Concurrent Engineering

Shortening Lead Times, Raising Quality, and Lowering Costs

John R. Hartley

• Publisher: Productivity Press
• Year: 2017
• Print ISBN:
  9781138438934
• eBook ISBN:
  9781351458351
• Topic: Business
• Subtopic: Operations
• Index: Business

By simultaneously examining the concerns of design, production, purchasing, finance, and marketing from the very first stages of product planning, concurrent engineering makes doing it right the first time the rule instead of the exception. This should be the first book managers read when they are ready to eliminate waste in the product development process.An introductory handbook, it gives managers 16 clear guidelines for achieving concurrent engineering and contains abundant case studies of Japanese, U.S., and European company success stories.The book also:Defines the concurrent engineering task force as a full-time, multidisciplinary unit of operation.Discusses the necessary interdependence of concurrent engineering, Quality Function Deployment, Total Quality Control, and CAD/CAM.Shows how concurrent engineering can be structured to fit your company and used to gain flexibility and efficiency.

PART ONE

Tremendous Gains

CHAPTER ONE

The Need for Change

To cut product time-to-market by one-third

To raise quality to world-class levels

To cut the time to ramp up to full production

Never has competition for manufactured goods been keener: Japanese companies have absorbed the increased value of the yen, the newly industrialized countries (NICs) are attempting to raise quality to compete on equal terms with U.S. manufacturers, while the Eastern Europeans are starting to produce a number of cheap products that meet the demands of consumers.

Because of the massive deficits in the federal budget and in the balance of payments, exporting is no longer an option for U.S. manufacturers; it is a necessity. As C. Fred Bergsten, director of the Institute of International Economics and member of the Competitiveness Policy Council, points out: “To cover the large external deficit, the United States must borrow about $10 billion monthly in new money from the rest of the world — and avoid any net withdrawals from the $1.5 trillion stock of liquid foreign assets already in America.”

That is a tall order, and Bergsten argues that the only longterm solution is for the United States to export more, and that it is already on the road to doing so. If the deficit is to be turned around, not only must more corporations export more products, but others must produce products that will prove to be import substitutions — the declared aim of General Motor’s new Saturn automobile.

Progress, but Not Enough

It is true that progress is being made, with the decline in the value of the dollar an important factor. U.S. manufacturers have increased their share of the world’s export markets by about 0.6 percent annually between 1987 and 1990. Some industries are doing better than others in exporting or taking sales back from importers. For example, the U.S. semiconductor makers increased their share of the world’s market from 34.9 percent in 1989 to 36.5 percent in 1990. They have also increased their share of the Japanese market from around 3 percent in 1986 to 13 percent in 1990.

Although that is remarkable progress, the increased share of a market that has grown strongly came as a result of U.S. political pressure. In 1986, the Japanese were persuaded to agree to buy 20 percent of all their semiconductors requirements in the United States by 1990. To pressure the Japanese to do so, U.S. authorities imposed punitive sanctions on imports of electronic products made with Japanese semiconductors that amount to around $160 million a year. So it is hardly surprising that the Japanese made efforts to buy American semiconductors.

Other industries have been less successful in turning back the tide of imports and in increasing exports. The U.S. automobile industry is one example: in 1990 General Motors (GM), Ford, and Chrysler posted one-year losses in sales of 3.7 percent, 11 percent, and 15 percent respectively. By contrast, Toyota’s sales in the United States were up 15 percent, and those of Honda up 9 percent.

It was encouraging that in 1990, imports of American cars into Japan increased by 50 percent, from 19,084 to 28,602 units. However, 7,700 of the extra units came from Japanese factories in the United States, with the indigenous U.S. makers increasing sales by only 1,794 units, or 12 percent. Honda alone increased sales of its imported Accord coupe by 2,837 units to 7,534, so it is clear that the U.S. makers have a long way to go in catching up with the Japanese.

Lower Dollar Not Enough

Some argue that the fall in the value of the dollar is sufficient to help the United States increase exports and reduce the level of imports. The success of the Japanese in maintaining or increasing market share while the yen has appreciated indicate that a cheaper dollar has had little effect. In any case, there are many more successful producers in the world now than in the early 1980s. Korea, Taiwan, Singapore, and Malaysia are just some of the countries that have improved the quality of their products and that are exporting strongly. Other NICs, such as Thailand, are moving up the learning curve in producing goods suitable for export.

Tremendous efforts are needed to combat this flood of imports, and to increase exporting, but the answer is not simply to repackage the products sold in the United States. When NTT, the Japanese telecommunications monopoly, first opened its doors to American-made products, its executives complained that large corporations submitted quotations for products that did not meet the Japanese specifications — they were identical to the American products. Later, NTT did purchase American digital switching equipment, and American companies started to export telephone handsets and other telecommunications equipment successfully. Even so, some customers complained that the office telephones supplied by American companies were harder to use than the Japanese telephones they replaced.

Better Products the Answer

Clearly, what is needed (apart from the more competitive dollar) is better products that meet the requirements of customers. To meet these goals, U.S. manufacturers not only need to improve their performance continuously but to ensure they can make better products with shorter lead times and with improved inherent quality. It is no longer merely a question of cutting manufacturing costs — itself a major challenge — but of refocusing the direction of the business so that it responds to the needs of customers. Because of the fierce competition customers will become kings, not tolerating even minor faults; they will be able to find better products at lower prices from other sources. The aim must be to put customers’ requirements first. Such a change demands a major shift in corporate culture.

This shift in culture must come from a clear recognition of the tasks and objectives that lie ahead and that must be met. But generating and then managing the cultural change is not easy. It requires confidence that only a wide perspective can support. It demands vision on the part of those who are in command of change; and the clear ability to give priority to the achievement of world-class performance, sensitivity to customers’ needs, design and manufacturing leadership, and business competence.

It is no longer sufficient to be classed as “competent.” Even excellence in one sector of the business in not adequate, as the trials of Citicorp, Disney, IBM, and Kodak demonstrate. The stakes are so high and the perils of failing so great that all-around industrial excellence is the only goal worth seeking. Inevitably, some organic restructuring cannot be avoided — indeed, it will be welcomed by those who can recognize the rewards in sight.

Work by a number of business management consultants has shown that corporations that have one excellent feature tend to concentrate on that until it becomes sanctified as the main aim of the organization. The result is inflexibility and a failure to detect weaknesses in other areas or any problems that impede the corporation’s ability to respond to the market.

To prevent itself from becoming addicted to the keys to past success, an organization must remain open to new ideas and maintain a dynamic structure that continuously responds to the outside world. Open-minded management, flexibility, and better response to the marketplace are among the qualities that make up such an organization.

Chief executives striving to make their company grow and keep up with the competition will find that concurrent engineering (CE) fits in with the characteristics that make for a successful company. It will foster the development of a new structure; it will breed more resourceful, profit-oriented managers in all departments; and it will motivate managers to question where the corporation is going — a prerequisite for success in the nineties.

Japanese Lead

It is clear that Japanese companies are able to develop products much more quickly than their American competitors, and with higher quality. In many industries, their products are the benchmarks. This competitiveness results from a number of factors, such as a loyal work force, dedication to the customers’ expectations, and the use of improved methods to develop products. The scale of the problem is shown in Figure 1-1, a comparison of development lead times for similar projects in Japan and the United States.

In this study, which measured six stages of development, the most important differences were in the timing of advanced engineering and process, or production, engineering. The Japanese start advanced engineering just one month after work on the concept has started; in the United States, there is a delay of six months as the concept is firmed up. In Japan, process engineering starts just two months after product design itself; in the United States there is a delay of nine months, again to allow the design to be finalized. Then, in Japan the pilot run is not just shorter but starts later than in the United States. In addition, most stages are completed more quickly.

Source: Kim B. Clark and Takahiro Fujimoto, Product Development Performance: Strategy, Organization, and Management in the World Auto Industry. Boston: Harvard Business School Press, 1991. p.78. Reprinted by permission.

Figure 1-1. Because of their team approach, the Japanese can develop products much more quickly than American corporations.

Crucial Differences

The differences are crucial. First, because advanced engineering starts so early, the Japanese engineers are aware of every little change made at the concept stage and can thus incorporate them into their thinking early on. At the same time, the process engineers would not be able to start their work unless they were aware of every change made to the design as it was being made — otherwise, they would be designing machines and their vendors building machines suitable for obsolete designs. To be able to respond quickly to these changes, the engineers need to react flexibly and with a sense of cooperation. All these factors result from the adoption of a task force system of project management. Finally, the pilot run starts later because the Japanese have a more completely specified product, with fewer changes being made late in the project. They can therefore afford to wait until the manufacturing equipment is virtually complete.

To close the gap, American companies must emulate their Japanese counterparts by reducing the time taken to develop new products, achieving equivalent levels of quality and similar production volumes from Job One. In the automobile industry, the Japanese are able to take a program from management approval to production in 36 months, against 48 to 60 months in the United States. Their level of defects is approximately one-half that of the United States, and they ramp up to full production within weeks of Job One. The questions facing American managers are: How do we compete? How do we move one jump ahead?

Piecemeal Progress

During the past decade, manufacturing companies have made progress in streamlining operations. Deadwood has been cut out — for example, the Big Three automakers have adopted just-in-time concepts to cut the value of their inventory by $1 billion — and productivity has been improved. Unfortunately, all too often this has been on a piecemeal basis. For example, over a three-year period, a manufacturer might introduce one new product to fill a sector of the market. Because of production problems, volume was probably about 50 percent of that planned for the first 12 months, just when demand was greatest.

Changes made to the design immediately before and during the first few weeks of production reduced quality and increased cost while slowing down production. Meanwhile, the older models, which are less in demand, continue in production in a smooth, trouble-free fashion. However, because of the combination of older plant and lower volume, overall costs of these products are higher than in the new plant.

In another area the same company added some automation, but because of changes in specification at a late stage, the equipment started operating nine months later than expected, and volume ramped up slowly. However, the management team congratulated itself on the elimination of a high level of defects in another plant, a successful program to cut overheads in handling, and the reduction of inventory in the goods receiving warehouse by 27 percent.

With improvements made on many fronts, most on the management team are pleased with progress. But one person is unhappy — the vice president responsible for finance. He or she complains, rightly, that the new product has not yet broken even and that, in the first year, the new plant is not giving the return on investment th...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Dedication
• Contents
• Illustrations
• Publisher’s Message
• Acknowledgments
• PART ONE • TREMENDOUS GAINS
• PART TWO • TOOLS AND TECHNIQUES
• PART THREE • MAKING IT HAPPEN
• Bibliography
• About the Author
• Index