Product Development), Raabe Verlag, Stuttgart etc. Herrigel, G. (1997): The Limits of German Manufacturing Flexibility, in: L. Turner (Ed.): Negotiating the New Germany. Can Social Partnership Survive?, ILR Press, Ithaca and London, pp. 177-205. Herrigel, G.; Sabel, C. F. (1999): Craft Production in Crisis: Industrial Restructuring in Germany During the 1990s, in: Culpepper, P., Finegold, D. (eds.), The German Skills Machine, Berghahn, New York. (forthcoming)
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Hoffmann, K., Linden, F. A. (1995): Modellwechsel: Zulieferer; Automobil und Industrie, in: Manager-Magazin, Vol. 25, no. 6, pp. 38-46 Hultink, E. J., Hart, S. (1995): Launch Strategies and Product Advantage, Centre for Market Driven Innovations, Working Paper 95-06, Erasmus University, Rotterdam. Jürgens, U. (1999): Neue Systeme der Produktentstehung im Spannungsfeld von Regionalisierung und Internationalisierung, in: Fuchs, G., Krauss, G., Wolf, H.-G. (eds.), Die Bindungen der Globalisierung – Interorganisationsbeziehungen im regionalen und globalen Wirtschaftsraum, Metropolis-Verlag, Marburg, pp. 162-191. Jürgens, U. (1999): Anticipating Problems with Manufacturing during the Product Development Process, in: Comacchio, A.,Volpato, G., Camuffo, A. (eds.), Automation in Automotive Industries. Recent Developments, Springer-Verlag, Berlin etc., pp. 74-91. Jürgens, U., Lippert, I. (1997): Schnittstellen des deutschen Produktionsregimes – Innovationshemmnisse im Produktentstehungsprozeß, in: Naschold, F., Soskice, D., Hancké, B., Jürgens, U. (eds.), Ökonomische Leistungsfähigkeit und institutionelle Innovation. Das deutsche Produktions- und Politikregime im globalen Wettbewerb, WZBJahrbuch 1997, Sigma-Verlag, Berlin, pp. 65-94. Lawrence, P. (1980): Managers and Management in West Germany, Croom Helm, London. Lincke, W. (1995): Simultaneous Engineering. Neue Wege zur überlegenen Produktion, Karl Hansa Verlag, Munich/Vienna. Lundgreen, P., Grelon, A. (eds.) (1994): Ingenieure in Deutschland: 1770-1990, CampusVerlag, Frankfurt a. M./New York. Meinig, W., Mallad, H. (eds.) (1997): Strukturwandel mitgestalten! Rahmenbedingungen und Zukunftsperspektiven für Automobilhersteller, Importeure, Zulieferer und Handel, FAW-Verlag, Bamberg.
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