Smart systems help reduce inefficiencies in product development.
by Swapan Jha, August 2011
Companies typically undertake engineering change management initiatives to control cost or improve efficiencies. According to a recent Aberdeen Group study, 63 percent of surveyed executives from manufacturing-intensive industries feel reducing time to market is the top driver for changing core product engineering processes. Indeed, numerous pressures are slowing down and/or complicating product development: compliance with new regulations, adoption of global teams and outsourcing, increasing product complexity, global competition and cost pressure, higher cost of quality, and customer satisfaction and loyalty. However, 54 percent of companies lack a single repository for reviewing, analyzing, approving, and tracking engineering changes across products—despite the fact that efficient engineering change processes can reduce typical product development cycles by 33 percent.
Engineering Change Management: The Challenge
In the high-technology and medical device industries, for example, an average of 25 to 35 percent of the work performed by employees in the research and development (R&D), operations, quality, and other divisions is non-value-added effort. Typically, employees spend a third of their time looking for information, re-creating data or drawings, and manually processing engineering change management. This prolongs the engineering change management process cycle time and increases the risk of introducing product quality and compliance issues.
The lack of electronic collaboration in conjunction with serial processing makes the engineering change management process inefficient and cumbersome. However, removing inefficiencies alone from the process is not a differentiating factor for best-in-class companies. In fact, a successful engineering change management process is driven by the effectiveness of the decision-making process around engineering change management.
Industry leaders understand that a small change can have a large ripple effect on downstream processes, including the supply chain. Business leaders at these companies solicit broader perspective from different contributors to the engineering change process to better analyze the impact of a change across product lifecycle and supply chain. Nevertheless, managers often fail to fully anticipate the impact of engineering change across various departments such as quality, procurement, and service.
Engineering Change Management: The Strategy
Automation is the key to enabling an effective engineering change management process. Leaders should drive process automation by leveraging technologies such as workflow, product lifecycle management (PLM), design and document virtualization markup, and product data management tools to institutionalize and enforce an effective change management decision-making process across the enterprise. The following capabilities are required for a best-in-class engineering change management process:
Single product repository: The ability to manage and control a single product data repository across the enterprise
Collaboration platform for internal and external entities: The ability to securely collaborate and exchange information with internal key stakeholders, customers, partners, and suppliers
Global engineering change management process: The ability to enforce and monitor a global but flexible engineering change management process
Real-time synchronization of engineering changes: The ability to quickly and cost-effectively synchronize changes across engineering, manufacturing, quality, and service divisions globally
Companies that implement good engineering change management practices gain a competitive tool that improves product profitability, R&D effectiveness, and market responsiveness. Improving the effectiveness of the engineering change management process by reducing non-value-added work will enable companies to produce more new products sooner, resulting in more revenue at higher margins. In fact, the financial benefit for products being first on the market is huge—on average, companies gain 11 percent margin advantages for their newer products.
Swapan Jha is senior director of industry strategy and insight at Oracle.