Automation And Digital Technologies Enabling Faster Time To Market
More and more participants would be encouraged to participate in the world of complete connectivity that helps organizations realize the maximum efficiency
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Manufacturing continues to serve as backbones of markets, societies and communities. Nations and Governments have recognized its potential to exert a wider impact on their business and social fabrics. Hence, efforts are made from time to time to promote local manufacturing. Most recently, USA’s “Make America Great Again” and India’s “Make in India” are examples of targeted campaigns. Manufacturers attempt to ride on the wave of an external stimuli and capitalize on the ensuing disruption.
The churn around us is a reaction to the geopolitical risks, economic factors, societal & political factors etc. All these underlying forces are known as megatrends which would continue to evolve over the next few decades and would be replaced by another set of megatrends in due course.
In response to the trends and opportunities, global manufacturers are redesigning their market access models, operating systems, internal processes and innovation systems. Some of these activities are accomplished in conjunction with the external collaborators while the rest are handled independently by the manufacturers themselves.
Manufacturing organizations have reshuffled their product development budget, priorities and approach to New Product Introductions (NPI) keeping in mind the global dynamics. One of the most noticeable shifts in manufacturers’ approach to product development has been around globalsation of product development. As distributed engineering gathered pace in the 2000s; product development became decentralized and since then they have evolved into a hub-spoke model. Manufacturers are bringing their supplier partners and the captive centers at the forefront of product development in order to tap into the global talent pool, regional know-how and to achieve the right cost - benefit pay-off from investments.
The current stage of market evolution and technology readiness is an opportunity for the manufacturers to address two important strategic questions- (a) design of a robust customer outreach strategy and (b) increase velocity of new product introduction. The industry is already taking a number of measures to integrate latest production and manufacturing technologies in order to make a tighter alignment between strategy, R&D financing and technology. As investments get mapped to products, measurement of their output is a natural next step in the minds of CxOs.
Manufacturing organizations usually spend 3.5%-5 % of the revenue on R&D activities. Effectiveness of such expenses has been tracked closely. Ever since the VUCA world has emerged, this metric is being monitored closely so as to strike a balance the spend pattern on old and new technologies.
What is the single most important metric to measure R&D effectiveness?
Increasing R&D efficiency is a good starting point towards delivering a superior EBITDA performance. Appearance, performance and acceptance of a product in the market directly impacts profitability of the enterprise. It is possible for the manufacturers to reduce as much as 20%-40% of the total product cost by changing the its inherent attributes (i.e., form, fit, function, design approach, technologies etc.) and structural attributes (i.e., supply chain, make vs buy, integration etc.). Similarly, a number of different levers exist to avoid cost creep in product development and enhance effectiveness of the R&D spend. Such levers of improvements tend to be a mix of technological, process as well digital in nature.
A dynamic function like R&D cannot be fully measured by unidimensional metrics alone such as R&D as a % of sales, % time reduction in new product introduction, % increase in carry over content in newer products etc. We believe that manufacturers should track R&D return using a combination of strategic and operational parameters as under –
All the individual productivity levers above should be deployed to derive the best value of R&D investment. Some of the levers such as project management of the product is a technical activity while make or buy decision etc., are strategic in nature. However faster time-to-market is an interdisciplinary subject with numerous sub-elements in it which makes it as one of the most effective levers.
Why time-to-market is an important consideration?
Time-to-market is the elapsed time between the concept of a product and its availability for the customers to buy. This concept holds equal importance for any product enhancement scenario - be it a model year action or first-of-kind product introduction. This document focuses on faster time-to-market and recommends plan of actions for OEMs to leverage various digital tools and technologies to attain sophistication in that area.
Time to market in retrospect
It is helpful to view how this discipline has evolved by observing a high volume manufacturing sector such as telecom network equipment manufacturing. This industry has completely transformed its velocity of new product introduction over time primarily by using process improvement and methods of software development.
Going forward, digital twin will have significant impact towards nimble and efficient product development
A physical product passes through digital stages and processes before it transforms into a physical entity. Thus, there is a wealth of product related information in the digital form. The concept of digital twin rests on the premise that a light weight / virtual model of the real product gives the designers / engineers a good chance to study, collect data and improvise on the product design and manufacturing process in real-time. Thus, digital twins impact the time to market performance of the product as virtual models reduce time and cost of alteration is faster. Secondly, such modifications can be percolated across the ecosystem enhancing collaboration.
Digital twin can impact the end to end Product Development Life Cycle (PDLC) in three ways - digital twin of the product, digital twin of the production process and digital twin of the equipment. A simple illustration of a standard PDLC process has been illustrated below to capture how digital twin adds value to different stages of the PDLC stage gates.
Opportunities for performance improvement by leveraging automation / digital tools
Over a period of time, product development organizations tend to accumulate norms, practices and processes that inhibit their ability to deliver products on time, such as:-
* Delay in freezing the design due to repeated design changes.
* Delay in onboarding of suppliers due to opaque / complex R&D & procurement working model.
* Data translation latency due to difference in systems at OEMs and suppliers
* Slow ramp-up bridge i.e., delay in R&D – manufacturing hand off
* Downstream impact of insufficient tests and calculations at the design stage
* Low accessibility of internal lessons learnt from past projects
* Design complexity without commensurate customer benefits
* Taking only a static view of the customer requirement and imprecise information gathering
* Sub-optimal distribution and usage of product development resources at disposal
* Delay in tooling data release to suppliers
* Lack of marketing and dealership readiness
Traditional methods such as lean, VA/ENVA analysis, platform standardization, FMEA, quality audits, supply chain control etc., have attempted to reduce development time. Now with the maturity of digital technologies, there is a renewed hope to further reducing product launch lead-time. However, such a task cannot be accomplished in isolation or just by tweaking the product creation system alone. All individual constituents or participants directly or indirectly associated with the R&D activity should work in unison to reach to that goal.
Manufacturers’ ability to launch products on time has been assisted by growing digital tools and technologies. Successful adoption of these technologies across different industries has yielded use cases. Organizations integrate digital technologies depending on their business challenges, risk appetite and perceived urgency. Going forward, as some of these technologies mature further; more and more use cases would get absorbed in mainstream and adjacent industries. Hence, the manufacturing industry would benefit from “technology diffusion”, thanks to early adoption of select technologies across financial services, retail or hospitality industry etc. We have already witnessed this in Blockchain technology which has a revolutionary impact on banking and legal services but is starting to get accepted in manufacturing supply chain and aftermarket functions.
How to begin this journey?
Attaining digital maturity in a complex activity like time-to-market is a time consuming process. Nevertheless, organizations need to take cautious steps towards so as to integrate them into their own systems and processes. At the start of this exercise of time-to-market optimization exercise, it is advisable that the product development organizations undertake a digital maturity self-assessment. Such an activity would provide them visibility of their current state vis-a-vis industry best practices. It would also help them zero-in on improvement areas to prioritise.
Manufacturers should prioritise improvement action within defined timeframes by leveraging the self assessment study. This would assist the manufacturers develop best-in-class product development capabilities. As a part of their development plan, selection of technology should be given the highest importance.
Digital operation is a credible route to sustainable reduction in time-to-market. Product development organizations would gradually evolve as they strike a balance between technology absorption and business disruption. So far, companies have implemented largely showcase examples and a full hog approach is yet to be seen. Nevertheless, this is a welcome development as slow and steady will reinforce confidence in the organization. By taking measured steps forward, organizations would be able to assimilate and improvise many of these new technologies. As power users of technology move towards a state of complete transformation, their supply chain will follow them. Thus more and more participants would be encouraged to participate in the world of complete connectivity that helps organizations realize the maximum efficiency.
Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.