To be successful in this global market, manufacturers should invest enough in research and development to design and prototype new products dynamically.
** This is part one of a two-part article on the value of integrating R&D with production in a manufacturing enterprise.
One of the biggest challenges in a manufacturing company, especially with the worldwide time-to-market race, is how to establish a solid integration between R&D and production entities.
This article describes an old integration model and elaborates some of the related problems, then explains some newer models with better integration techniques. In addition, the “Design For Six Sigma” (DFSS) and lean manufacturing techniques are briefly explained as how they can significantly help on better integration and producing better results.
The main goal in this article is to focus on different models for integration of R&D processes with production to increase efficiency.
Questions include: When and how should the R&D process start? When and how should it be completed? What factors govern the completion stages? What the best practices and methods are to make the hand-off from R&D to production as robust and smooth as possible?
The variety of manufacturing environments make it impossible to provide one global solution to satisfy all the possible needs, however to answer some of these questions, brainstorming methods have been used by conducting several interviews and meetings with a number of plant managers and subject matter experts.
Keywords: NPD (New Product Design), R&D (Research and Development, prototyping and designing the conceptual product), Production: (Manufacturing process for making the final goods), DFSS (Design for Six Sigma), ROI (Return on investment), Time-To-Market: (The length of time to make a product from conceptual design to be available to sale)
Business values of R&D
Dynamic global manufacturers are currently faced with numerous different types of data to process such as inventory, logistics, production and scheduling, quality and process management, finance and material tracking, warranty and field services, and many others.
Hence the need for optimization and customization is growing rapidly as the market place puts enormous pressure on providing higher quality products with minimum cost and the shortest possible time to produce.To be successful in this global market, manufacturers should invest enough in research and development to design and prototype new products dynamically. This process of course depends on market-share and customer demands. Along with developing new products, the R&D team should simultaneously be able to communicate with “Production” accordingly. This communication is very crucial, as the speedy R&D process can be easily undermined by a long production time, therefore to increase efficiency, the results of R&D should be morphed into production in the shortest time possible.
To provide such a robust and flawless transformation, management should provide sophisticated procedures and a precise strategy.
Challenges
In the following examples, we assume there is no purchasing lead-time for raw materials.
Let us picture a fictitious product line in a manufacturing company: The Sales and Marketing department analyzes market share every quarter and forecasts the demand based on customers’ need and new offering feasibility. Based on their results, R&D defines a certain NPD and creates a workable design in a period of one month.
Production takes the R&D results and produces the new product with the needed quantity in two months and the new product is ready for the customers at the beginning of each quarter. Before the next quarter begins, the marketing people already have done their homework for the new quarter and have new ideas for R&D team to implement for the new version. This cycle continues and demand is enough to continue selling the old version until the new version arrives.
Of course this is not the picture you see in the real world. The main challenges are proper coordination and resources. Defining a product that you intend to be developed and eventually manufactured is difficult. Not always knowing what the goals are, it suffices to say that R&D requires a lot of resources including funding and people, as R&D needs knowledgeable personnel. Also required is input from experts in core technologies relevant to the product. Often a product starts with one goal. During the process of R&D, goals and results change slightly due to different research results or market changes. R&D cannot always produce successful results either. Sometimes efforts and estimates do not match. Additionally, too many new versions confuse customers and create hesitation to buy because there is always news of the arrival of a newer version.
Both modern and classic R&D models start with Marketing and Sales who directly communicate with customers and understand their needs and desires. This interaction significantly changes the whole manufacturing strategy and the way the entire process should perform. The main inputs are “What to Make, “Time to Make,” and “How often or when to start making another change or new product”.
In modern models, the R&D team also provides feedback to the marketing group as to what can be made and the marketing people should try to sell the new ideas to customers.
In any shape or form, counterparts can outperform the speedy performance of marketing, if the R&D and the “Time to Make” takes longer than it was anticipated.You can see an example at left, the marketing team (top level management who are participating with overall main strategy) conveys to engineers and supervisors what needs to be made or changed. They underscore that the new product needs to be ready for sale between 19 to 20 months otherwise they may not be successful due to the fact that the competitors may come up with the same product sooner. They recognize what the price of new product should be. Based on the price, demand, ROI analysis, and existing resources that they have to put in this process, they should complete the whole process in less than 18 months.
Engineers finish the preliminary process such as gathering requirements and provide the needed specifications and process details. Once they are ready to launch the lab-work, they come together with the R&D team to make the prototype for the new product. This process in the example above is intended to take 12 months to complete. In the meantime, the R&D group finds some resource-related issues and a few shortages in some equipment which will delay the process two months longer than the original estimation. Therefore the manufacturer spends 18 months to complete in addition making the executives nervous about this process.
Finally the R&D process is completed. The prototype works very well, according to the specifications. Managers and supervisors are excited to start the production of the new product.
Production people are ready to start the test run, however they are lacking some of the important procedures. Some of the other documentation for assembly and production are missing. There are also some software applications which need to be deployed to the production line along with the prototype. The prototype itself has deployment issues, and is not supported by some of the equipment in the production line. There are some performance issues with some of the tools; they have not been tested in production environment before. During the testing of some features, they find some quality issues that are not clear how to fix or who is responsible for fixing them. Management had estimated a maximum one month to finish the test run but fixing all these issues takes six months of their time including overtime from the R&D team and themselves.
Finally they finish the test run in seven months and all the documentation and procedures and applications are ready to move to production from the preproduction stage. Since everything is ready, real production takes only two days and product is ready to be shipped out.
Unfortunately it is too late. Just a few weeks prior to the completion of the product, one of the competitors comes up with almost the same product with an even lower price. Managers cannot afford to reduce the price since they have spent lots of resources for the extra time. The Sales group has lost some of the customers due to the late delivery and customers have lost their interest and faith in the company. Now sales are extremely weak, and after a couple of months they probably cannot afford to continue the new line.
It becomes a disaster.
Check out Part II of this two-part article on the value of integrating R&D with production in a manufacturing enterprise next week on Manufacturing Business Technology.
