Tuesday, 3 March 2009

New Aberdeen Group Reports define lean product development initiatives critical for rapid product introduction and decreasing costs across five key industries

Siemens PLM Software, a business unit of the Siemens Industry Automation Division and a leading global provider of product lifecycle management (PLM) software and services, responded to the findings from a series of Industry Sector Insight reports unveiled by Aberdeen Group. The reports were based on the findings of benchmark research entitled "Lean Product Development Benchmark Report," which identified best practices to eliminate waste and non-value added tasks. To further this research, Aberdeen looked at lean product development strategies of five vertical industries and examined key themes for each industry.

Released in January 2009 and spanning Aerospace & Defense, Automotive, Consumer Packaged Goods, High Tech & Electronics and Machinery (Industrial Equipment Manufacturing) industries, the research identified key strategic initiatives and challenges specific to each industry and how manufacturers need to implement lean product development strategies in order to streamline repetitive and redundant processes to shave development time and reduce costs.

"In today's economy, it is imperative for all companies to have a focused lean product development strategy to increase product efficiency and stay ahead of competition, with a greater emphasis on the bottom line," said Leif Pedersen, vice president, industry marketing, Siemens PLM Software.  "Now more than ever, manufacturers across all industries need to adopt Best-in-Class lean product development practices in order to get their products to market quickly to capture market share while keeping costs down in order to price competitively."

"Our research reveals that although lean is a familiar word in manufacturing organisation, it is a concept that is just beginning to make headway with product development organisations in most industries," said Michelle Boucher, research analyst, Product Innovation and Engineering Practice, Aberdeen Group.  "By optimising their lean product development programs, manufacturers streamline their product development processes, improving efficiency and lowering costs."

A summary of the Aberdeen Sector Insight findings follows:

Aerospace & Defense

For the aerospace and defense industry (A&D), bringing products to market is a far more capital and time intensive undertaking with underlying pressures of tightening budgets and customer demand for quality.  A&D organisations have been adopting lean initiatives for some time with 43 percent reporting that they have pursued lean initiatives for more than a year.   Many A&D organisations have taken great strides toward streamlining product development processes to help bring products to market faster. 

A&D companies are ahead of the industry average in adopting value stream mapping capabilities - 64 percent compared to 39 percent respectively.  To improve their lean programs, A&D manufacturers are using technology tools such as product data management (PDM) - 65 percent of the A&D industry compared to the industry average of 48 percent.  To expand on their lean programs, A&D manufacturers need to continue to streamline product development, empower lean decision makers at all levels of the organisation and support lean with planning and automation technologies.

Automotive

The automotive industry faces global competition and is in need of a program designed to improve the efficiency of processes so that an organisation gets products to market faster while keeping costs down. As one of the top strategies the automotive suppliers use to support their lean initiatives, 32 percent of them are increasing the capture and reuse of product and process knowledge while only 10 percent of Best-in-Class have adopted this strategy.

To support their strategies, automotive companies are adopting lean process capabilities on par with the Best-in-Class, specifically 48 percent of automotive suppliers are using design sets for product development compared to 50 percent of the Best-in-Class.  The adoption of product data management (PDM) among automotive companies is near that of the Best-in-Class given the strategic attention to capturing and reusing design knowledge - 66 percent compared to 67 percent respectively.  However, only 31 percent of automotive companies take advantage of advanced search technologies to sort through information, compared to 53 percent of the Best-in-Class.

Although lean and its principles were first popularised by Toyota Motor Corporation, this industry could still upgrade their lean product development program by empowering lean decision makers at all levels of the organisation, involving manufacturing in the product development process and maximising the efficiency of design reuse.

Consumer Packaged Goods

While the need to reduce costs and streamline product development are not new concepts for the consumer packaged goods (CPG) industry, deploying a lean initiative is perceived as a new notion- only 24 percent of CPG manufacturers indicate they have pursued a formal lean product development initiative for over a year.

Many CPG organisations are taking advantage of technology tools as part of their lean programs, and 43 percent of CPG manufacturers are using specialty tools for lean compared with 21 percent of the industry average. Lean may be a new concept for CPG companies, but to expand on their current programs, they must centralise product knowledge, empower lean decision makers at all levels of the organisation and involve manufacturing in the product development process.

High Tech & Electronics

High technology and electronics (HTE) companies face everyday pressures such as global competition, market demand for rapid product introduction and limited product development budgets with relatively equal urgency. When it comes to the adoption of the capabilities to 'lean out' product development processes, HT&E companies tend to fall around the industry average. However, 74 percent of HT&E manufacturers report a concurrent approach to product design and the development of production processes, compared to 54 percent of the industry average.

Truly 'leaning out' product development requires organisations to support the implementation and effectiveness of lean concepts, including authorising lean process improvements at all levels of the organisation, which 53 percent of HT&E companies are adapting to, compared to 35 percent of the industry average. To reach the success that Best-in-Class are having with their lean initiatives, HT&E manufacturers must streamline product development with design sets, empower lean decision makers at all levels of the organisation and involve manufacturing in the product development process.

Machinery (Industrial Equipment Manufacturing)

Market demand for rapid product introduction is the top factor driving lean product development for machinery manufacturers, but it's followed closely by cost pressures in the form of increased global competition and limited budgets. As a top lean strategy, the Best-in-Class are focusing on involving manufacturing in product development, something that is lacking among machinery manufacturers, specifically 35 percent of Best-in-Class and 18 percent of machinery companies.

However, machinery manufacturers are using technology tools to improve their lean capabilities, with 38 percent of them using specialty tools for a better lean program compared to 21 percent of the industry average.  Machinery companies report relatively wide adoption of lean strategies. To see more benefit from these initiatives, machinery manufacturers must streamline product development with design sets, empower lean decision makers at all levels of the organisation and involve manufacturing in the product development process.

Methodology

Aberdeen Group examined how more than 483 enterprises develop lean product development programs that would bring products to market faster and reduce costs. To gain an understanding of how manufacturers successfully manage lean product development, respondents were benchmarked according to their performance across five key performance indicators and divided among three performance categories: Best-in-Class (top 20 percent of performers); Laggard organisations (bottom 30 percent) and the Industry Average (the remaining 50 percent). These measures included the percent of products meeting launch dates, revenue targets, product cost targets, development cost targets and quality targets.