Lean Product Development: The Next Frontier Date:   Thursday , July 03, 2008 Now the terms ‘lean manufacturing’ and ‘lean enterprise’ are quite popular and well accepted. The ‘lean’ approach is acknowledged as a way of doing business in the present challenging environment. The ‘lean’ principles are easy to understand and accept. The challenge is in implementing them. Such an approach revolves around concepts which have been talked about since time immemorial. However, it is only recently that the ‘lean manufacturing’ and enterprise concepts have been given a serious look as businesses combat the ever increasing pressures of customer satisfaction, cost reduction, globalization, compliance, time to market, growth, and profitability. Lean manufacturing aims to ‘do it right the first time’, while minimizing waste (this refers not just to the physical waste but more importantly to non-value add processes as well) and being open to change. Toyota led this effort by what is now the well known Toyota Production System (TPS). The global manufacturing industry went about researching, learning, or adopting similar practices only to find out that they did not achieve significant business success, like gaining competitive advantage. The reason for this most probably lies in the fact that emulating only the manufacturing practices is not enough. This can put a company’s manufacturing practices at par with other leaders. But what about the products themselves? If quantum improvements are needed in areas such as competitive advantage and market share - which can lead to higher revenue growth and profitability - companies need to build winning products! Thus, Toyota’s leadership today is not only because of TPS. Leading companies around the world recognize this fact and are applying the ‘lean’ principles to other activities of the value chain. ­Examples of activities even before a product is manufactured are product development, planning, parts sourcing, purchasing, and so on. It is in this context that most companies are realizing that Lean Product Development is the next frontier, since it provides a greater level of opportunity for improvement. Lean manufacturing still delivers significant value but is no longer a competitive differentiator. In Focus - Product Development With enterprises becoming more customer driven, the focus has shifted to product development. They are now beginning to realize that an even greater level of opportunity for improvement is available by better managing the digital product definition at every stage in a product’s life. There are ever increasing demands to improve innovation, quality, and time to market while reducing costs. These circumstances have forced businesses to re-engineer their product development processes. Global Product Development (GPD) has become a reality through offshoring and outsourcing, to leverage the benefits of costs and talent availability around the world. However, newer challenges have emerged. There is a need to collaborate effectively across geographies, various participants including customers and suppliers, time zones, cultures, and languages. Developing the organizational ability to manage projects, product information, protect intellectual property (IP), deploy consistent processes, communicate the right thing to the right person at the right time, manage change, or have version control in a distributed environment is a complex task. Product Lifecycle Management (PLM) – An Enabler for Lean Product Development Many enterprise solutions – such as ERP (Enterprise Resource Planning), CRM (Customer Relationship Management), and SCM (Supply Chain Management) – focus on optimizing the flow of physical products and transactional information. These applications work best for processes that involve doing the same thing, the same way, over and over again. The fact is, they are not suited for the kind of rapid iteration and innovation necessary for successful product development. Hence, the birth of PLM. To consistently produce great products, companies need a product development process that becomes, in itself, a competitive differentiator. While some see product development as synonymous with engineering, a truly effective product development process engages a variety of cross-functional participants from marketing, engineering, procurement, manufacturing, sales, and service departments. The ever-increasing levels of outsourcing have driven suppliers and manufacturing partners into direct roles in the product development process. At the same time, a strong customer focus has necessitated the customer’s direct involvement. As a result, attempts to optimize product development naturally evolve from a departmental focus within engineering, to an enterprise focus, and ultimately to a distributed value chain focus. Developing digital products in a value chain environment - and under intense time and cost pressures – is certainly not easy. While many manufacturers have made great strides improving operational effectiveness across their enterprises and supply chains as it relates to manufacturing and logistics, most companies will admit that their product development processes are rife with problems. The digital content that describes products during the development process typically gets fragmented across organizational boundaries, with each group having different forms of product definition stored in different systems, and many with incompatible formats. No easy-to-use capability exists to share information among these enterprise systems in a controlled manner. PLM describes a comprehensive framework of technology and services that permit manufacturing companies and their partners and customers to collaboratively conceptualize, design, build, and manage products throughout their entire lifecycle. PLM solutions must enable companies to create detailed, intuitive, and realistic digital product information; collaborate by incorporating early input from the various participants in order to identify and resolve critical issues; and control and automate critical processes such as release to manufacturing, change, and configuration management throughout the product’s lifecycle. PLM has emerged as the primary means by which manufacturing companies can achieve step-change improvements in their product development process. Architecture Matters A superior product development system must be based on leading technology that tightly links footprint and architecture. A comprehensive set of capabilities on an inadequate architecture, or a great architecture that lacks critical capabilities, would not deliver an effective product development system. A comprehensive footprint must offer the capabilities necessary to improve product development processes. These processes involve the entire enterprise and are further extended to include supplier, partner, and customer participants. The footprint of PTC’s Product Development System provides five essential capabilities: *Create detailed digital product information (MCAD, ECAD, Software, and Documentation). *Collaborate with distributed project teams, customers, suppliers, and partners. *Control content and automate processes. *Configure content to match products and services. *Communicate via dynamic publications. But, this footprint of capabilities must align on a sensible system architecture. Without an integral, Internet-based architecture that knits together these five interdependent capabilities – create, collaborate, control, configure, and communicate – manufacturers cannot effectively optimize their product development processes. Therefore, leading technology must ensure that the footprint of capabilities are built from the ground up on an optimized architecture that addresses the needs of the digital product value chain, what PTC calls the ‘3 Is’. The architecture must be * Integral, in the sense that it shares a common database schema, common business objects, and a common Web-based user interface, * Pure Internet, in the sense that it deploys seamlessly across existing Intranet and Internet infrastructures to accommodate a distributed value chain as well as provide a seamless user experience across applications, and * Interoperable, in the sense that it integrates easily with other systems (ERP, SCM, CRM, as well as a variety of MCAD/ECAD and software applications) using standard protocols and integration approaches. The emerging need of a PLM system today is to have a very strong capability to define and automate processes, and not just tie those tools together which help engineers create a product with a set of capabilities. A competitive value can emerge when organizations focus on not just ‘what’ they develop, but ‘how’ they develop it. Examples of processes involved would be concept development, change management, quality management, manufacturing process management, and component sourcing – to name a few. PTC’s PDS has the ability to help manage the various processes involved in the course of product development. Conclusion In general, the goal of lean techniques is to define processes which allow people – individuals, functions, or organizations - to operate as one entity to create breakthroughs in a continuous value stream to raise the whole chain to a higher level. PLM system is the technology which ties the people and processes across the supply chain to help create winning products. The author is the Vice President and Managing Director, PTC Software India.