Applying Lean Principles to Product Development
By James Morgan, Vice President, Troy Design and Manufacturing
The ability to effectively bring innovative, high quality products to market rapidly has become a hallmark of the successful consumer driven enterprise. This is particularly true in the automotive industry where radically shortened product development cycle times and drastically increased product quality levels remain crucial differentiating factors between the best performing companies and the rest of the industry (Sobeck, Ward and Liker 1999). New product introductions have been at the heart of several companies' resurgence in this hyper-competitive market. In fact, the CEOs of both General Motors and DaimlerChrysler recently asserted that success in the auto business is defined by a company's ability to develop exciting products and deliver them to market first (UM Automotive Management Conference, August 2000).
What has all this to do with "Lean?" Speed-to-market is achieved by maximizing effectiveness in both the product design and manufacturing stages. Comparative research in the auto industry suggests that process performance in product development can benefit significantly from modified versions of the same lean tools and methods that have driven the North American manufacturing renaissance.
While product development is clearly a unique environment, the work performed across projects is similar and can benefit from some of the same optimization tools and methods applied to manufacturing. This is especially true for tasks further downstream in the product development process where manufacturing capability becomes an essential competitive advantage (Clark & Fujimoto). It is possible to manage, standardize and continuously improve the product development process as long as there is a solid understanding of, and allowances are made for, those characteristics of the product development environment that are indeed unique. Paul Adler's 1998 research on the product development process has shown that achieving traditional manufacturing process improvement goals such as reducing variation, relieving process bottlenecks, eliminating rework, and managing capacity, can reduce development times by as much as 30% to 50%. Further, the application of lean principles during the product development process is a critical, early enabler of lean manufacturing.
Where can we find such impressive performance? Interestingly, the same company that originated TPS. Toyota's product development system is a powerful yet not widely recognized source of major competitive advantage. There is compelling evidence of Toyota's systems effectiveness. Toyota's product development system enables them to bring the highest quality products to market faster, and manufacture them more efficiently than most of the industry. Consider that in 2000 Toyota topped seven of sixteen total categories in the J.D. Powers study for Initial Quality. No other car company placed first in more than two categories. Toyota also placed first in four of ten categories for Consumers Reports Top Autos. In addition to consistently high quality levels, Toyota's product development system delivers product designs that contribute to the performance of some of the worlds most efficient manufacturing plants according to Harbour Reports. Finally, Toyota's product development system is able to bring a product to market at just a fraction of the time required by their competitors.
A thirty-month research study by The University of Michigan identified seven fundamental principles that account for Toyota's speed-to-market. These principles form the foundation for, and optimize, Toyota's product development and production systems.
- A holistic, systems approach to product development. The basic elements of the product development system (people, processes, and technology) are fully integrated, aligned and designed to be mutually supportive. Highly skilled, intelligently organized people are the heart of the product development system. Processes are designed to minimize waste and maximize the capability of the people who use them. Finally, technology must be right sized, solution focused and selected to enhance the performance of the people and the process. When these fundamental system elements are coherent by design, they combine to create a truly synergistic system effect. Clearly, in order to achieve this result, other functions within the organization must also be aligned.
- An imbedded customer first approach to product development. Truly internalizing this philosophy acts as the bond that creates a seamless integration between both functional specialties and fundamental system elements. The customer first philosophy results in a deep understanding of customer defined value which is the first step in any product development process. All system participants must understand customer defined value from the start. Product development must deliver a product design that both meets customer needs and is capable of efficient manufacture if we expect to actually deliver this value to the customer.
- A front-loaded process. Early engineering rigor, problem solving and designed-in countermeasures, along with true cross-functional participation, are key to maximizing the effectiveness of the product development process. Further, by effectively segregating this inherently "noisy" phase of the product development process from the execution phase, Toyota is able to minimize downstream process variation that is crucial to both speed and quality.
- Built-in learning and continuous improvement. Learning and continuous improvement are fundamental components of every job performed, rather than a special corporate initiative. Toyota accomplishes this by setting increasingly rigorous performance goals for every project and by holding both real-time and post-mortem learning events (called Hansai or reflection) that encourage functional specialists to validate and update their own knowledge data bases. Learning and continuous improvement are also embodied in a problem solving process that creates multiple potential solutions and focuses on root cause countermeasures designed to stop future recurrence.
- Synchronize processes for simultaneous execution. Truly effective concurrent engineering requires that each subsequent function maximize the utility of the stable information available from the previous function as it becomes available. That is to say, development teams must do the most they can with only that portion of the design data that is not likely to change. Otherwise, working with early data will result in tremendous waste and actually require a longer duration than a linear process. Each function's processes are designed to move forward simultaneously building around stable data as it becomes available. This practice can be referred to as simultaneous execution.
- Use rigorous standardization to create strategic flexibility. This seeming paradox is at the heart of Toyota's quality and efficiency by creating far more predictable quality and timing outcomes than would otherwise be possible. This principle includes concepts and tools such as reusability, common architecture, and standard processes. It is crucial in driving waste out of the product development process. In fact, standardized skills, design standards and standard processes allow for specific program customization, broader scope of individual responsibility, a JIT human resource strategy, flexible product development capacities and many other system benefits. These standards are also crucial to downstream lean manufacturing capabilities.
- Go to the source engineering. In this day of high tech engineering it is very tempting for engineers to divide their time equally between conference rooms and their cubicles. But as Kelly Johnson, the famous head of Lockheed's legendary Skunk Works said, "an engineer should never be more than a stones throw away from the physical product." At Toyota this philosophy is referred to as "Gentchi Genbutsu" and is practiced in many ways. Examples of this philosophy in action include spending a significant amount of pre-program time at manufacturing plants and dealerships, by working on competitor tear downs, or by personally fitting parts on prototypes.
These principles form the core of an only recently recognized system that is to product development what TPS has been to manufacturing. A system that has already proven to be a major competitive advantage to Toyota and is designed to continually improve its already formidable capability. A system that, considering the crucial implications of product development capability on the health and welfare of consumer focused companies, we cannot afford to ignore.
James Morgan has recently completed a two and a half year research study of product development for his doctorial dissertation at the University of Michigan and is one of the instructors for the SAE Lean Product Development Certificate program.