Managing Short Product Cycles

1. Managing Short Product Cycles Lighting Fixture Design Conference June 2014 Brian Price b.j.price@aston.ac.uk Engineering & Applied Science

2. Agenda My Background Tools & Techniques Time to Market References

3. Time to Market One Month Delay 1% Sales Decrease 1% Production Cost Overrun 1% Design Cost Overrun • Benefits – • Improve Quality • Resource availability • Reduce Costs • Resource allocation optimized • Market Advantage • Hit ‘hot markets’ Source - Reinertsen 1992

4. Project Failure Rate Source: Standish Report, Chaos Report

5. Reasons Projects Fail • Delivering the Wrong Project • User involvement in requirements & Specs • Inadequate Management Support • Priority and corporate commitment • Scope Creep • Lack of scope control • Poor Project Management • Inadequate Timing • Either too long or too short • Poor People Skills • Internal & external to the team • Inadequate Resources All easily fixed – so why aren’t they? Source: Standish Report, Chaos Report

6. My Background

7. The Challenges Sustainability - Hype - Cost Customer Expectations - Range - Reliability New Technologies New Markets Fast Time-to-Market Opportunity & Threat

8. Finish First

9. Finish First Launch Configuration Lean & Agile Projects

10. Launch Fast Follower Strategy Soft Launch Kaizen & Kaikaku Improvements Launch Support

11. Fast Follower Strategy Launch Risk A fast follower strategy balances the risks associated with innovation, against the loss of first mover advantage. Innovative companies are more profitable, but require greater investments and are exposed to greater risk of product or market failure. Fast followers can use competitors to open the market and follow with superior service. Microsoft adopts a fast follower strategy, compared to Apple Computers innovation strategy. Fast Followers Innovators

12. Soft Launch Start of Production A soft launch allows fast time to market, with a robust, but less than fully featured product. Cost exposure is controlled with limited market release and restricted volume. Toyota adopted this policy for introduction of the Prius hybrid, which went through four generations in 10 years and was limited to <100k units/yr out of 7 million annual production until it was fully developed. Volume ramps up once market is matured and product proves viable. Full Volume Annual Volume Soft Launch Time

13. Improvements Kaikaku – Radical, Dramatic Improvement Once launched, products need scheduled updates and improvements for cost, quality and marketing reasons. Changes should be aligned to key points e.g. model year updates, and be continuous incremental improvements (quality) and/or occasional step change improvements. Improvement schedule should be planned as part of lifecycle planning, minimizing reactive changes to manage cost and investment write-off. B A Kaizen – Continuous, Incremental Improvement B A

14. Launch Support Initial care support for high risk launches (new technology, new markets, etc.), can provide customer confidence, manage brand perceptions with early issues and feedback valuable initial, real-world data on usage. Rapid customer issue response is essential, including technical team support for field issues, dealer training and seamless repair/replace in the event of issues. Early adopters are potentially highly valuable members of the development team, as well as evangelists for the brand.

15. Configuration Product Lifecycle Parallel Developments Modularity De-coupling

16. Product Lifecycles Plan product lifecycle, including decline and death. Variant introduction, upgrades and replacement strategy must be in place prior to the start of concept design, let alone investments in tooling, in order to minimize unplanned write-off or replacement and maximize return on investment. Plan complete portfolio of products to balance resource allocations and launch risk. See Fujimoto, Reinertsen

17. Parallel Developments Product Launch Traditional Model Pressure to minimize product development costs leads to reducing options early in the NPD process and developing a single configuration. Set-based design, as used by Toyota and many other Japanese companies, develops viable alternative options to a late stage, allowing optimal product selection at point of launch. Development costs are higher, but more than compensated by launching on time and with the right product for the market. See Sobek & Ward Option ‘A’ Option ‘B’ Option ‘C’ Product Options Parallel Model Option ‘A’ Option ‘B’ Option ‘C’ Time

18. Modularity Modularize products, systems and components to reduce risk. Use proven components from supply base. Reduce launch risk with minimal new components, concentrating on customer observable features and benefits. Component/feature level reuse improves economies of scale, reduces development costs and launch risk. See Ulrich & Eppinger

19. De-coupling Features Launch Separation Features and systems are de-coupled to stagger launches, reducing cost and risk, whilst enabling product refresh. Highly coupled products may allow more optimal features, but come with considerable launch risk/cost. Evaluate risk/benefits of coupled features to manage risk. Mitigate high risk through de-coupling designs at the concept and configuration stage. Lifecycle plans for products, systems and features, will enable product launch risk management. See Ward, Fujimoto Body Engine G’Box System Launches Body Engine G’Box Time (Model Years)

20. Lean & Agile Voice of Customer Agile Start-up Mentality Concurrent Engineering Testing & Validation

21. Voice of Customer The voice of the customer needs to be at the heart of every activity. Formal processes, such as QFD (Quality Function Deployment) and VSM (Value Stream Mapping), can be used to identify what adds value in an organization's activities and products. Care should be taken with focus groups and customer feedback/surveys, as these require careful interpretation. Consider use of direct observation (industrial anthropology) and tap into internal and external expert opinion. See Taguchi, Ohno

22. Agile Start-up Engender a ‘start-up culture’ in your NPD teams. Give then resources, an overall objective and then get out of their way. Empower the team to succeed by giving them ownership and remove barriers, especially bureaucracy that adds little value. Identify all the things you currently do that you don’t need to do – and stop doing them! This generates the resources and capacity to work on new, high value work. Fail often, Fail early. Agile Process

23. Concurrent Engineering Start of Production Concurrent or simultaneous engineering involves key stakeholders (suppliers, manufacturing, customers, legislative bodies, etc.) being active participants in the product development process. Where possible, geographically co-locate the team. Establish a virtual collaborative environment for dispersed teams. Delegate authority and align performance assessment with project success. See Sobek& Ward, Clark & Wheelwright ‘Over –the-Wall’ Engineering Concurrent Engineering Number of Changes Time

24. Testing & Validation Start of Production Closely linked to knowing your customer, is the definition of appropriate sign-off criteria (validation testing). Industrial anthropology will define expected life and in-service environments. Robust/appropriate testing reduces warranty cost and protect brand value. Avoid over-test, as this increases product cost for no added customer value. The Taguchi loss curve can be applied to optimize the cost-of-quality and ensure testing adds value. Long term testing can extend post-launch, as used in aerospace industry. Design/Test Phases Time Extended Life Testing

25. Project Management Risk Management Leap-frog Development Capacity Utilization Knowledge Management

26. Risk Management Successful project management is all about managing risk. Identify risks based on prior experience, expert opinion and scenario planning. Categorize risk by likelihood of occurrence and severity of impact. Mitigate high risks, track moderate risks and accept low risks. Risk mitigation strategies include: • Transfer/Insure • Eliminate/Avoid • Reduce/Accept • Alternative/Fallback

27. Leap-frog Development Time Compression One method of compressing development times, is to ‘leap-frog’ design updates and changes to miss the immediate next phase. This allows greater overlap of phases and more iterations of design prior to launch. Careful tracking of design iterations and component test level is required to manage this activity, but it allows reduced waiting/lead time of prototypes. See Reinertsen Design/Test Phases Time

28. Capacity Utilization Thoroughly understand the capability, capacity and availability of all resources at your disposal (people, equipment, facilities, etc.). Apply resources ensuring there is a critical mass to succeed. Queuing theory suggests max. load capacity should be ~70% to account for contingency and unknowns. Front load resources on projects. Fewer projects, better resourced, ensure more success than teams spread too thinly. See Goldratt

29. Knowledge Management Maximize knowledge capture and reuse through formal, structured systems. Encourage creation and dissemination of knowledge through valuing learning, competition (‘X’ Prize) and intellectual property bounty. Utilize project collaboration sites and document repositories for information storage and retrieval – especially for dispersed teams and concurrent engineering environments.

30. Questions?

31. References Bicheno. J. & Holweg. M., 2009. The Lean Toolbox. PICSIE Books Brophy. A., 2013. Lean. Financial Times Guides Clark. K. & Fujimoto. T., 1991. Product Development Performance. Harvard Business School Collins. J., 2009. How The Mighty Fall. RH Business Books Cooper. R., 2001. Winning at New Products. Basic Books Goldratt. E., 1992. The Goal. North River Press Haik. Y. & Shahin. T., 2011. Engineering Design Process. Cengage Kendrick. K, 2004. The Project Management Tool Kit. AMACOM Omerod. P., 2005. Why Most Things Fail. Faber & Faber Oosterwal. D., 2010. The Lean Machine. AMACOM Pandey. V., 2014. Decision Based Design. CRC Press Reinertsen. D., 1997. Managing the Design Factory. The Free Press Trott. P., 2012. Innovation Management & New Product Development. Pearson Ulrich. K. & Eppinger. S., 2008. Product Design and Development. McGraw-Hill Womack. J. & Jones. D., 2003. Lean Thinking. Simon & Schuster Womack. J., Jones. D. & Roos. D., 1990. The Machine That Changed the World. Macmillan Wheelwright. S. & Clark. K., 1992. Revolutionizing Product Development. The Free Press