Tuesday, September 13, 2011

Project Management for the Re engineering Projects (Product development) from POME BY GAUTAM KOPPALA VT

October 18, 2010 by · Leave a Comment 

Project Management for the Re engineering Projects (Product development):

 For the product development in re engineering Projects, there are a number of methodologies were assessed.  The work identified the principle strengths and weaknesses contained within structured product development in Re engineering Projects processes in use in industry today.  These methodologies have been credited with a fair degree of success in improving the productivity and quality of the product development in Re engineering Projects process.  The aim of this chapter in POME is to describe how these methodologies are applied in a number of case study organisations, and to present proposals for the improvement and continued development of the product development in Re engineering Project management process.  A proposed framework for product development in Re engineering Projects is presented that may act as a guide for companies seeking to advance the quality of their current product development in Re engineering Projects process.

 The environment in which today’s manufacturing companies operate is unpredictable and highly competitive.  In order to sustain growth companies need to continuously introduce competitive new products, with steadily decreasing development cycle times.  Under such conditions it has become increasingly important for firms to develop their product development in Re engineering Project process, and technological competencies as a basis for competitive advantage.  The fact that technologies, particularly in electronics and materials, are changing at an ever increasing rate, means that getting the right products to market at the right price, and ahead of the competition has become an even more difficult task.  It is however a task those companies must accomplish if they are to survive.  There exists therefore a requirement not only to accurately anticipate future market needs but also to reduce time to market for new products.

 

The use of a structured product development in Re engineering Projects process which is constantly used and continuously updated, is an effective tool to achieve this goal.  Earlier studies have identified key differences between new products that have succeeded, and those that have failed. A recurring theme within this work is the importance of a formal new product development in Re engineering Project management process. The aim of this chapter is to critically examine how products are developed and, through analysis of the strengths and weaknesses found in these procedures, propose a management framework for new product development for Re engineering Projects.

 

One problem appears to be that the business units within many traditional firms are split along functional lines, and as a result new product development in Re engineering Projects has been similarly organised.  Product development in Re engineering Projects is however a cross-functional exercise, and involves personnel from every functional specialisation.  It needs therefore to be organised around a multi-functional project ‘core’ team.  This opens the prospect of limiting downstream engineering changes once development is under way, and encouraging concurrent engineering, with decisions being subjected to a rigorous assessment of their impact on subsequent stages in the process.

 

In the past decade, organizations have become more aware of the fact that America’s most formidable weapon is its manufacturing ability, and yet more and more work seems to be departing for Southeast Asia and the Far East. If America and other countries are to remain competitive, then survival may depend on the manufacturing of a quality product and a rapid introduction into the marketplace. Today, companies are under tremendous pressure to rapidly introduce new products because product life cycles are becoming shorter. As a result, organizations no longer have the luxury of performing work in series.

Concurrent or simultaneous engineering is an attempt to accomplish work in parallel rather than in series. This requires that marketing, R&D, engineering, and production are all actively involved in the early project phases and making plans even before the product design has been finalized. This concept of current engineering will accelerate product development, but it does come with serious and potentially costly risks, the largest one being the cost of rework.

Almost everyone agrees that the best way to reduce or minimize risks is for the organization to plan better. Since project management is one of the best methodologies to foster better planning

 

A structured product development in Re engineering Projects process allows a product development in Re engineering Projects to be split up into logical phases rather than functional steps, and therefore enable decision points or gates to be inserted at appropriate points in the project.  This gives senior management the opportunity to review a projects progress against an agreed set of deliverables, and to be involved in the project at appropriate points in the programme, rather than to attempt to micro-manage the project.  Many projects do fail, and an important aspect of the review of a new product development in Re engineering Projects is to determine if and when a project should be cancelled or redirected.  The fact that many new projects are not entirely new highlights another benefit of structured development processes, namely that the project team can exploit the experience and knowledge gained from previous projects.  This can assist in scheduling cycle times to complete stages within the project, as well as indicating improvements to the methodology employed for new product development in Re engineering Projects within the company.

 

From information gained during industrial visits, and from a review of the current literature on the subject, a comparison of the new product management processes has been developed by POME (which is not applicable in all cases).  The majority of companies now utilise a formal life-cycle management process for all new product projects, and this highlights the importance attached to the continuous improvement of this process, both in terms of time to market and quality of execution.  A formal process provides a road map for the product development in Re engineering Project steam to follow.  It is not intended to be prescriptive, and flexibility will be built into the process, as is the ability to learn from previous projects, and therefore to improve the process.  The processes reviewed come from a number of companies, all of whom are engaged in new product development in Re engineering Projects to a certain extent.  The products of all of the companies studied have a large information technology content, and as a result they employ a high proportion of skilled and graduate personnel.  The companies analysed include in this chapter itself, with their respective processes:

(a) A leading manufacturer of electronic IT products.

(b) A large scale bespoke engineering company.

(c) A high technology service equipment manufacturer.

(d) A large scale manufacturer of low value IT products.

(e) A computer systems house.

 

Methodlogies for Product Development in Re engineering Projects

The chapter aims to appraise the product development in Re engineering Project methodologies in use at the companies analysed, and to produce recommendations foe the improved management of new product development in Re engineering Projects.  The companies all utilise a formal product life cycle management process, which are mainly variations of a stage / gate approach to product development and a brief summary of the stage / gate management of a product development in Re engineering Projects is given in the same chapter.  In addition the PACE (Product and Cycle-time Excellence) variation on the stage / gate methodology is further expand, as it has been utilised to some effect within companies in the electronics sector.

 

The Stage / Gate Approach to New Product development.

Stage / gate methodologies divide a new product development in Re engineering project into stages that represent logical milestones during product development. These stages are separated by gates that enable senior management to review the project against a previously defined set of deliverables, and decide if the project should proceed to the next stage, be redirected, or abandoned altogether.  An example of a stage / gate methodology is shown in Figure 1.

 

All the companies investigated utilised a variation of the Stage / Gate theme in managing their new product development in Re engineering projects.  Within this method of new product development in Re engineering Projects, the project is managed by a cross functional team, headed by a team leader.  Normally the full-time team consists of eight to ten members, many more and its effectiveness may be reduced.  The use of a cross functional teams also enables concurrent engineering, since all the team members are aware of the effect of their functional input to the project on other area.  The team are able to plan activities that may be carried out in parallel. The gate reviews allow senior management the opportunity to encourage the overlapping of stages.  If a preceding stage is not complete management are able to analyse the reasons for this and assess the risk involved in proceeding with the project.  If this level of risk is deemed acceptable, and there is a good chance that the unfinished tasks will be completed in the near future, they are able to give a ‘conditional go’ decision on the project.  This ‘conditional go’ is normally subject to the required tasks being completed at a defined point in the future.  An interim review is normally deemed necessary in this case.

 

The methodology also allows senior management to be involved in the project at the right time, and at the right level.  Their main role in product development in Re engineering Projects is setting strategic direction and ensuring that all new product projects are in line with the business strategy of the company, rather than micro managing development projects.  The gate reviews give senior management an excellent opportunity to carry out this role, and to consider the project in the light of the company’s entire new product development in Re engineering Projects portfolio.  This provides encouragement the project team to concentrate on the initial planning stages of the project, so that downstream engineering changes are kept to an absolute minimum.  The latter is considered to be a very important part of the management of new product projects, since it has been shown that detailed and early product definition is a key determinant of new product success.

 

Product and Cycle-time Excellence – PACE.

Product and Cycle-time Excellence -PACE, is a particular version of the stage / gate approach to new product development.  It was developed by Pittiglio Rabin and McGrath (PRTM) and calls for the project to be run by a multi-functional core team.

 

The project is divided up into a number of phases, which are separated by a phase review.  The phase reviews are the gates in the project where a committee of senior managers, called the Product Approval Committee (PAC), who are charged with the responsibility for the company’s or business unit’s product development in Re engineering Project programmes, can review the progress of a project.  A structured development plan is utilised to schedule the activities involved with developing the product.  Structured development allows standard cycle-times for tasks to be recorded and kept on a database.  As the company becomes more familiar with the process, this database can be used to predict the time and resources required to complete a specific task, therefore the company can use cycle-time estimates to schedule projects.

 

The management of new product development in Re engineering Projects is primarily the responsibility of the project core team.  Senior management’s role is to set the strategic direction for the company, and to decide on the best possible portfolio of research and development projects that will attain the desired goals.  In adopting a cross-functional team approach to the management of the new product development in Re engineering Project process, senior management should provide the team with the necessary backing in both resources and authority to complete the project.

 

Senior management requires the ability to review each project, and to intervene by cancelling or redirecting projects as necessary.  The use of a structured new product development in Re engineering Projects methodology allows the insertion of review points between the various phases in the product development in Re engineering Projects process, allowing senior management to ensure that the firm’s resources are being exploited in the most effective manner.  Management will base their decisions upon a previously agreed set of deliverables, and then empower the project team to develop the project on a phase by phase basis.

 

The process contains a fair degree of flexibility, so that projects are not delayed at a review point waiting for one task to be completed.  The phases and review points have a blurred division between them, so that phases can overlap one another.  The role of senior management is to decide whether the risk of proceeding to the next phase is less or greater than the commercial risk to the company of delaying the project, and may therefore issue a decision to proceed conditional upon any remaining tasks being completed at a future date.  The use of cross-functional teams can help to quantify any risk involved here, and assess its acceptability, since the team will possess the expertise to predict the chances of delivering the incomplete task within an acceptable time scale.

 

Companies have many possibilities for developing new products, and the major problem for management is to decide between all the potential investment choices available.  The nature of the project under consideration determines the way in which it is managed.  If the product is a derivative, then market pull considerations are of primary importance, since these projects are fairly low risk, and do not normally involve extensive technology acquisition.  Breakthrough projects, on the other hand, normally involve the adoption of new technology, and often contain an element of technology push.  Senior management’s role here is to ensure that the portfolio of projects undertaken represents an acceptable balance between risk and potential reward for the company.

 

 

Industrial case visits.

The concepts discussed above have been tested with a number of industrial organisations.  Their inputs are expanded upon in the following sections.  All the companies visited had a formal documented product development in Re engineering Projects process in place, and utilised a cross functional approach to the management of product programmes.  One of the companies has implemented the PACE (Product and Cycle-time Excellence) methodology for the management of their new product development in Re engineering Projects process. The  company has already seen benefits arising from PACE implementation.  The tangible benefits include a 40% reduction in time to market of one new product as opposed to an earlier model, and savings of $5 million in allocated development expense through the cancellation of a suspect project

 

Company A:  A leading manufacturer of electronic IT products.

This company has found that a major benefit associated with reduced development time was increased predictability of development results.  This means that there is less possibility of market expectations changing before the product came to market.  Shorten development time meant that market conditions at the time of launch were more likely to have been estimated accurately.  The company considered it better to increase R&D spend, than be late to market.  Evidence to date suggests that late launch of a product can seriously reduce total sales.  However resources needed to be applied at the right time, since simply adding more manpower to a delayed project could actually increase development time.

 

The company considers that one of the principle benefits of PACE is that it brings together the different functions within the organisation in the core team.  This means that parallel tasks are better co-ordinated, concurrent engineering is encouraged and there are less downstream engineering changes.  The company has seen a cultural change away from a hierarchical management organisation, to a flatter management structure.

 

Company B:  A large scale bespoke engineering company.

In developing new products this company has no shortage of ideas and information on potential development projects.  The main issue for the company is therefore the way in which it manages new product projects, and how the conditions are set for the continuation of each project. The company uses a structured development plan to enable the company to “lock on to the development target”, thereby ensuring early product definition and the commitment of management to the project.  A life cycle management structure was utilised for new product management, however the process used is more detailed, and includes “inch stones” within each phase.  These are interim deliverables that are completed between each formal management review.  This ensures that management is aware of the status of all projects at all times, and are closely involved with them.  The life cycle management process is applied to all projects, and it includes details of all stages in a product’s life from concept to withdrawal.  At each review meeting the product development in Re engineering Projects team presents their recommendations on the continuation of the project.  The objectives for the next phase are then set and resources committed.  An important role for management is seen to be the ‘management of motivation.’  Killing a project is often seen to be a difficult decision to make, as it is associated with failure.  Management needs to ensure that cancellation and failure are not held as being identical, since stopping a project that is no longer relevant at the right time may be the correct result for the business.

 

Company B sees the management of risk as one of the most important aspects in the management of the company’s portfolio of product development in Re engineering Projectsprojects.  They have drastically cut the number of suppliers used, and seek to involve their suppliers as partners in the design process.  They also assist suppliers financially with research and development activities in certain cases.  Alliances with other electronics systems companies are employed to reduce risk and spread costs.  This is particularly important in this company’s main market, where the cost of bidding may be very high.

 

This diagram illustrates the core business of the company as supplying existing products to the current customer base.  The business may therefore be expanded in three ways:

(a)  Supplying existing products to new customers.  The risk involved here is mainly business risk.  The main focus of management is in building relationships with the potential new customers.

(b)  Supplying new products to existing customers.  The customer is well understood and a relationship already exists.  The main risk is therefore technical, and the main focus of management is to ensure that the product adequately matches customer needs at the review points.

(c)  The highest risk area for new product expansion is in supplying new products to new customers.  In this case both the business risk and technical risk are high.

 

This approach enables the company to consider the ways in which it can leverage its core competencies across all new product development in Re engineering Projects.  Projects follow a structured path through marketing and bid preparation, contract, development, production, and support.  For products the major stages are, marketing and feasibility, development, field trials, production, and withdrawal.

 

Company C:   A high technology service equipment manufacturer.

Company C employs a formal life-cycle management plan for all new product developments.  The management plan allows for deviations from this plan, and the reasons for this must be presented at the start of each project.  Reasons for a project to deviate from the plan are agreed by the senior management of the company and the project manager.  All risks involved are analysed at this point.  Decisions are then documented, so that the experience gained through the project can be passed on to subsequent programmes, and the reasons for the deviation made clear to all involved.

 

The new product management process differs depending on whether the project represents a derivative or a totally new product.  The decision to invest in a product is backed up by a standard ten point business plan, which will include issues such as risk analysis, sales channels, access to technology, and define the product in detail.  There is a three step process in taking a new product from design through to manufacture:

(a)  Design and Development.

(b)  New Product and Process introduction.

(c)  Volume manufacture.

 

Company C follows a Platform and Derivative strategy for new product development, and favours incremental innovation.  The advantages of this strategy are:

 

 

The experience gained in all new product development in Re engineering Projects is feedback into the life-cycle management process, allowing it to be updated.  This means that projects are more accurately scheduled, since the database of past projects provides a good estimate of future cycle-times.

 

Company D:  A large scale manufacturer of low value IT products.

Company D utilises a formal development process, and see a formal development plan as essential for new product development.  The plan is seen as a road map which need not always be totally complete.  The company stresses the need for incremental innovation and the clever integration of existing technology.  This is because much of the technology employed in the company’s main market is available to all their competitors.  Time to market is therefore the most critical issue.  The product development in Re engineering Project team will therefore fix a product specification early and “Cut and Run” with a design, even though it cannot be determined as 100% satisfactory for the market.  It is better to be early to market with a product that is 95% satisfactory than to be late.  The company tries to involve customers early, at the concept evaluation stage.  Often a concept prototype will be assembled, to judge customer reaction.  At this early stage, costs, sales targets and required profit are estimated to a good degree of accuracy.

 

The process highlights the need to feedback lessons learned on project management issues, which are incorporated in future projects.  This is present within PACE in that a database of past projects is maintained, and that the process is constantly reviewed and updated.  The company holds formal review meetings at which the development manager assesses the project, and present his recommendations to executive management.  The development manager is charged with considerable responsibility.  This is seen as important in communicating the support and commitment of senior management for innovation and the development process.  The company has employed concurrent engineering and stresses the need for product and process innovation to be carried out simultaneously.  Areas such as purchasing and procurement, as well as production and testing, are brought into the process early.  This ensures that all aspects of new product design are considered up front in the design process.  The ability to acquire the required parts, for example, is an important part of new product development.

 

Company E:   A computer systems house.

Company E utilises a phase review process that is documented in detail in their phase review procedures guide.  In common with other companies studied the procedure is not a step-by-step instruction manual, and is seen as a road-map for project development teams.  The phase review process helps management ensure that a business plan has been compiled for all major projects within the company, and reinforces the application of sound business decision making to all aspects of the development cycle.  The process calls for a phase review to take place for the key milestones of new product development.  The project team prepares a phase review document for each phase review, and this is distributed in advance to the reviewers.  The document lists progress against the prior stated objectives, in addition to all risks or other issues arising from this phase in the development programme’s life.  The review process ensures that the key activities of each phase are completed successfully, through defining specific objectives of the project team.  The process lists the criteria for progress to the next phase, and the actions that the core team is now required to complete, prior to the next phase review.

 

The phase review process assigns process ‘owners’ who are responsible for the update of the phase review process.  There are specific procedures in place for preparing all documentation associated with the phase reviews, and standard forms have been produced to indicate the results of each review.  In this way all aspects of a product development in Re engineering project are documented in a similar way.  This enables learning to be acquired from each development programme, in addition to highlighting possible improvements in the phase review process to the process owners.  The phase review process is thus subject to periodical reviews itself, and will be updated should an improvement to the system be identified.

Best practice recommendations.

 

The use of a formal life-cycle management process is essential if firms are to significantly reduce time to market, and to enable them to learn from each new product development in Re engineering project.  A cross-functional approach to the process of new product development in Re engineering Projects is also necessary, so that the need for downstream changes to a product are reduced or possibly eliminated.  Successful companies also have clear strategies for business planning and technology planning, and the first test of any new product is its strategic fit.  The firm must also ensure that its technical and business strengths can be leveraged to give a new product a clear competitive advantage.

 

It is important that once the concept evaluation stage has been passed the product specification of the Project is fixed.  If changes are made later on, the required redesign work will significantly increase time to market.  Successful companies have a clear plan for product specification and cost at this stage.  They will have investigated the marketing issues surrounding the new product, and its competitive advantages will also have been defined.  The firm will also have a clear understanding of the risks and potential reward involved with the project.

 

A detailed business case must then be prepared, and a detailed development plan drawn up.  Senior management needs to assess this business plan of the Project, including a full assessment of all risks involved.  If the plan does not meet the company’s criteria for projects it can still be rejected at this stage.  Moving to the development stage is where most of the money is spent, and so it is important that unsuitable projects are weeded out before development begins.  During development many intermediate milestones can be defined before a working prototype is ready, since it has been found beneficial to divide a project up into logical and manageable parts.  The manufacturing process will also be designed concurrently with product development, highlighting the need for a cross-functional approach.

 

Following the production of the prototype(s), the product is tested to ensure that it matches the specification, and that it can be reliably manufactured.  Test marketing should be carried out, in partnership with a small number of key customers.  It is a mistake to assume that this process will increase time to market.  In fact, eliminating test marketing and customer trials may increase time to volume manufacture, since any minor problems will have to be ironed out whilst the sales force is attempting to arrange deliveries.  The subsequent lost business may never be recovered.  This stage also allows the company to ensure that sales and support, both financial and service, are in place and ready.

 

After the product has been passed to volume manufacture and launched into the market place, the company should continue to monitor the product.  This will ensure that the actual performance in the field can be compared with the business plan, and that lessons are fed back to subsequent new product development in Re engineering Projects.  It will thus enable the firm to assess the possibility for enhanced or derivative products.

 

The withdrawal of support for a discontinued product should be part of the life-cycle management process.  The reasons for withdrawing support should be fully assessed and agreed by all departments.  A structured withdrawal plan should then drawn up by the product manager, and agreed with the core team and marketing.  All existing customers are then informed of the withdrawal, and the plan implemented.

 

The importance of continuous improvement and revision to, the new product development in Re engineering Project process cannot be understated.  Only by bringing a continuous stream of superior and innovative new products to market can a firm hope to sustain growth.  This sustained growth will also depend upon a clear mission, supported by complimentary business and technology strategies that are also continuously revisited and revised.  These plans should not only play to the firm’s strengths but also to the future core competencies that it will need to acquire.

 

The key activities associated with each phase, together with those for the organisations analysed, are highlighted in the table of Appendix 1.  From this analysis a series of ‘best practice’ recommendations for the management of new product development in Re engineering Projects has been presented.  The best practice model described above is illustrated in the model of Figure 4.  This diagram shows the three main strands associated with product development:

(a)  The strategic management processes.

(b)  The technology acquisition and assessment processes.

(c)  The project management plan for product development.

 

The role of senior management is shown as one of setting strategic direction, and the assessment and management of risk.  Management also control the allocation of the company’s resources, and so must also decide on the complete portfolio of product development in Re engineering Projects, as well as deciding upon the acquisition of new technology for future product projects.

 

Technology acquisition cannot be left separate from the product development in Re engineering Projects process, since the decision to acquire a new technology is a strategic decision based upon those product that a company wishes to market in the future.  The source of technology acquisition, either from in house R&D, external acquisition, or through an alliance venture, must also form part of this process, since control and expertise in a technology may define the competitive environment for a particular product type.  It may not always be necessary to develop a given technology in house, but the ability to guarantee access, and the competence to exploit it could be.

 

 

Concluded Note:

The use of stage / gate methodologies such as PACE have been found to have a beneficial effect on the productivity, and quality of execution of new product development in Re engineering Project programmes for the companies studied.  Experience gained through product development in Re engineering Projects is built upon, concurrent engineering is encouraged, and time to market reduced.  The companies identified that they tended to produce superior products with fewer defects through the use of structured life cycle management processes, since cross functional teams enable early product definition, and limit downstream engineering changes.  Product life cycle revenues were increased as products came to market earlier, and a larger market share obtained.  The reduction of new product development in Re engineering Projects time means that market requirements at the product launch can be more accurately predicted at the commencement of a development programme, and therefore the new product is more likely to fit prevailing customer requirements when it comes to market.  Another key advantage associated with introducing phase review points, or gates, into a new product project is that weak projects would be identified early, and redirected or cancelled altogether, thus eliminating a degree of wasted development resources.

 

The use of a structured development process is not a guarantee of new product success.  These methodologies do have some potential weaknesses that management must address.  As has been stated earlier these procedures should be seen as guidelines, and if an overly rigid set of rules is applied to product development, responsibility may actually be taken away from the core team.  If this is allowed to happen the desired effect of empowering the team, and allowing them to develop the process will not be achieved.  It is thus important to remember that phases can, and should, be overlapped in places.  If tasks are allowed to queue at phase review points, time to market may actually be increased.

 

The make up of the team, and the quality of the team leader, Project Manager in particular, are also important aspects in the success of new product development in Re engineering Projects.  Project Managers and Project Leads need to possess influence across all functions, and knowledge of the whole business.  They are therefore generalists, often engineers with business and management training or experience.  This quality of individual may be hard to find, but fortunately these skills can be acquired.  Development projects themselves are often good training courses for perspective team leaders.  A new project team leader will often handle a minor derivative project initially, before subsequently moving on to increasingly more complex and important new product projects.  A new product project core team must also be seen to carry the full support and backing of senior management, and be provided with adequate resources to complete the project.

 

Resource allocation and management of the company’s product development in Re engineering Projects portfolio is therefore a vital aspect of cross project management, and an area in which senior management must be heavily involved.  There are several ways in which a firm’s portfolio of new product projects can be managed.  Arthur D. Little  (Roussel et al,  1991)  propose ‘aggregate planning’, as an effective method of ensuring a competitive and balanced portfolio of Re engineering projects.  It is important that companies also include an evaluation of technical and business competency, in addition to resource management, when evaluating a new product project.  Additionally procedures and tools for the acquisition of appropriate technology must be incorporated into the new product development in Re engineering Projects process.

rgds-

Gautam Koppala,

pome author

 

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