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Companies in the manufacturing industry are responding to enormous economic and political pressures in a variety of ways. The combination of these pressures and responses is transforming the industry. From economic pressures such as high-cost labor pools and increasingly expensive raw materials prices, e.g., steel and petroleum, to responses such as outsourcing (global product development), consolidation within the industry, and assembly flexibility, companies cannot afford to remain static in any of their operations.
To understand these trends, studies have been conducted on manufacturing product development that provide a snapshot of the current state of the industry and a 5-year forecast. The studies review such varied areas as business philosophy, product design tools, communication methods and engineering efficiency. One clear trend identified in this study is an increase in outsourcing to global suppliers, broadly classified as Global Product Development (GPD).
Global Product Development is defined as maximizing the financial and operational productivity of the product development process by spreading product development activities across multiple regions of the world in order to better match value-add to cost. In this context, the definition of "product development" covers marketing activities that identify and document customer needs.
Along with this it includes engineering activities that conceptualize, design, analyze and refine new product ideas; to activities that plan and document manufacturing, operation, and maintenance processes; to sustaining activities that make ongoing product changes and refinements.
Studies show that companies who deploy Global Product Development strategies stand to gain significant financial and operational benefits. Significant "hard dollar" savings typically in the range of 0.5% of company revenue and 10% of the product development budget may be achieved. Additional "soft dollar" operational improvements such as 24x7 engineering and reinvestment of cost savings to provide specialized skill capacity are also possible.
Many OEM's now utilize the GPD model leading to restructure of global design and operations for optimal utilization of global resources, increasing the pace of product development thus leading to expense reduction. The implementation of a GPD strategy needs the analysis of product development activities. A company needs investigation of the partition between high value-addition and the low value-addition activities and then requires to find the extent of portability of these activities.
To understand these trends, studies have been conducted on manufacturing product development that provide a snapshot of the current state of the industry and a 5-year forecast. The studies review such varied areas as business philosophy, product design tools, communication methods and engineering efficiency. One clear trend identified in this study is an increase in outsourcing to global suppliers, broadly classified as Global Product Development (GPD).
Global Product Development is defined as maximizing the financial and operational productivity of the product development process by spreading product development activities across multiple regions of the world in order to better match value-add to cost. In this context, the definition of "product development" covers marketing activities that identify and document customer needs.
Along with this it includes engineering activities that conceptualize, design, analyze and refine new product ideas; to activities that plan and document manufacturing, operation, and maintenance processes; to sustaining activities that make ongoing product changes and refinements.
Studies show that companies who deploy Global Product Development strategies stand to gain significant financial and operational benefits. Significant "hard dollar" savings typically in the range of 0.5% of company revenue and 10% of the product development budget may be achieved. Additional "soft dollar" operational improvements such as 24x7 engineering and reinvestment of cost savings to provide specialized skill capacity are also possible.
Many OEM's now utilize the GPD model leading to restructure of global design and operations for optimal utilization of global resources, increasing the pace of product development thus leading to expense reduction. The implementation of a GPD strategy needs the analysis of product development activities. A company needs investigation of the partition between high value-addition and the low value-addition activities and then requires to find the extent of portability of these activities.
About the Author:
The global product development service example is increasingly used in the modern manufacturing world to maximize efficiencies and minimize costs.
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