The chief executive of EADS has called for the industry to learn lessons from the introduction of its own A380 super jumbo and Boeing’s 787 Dreamliner. Immature products and lateness to market, which mean major loss of income and market share, requires fundamental change. Traditional organisational approaches to new product introduction cannot meet modern business requirements. They break the Product Introduction Process (PIP) up across many specialist functional departments with poor communications, lack of ownership, excessive complexity and considerable Non Value Added (NVA). What is required is a team structures, where there is clear ownership and integrated control, to replace the traditional approaches.
In the aerospace industry, getting it right first time when introducing new products is very important. The introduction of the 787 demonstrates this. But the programme also shows us that to get it right we must remember:
- A complex engineering jigsaw plus a complex supply chain together with a complex computer system equals excessive costs;
- “Make vs. Buy” decisions are critical to new product development programs and is a key driver to business performance;
- Product Introduction Process (PIP) should be designed to deliver mature new products.
Our experience and best practice suggest that 4 dimensional Smart Product Lifecycle Management (4D-SPLM) approach will prevent you from getting it wrong, which is far better than applying a costly cure that will adversely impact your financial performance. 4 Dimensional Smart Product Lifecycle Management (4D-SPLM) integrates Production Introduction Process (PIP) together with Simultaneous Engineering (SE) into a seamless approach. 4D-SPLM, which is a clearly defined and structured approach, can give companies considerable significant gains in this critical area. These include an ability:
- To reduce the lead time of the overall Product introduction Process by 25-50%
- To produce 15% more products with 25% less resource
- To improve its reliability and quality performance
- To ensure that the process consistently delivers mature quality products at low cost.
Lesson learnt on 787.
Aerospace manufacturers are learning to live with a whole new set of rules brought about by low growth in the global economy, austerity measures and new entrants into the market. Most agree that the two key important issues facing them are reducing an aircraft’s maintenance and running costs and improving its availability. These issues are here to stay for the next 3 – 5 years and success or failure to come to terms with them will be critical to each company’s performance. Therefore, there is no avoidance of the challenge.
Time is also critical. This means that cost saving quality products are required now. This together with increase competition within the industry excludes incremental changes that have been delivered success previously through the use of continuous improvement programmes. But, how does one make drastic changes in design, development and supply chain to deliver mature products that add value for the customer with the minimum of risk, whilst reducing costs?
The extent to which the 787 have been troubled both in gestation and post-launch suggests that the 787’s issues is more strategic than tactical, outsourcing, risk management or the timing of when to modularise the aircraft. Boeing in 2003 was under pressure to counter Airbus’ strategic move, which was to offer its A380, a hub-and-spoke solution, to the market. In response, Boeing decided to offer the 787 Dreamliner, as a point-to-point solution, as their view of air travel evolution was different than Airbus.
But a point-to-point solution requires more flights to serve the same number of cities as a Hub-and-spoke solution. This higher cost lead the company to examine the whole life-cycle cost of an airplane, so that it can offer customers a guaranteed reduction in maintenance cost and improvement in availability. As a result, the company made the following game changing decisions:
- The plane would be made from carbon fibre composite instead of aluminum.
- The plane braking, pressurisation and air-condition systems would be run by electricity instead by hydraulics.
- Development costs and time, and financial risk will be reduced by the following actions;
- Design and manufacturing authority will be delegated to partners through the use of risk sharing contracts as never before. The wings would be made would be made in Japan, the horizontal tail in Italy and the fuselage assembled in huge pieces by partners in Charleston, S. C., and Wichita, Kan. This resulted in a complex, fragmented, functional global supply chain.
- The company would use Exostar that had been used on other programmes. The web-based system, which was a complex computer system, would manage the change process by allowing suppliers to input up-to-date information about the progress of their work. It was meant to provide supply chain visibility, improve control and integrate critical business processes.
- Each plane would accommodate either Rolls Royce or GE engines and the engines and would be swapable between them in about 24 hours.
- The entertainment system will be on the same network as the flight-control system.
However, to rectify the unintended consequences brought about by Boeing’s approach, the company had to expel significant management effort and to spend $2.4 billion plus. The company’s approach had the following inherent weaknesses:
- The overall focus of the company product introduction (PIP) process was on cost saving at the exclusion of delivering mature processes and product.
- Its PIP did not include a step to check the integrity of the processes and product.
- Financial and marketing factors drove how the company modularise the aircraft (Make vs. Buy decisions).
- Supplier integration was not validated.
- The company’s risk-sharing contract linked every company in the supply chain to the slowest member in the supply chain; therefore the slowest company became the pacemaker for the project.
- Over reliance on IT system communication exclude a mechanism to resolve crossed organisational boundaries issues.
- The expertise of the 787’s senior management team was bias towards finance and marketing.
- Failure Mode Effect Analysis was not used to manage business processes and planning risks.
Improving the practices, procedures and organizational approach to Product Introduction Management to world class standards is one of the most important issues facing any defence organisation which wishes to deliver affordability for any company which wishes to compete in global markets.
Marketing to Manufacturing: What are we aiming to achieve?
By using clearly defined, structured approach, the product introduction process (PIP) can be considerably enhanced to give companies significant gains in this critical area. These include an ability to handle:
- Dramatic increases in New Product Introduction Rate
- Shortened Product Life Cycles
- Delivering mature technology
Lateness to market means major loss of income and market share. Typical targets should be to reduce the introduction time by 25-50% and produce 15% more products with 25% less resource.
Traditional organisational approaches cannot meet current business requirements. They break the PIP up across many specialist functional departments (silos) with poor communication, lack of ownership, excessive complexity and considerable Non Value Added (NVA) activities. The traditional approach must be replaced by team structure. Clear ownership and integrated control of the PIP is necessary.
The aim of the new methodology are:
- To deliver mature products and supporting services to market more effectively in terms of time, cost, and reliability and quality of performance.
- To cut the time for new mature technologies to be introduced.
Understanding this aim means understanding that the effective product delivery and aftermarket support are not ends in themselves. They only have value if they enhance the customer's value. This aim gives equal emphasis to initial product delivery and aftermarket-care support, as integral parts of the overall customer acquisition process.
The new modern process has a number of key features, some of which build upon the business processes and practices the already exist in lean manufacturing:
- A whole-life approach, embodied in a single Integrated Project Team (IPT) bringing together the main stakeholders.
- Clearly identified market
- A greater willingness to identify, evaluate and implement effective trade-offs between system performance, whole-life costs, annual cost of ownership and time.
- A more open and constructive relationship with suppliers, based on collaboration and risk-sharing.
The new cycle: Smart Product Lifecycle Management (SPLM)
Our Smart Product Introduction Management (SPLM) reduces the risk during early stages of product introduction so that there is a high level of confidence that project targets for time, whole-life cost, annual cost of ownership and performance will be achieved. Encouraging system maturities in these early stages is therefore an objective of Smart Product Lifecycle Management.
At the highest level, Smart Product Lifecycle Management (4D-SPLM) has four key dimensions:
- 10 gate simultaneous engineering product introduction process to manage innovation risk, where each gate involves executing the plan agreed at the previous gate, reviewing the outcome, and planning for the next gate.
- Categorising major modular product groups together with Regulators to integrate suppliers,
- Multi-skilled integrated project/planning/supply teams to work and communicate as a unit, and
- Centralised accountability to monitor performance and progress.
The approach reduces time-to-market by typically 25-50%, improves reliability and quality of performance, and ensures that the process consistently delivers mature quality products at low cost and risk. It has been proven to manage risks and deliver mature products that meet cost targets and customer expectations. Manufacturing companies need expert help to introduce this new production introduction philosophy.