Using Information Technology

To Support New Product Development

By: Andrew Herdan, I/T Practice Leader

Kaufman Global, LLC

11350 N. Meridian Street, Ste. 345
Carmel, IN 46032
Tele: 1-317-818-2430
[Link]
In the late 80’s and early 90’s many of us went through the agony of trying to convince business
leaders that integrated Information Systems such as SAP were critical in supporting the
automation of Supply Chain functions throughout an organization. Little focus however, was
placed on the support of New Product Development (NPD). As we move into the 21st century, it
is now like “déjà vu” as companies struggle to develop integrated systems that support the
Marketing and Product Development functions of manufacturing organizations. Convincing
corporate executives that they must once again “dig deep and weep” in order to be competitive
in our fast-moving global economy, and once again fund major Information Systems initiatives,
is a very tough sell. Kaufman Global has placed major emphasis on understanding the
challenges and rewards of integrating New Product Development, marketing systems and
processes with the more traditional, transactional ERP environments using Lean tools and
techniques to achieve rapid results.

The six key characteristics that determine the effectiveness of an I/T organization in support of
New Product Development are:
Common and Integrated
Cost Effective
Scaleable and Flexible
Accessible and Available
Standardized
Global

With these six critical success factors in mind, Kaufman Global in its search for excellence in
implementation of Lean NPD processes, follows the premise that:

"Any intelligent fool can make things bigger, more complex, and more violent. It takes a
touch of genius—and a lot of courage—to move in the opposite direction."
~Albert Einstein

Our findings have been consistent across a number of industries, from aerospace to office
products. The future state NPD process must position an organization to achieve higher levels
of automated, cross-process and cross-organizational information sharing in order to meet
market demand for new products. This can be delivered by leveraging common processes and
maximizing the use of common applications and tools.

Basic Assumptions

The following statements characterize the current state of I/T support for typical NPD
organizations:
Collections of aging, host-based and newly developed or acquired client/server
“stovepipe” systems that are focused on individual programs, and functional
organizations that make data access and interoperability difficult. As the economic
environment continues its rapid change, such “legacy architectures” will have an
increasingly, and perhaps exponential, negative impact on an organization’s competitive
position in the market.

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 Legacy architectures are characterized by a myriad of poorly documented interfaces,
some of which are automated but many of which require costly and schedule-consuming
human intervention.
Many systems in use today are the products of lengthy, in-house development and
modification projects performed with varying styles and tools. The result is a highly
heterogeneous IT environment that is both costly, difficult to maintain and highly
resistant to change.
In the future state, IT systems that support New Product Development must be viewed
as existing within larger environments, or conceptual domains, of information sharing
and end-to-end, cross-process integration. We must stop thinking “New Product
Development” (NPD) and start thinking “Integrated Product Development” (IPD).
Adopting this perspective requires that IT systems be optimized for supporting the
organization as a whole rather than being optimized for supporting localized,
“stovepiped” requirements.
Adopting this perspective can help the corporation achieve a competitive advantage by
incorporating functions previously treated as being “off-line” into enterprise-wide
business processes.
Integrated systems, where information is passed automatically between processes, fall
into two primary categories:
o ERP (Enterprise Resource Planning) systems: Data created by different
functions exists in a single, large database – (e.g., Purchasing linked to
Receiving linked to AP linked to Finance linked to Cost History); requires tightly
defined business processes and interfaces.
o PDM (Product Data Management) systems: Data created by different functions
is managed in a single “repository”, with full data mining capability. Passing
between functions should be automated through workflow tools. This requires
well-defined product structure models, standardized gating processes, and
common methodologies for developing and launching new products.

So, What’s Working and What’s Not?

I/T organizations are intimately familiar with the use of ERP systems, their value to an
organization, and how to ensure tight integration of all Supply Chain functions. The users of
ERP systems are brought up and educated in the world of transaction processing. However,
when confronted by Engineering and Product Development organizations, whose people thrive
on entrepreneurial thinking, unconstrained by processes, controls, and standardized
methodologies, the story is very different. How can Information Technology support a segment
of the organization that feels constrained by discipline and a procedural approach to its day-to-
day work? Even in organizations where PDM software has been installed and possibly even
integrated into the world of transactional ERP systems, there continues to be a significant
inability to improve cycle times, quality, or the cost of NPD through the use of information
technology tools. A comment by the Director of Product Development at the conclusion of a
recent NPD Kaizen Event was poignantly simple, yet pointed directly to the root cause failure of
most I/T solutions that are applied to address the NPD challenges of our current global
economy:

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 “We need to make our routine activities simple and easy to do, and that will allow us to
focus our efforts on true innovation in the development and launch of New Products.”

Information systems must focus on implementing simple, preferably web-based tools, which
provide obvious value-added capabilities to the New Product Development life cycle. Monolithic
solutions, with extended learning curves and time-consuming data entry will never be the
answer to the current dilemma facing so many organizations in terms of getting competitive
products to market within abbreviated timeframes.

From another New Product Development Kaizen Event facilitated by Kaufman Global, five of the
nine major improvement areas identified were related to the use of Information Technology and
included:

The need to establish a knowledge base to deposit/retrieve data (e.g., Product Data
Management System)
The need to integrate systems in order to get better at delivering products (ERP and
PDM software)
Inconsistent usage of current processes (e.g., standard product specifications
documents)
Large information gaps exist across organizations (e.g., Marketing, Product
Development and Supply Chain)
Full capabilities of the existing systems are unknown (e.g., workflow tracking systems)

In addressing improvement areas such as those identified above, Kaufman Global has had the
opportunity to investigate many of the Information Technology tools that can enable streamlined
New Product Development processes, many being web-based and self-intuitive.

The most promising tools coming onto the market are in the area of workflow management and
tracking, whose one drawback continues to be complexity and setup. Web-based tools such as
I-Nexus show great promise in that they make extensive use of Visual Management techniques
such as early-warning “lights” which are linked directly to predefined methodologies containing
deliverable-driven stage gates with associated hurdle rates. Organizations that are able to link
workflow management with a fully integrated Product Data Management repository that
incorporates such information as a knowledge base of “new ideas”, engineering drawings,
document control, marketing data, product specifications and historical test results will be
positioned to take advantage of Information Technology as a competitive tool in the world of
Integrated Product Development. Our experience to date has shown that acceptance and full
implementation of available tools can take up to two years, but as web-based solutions become
more readily available, we believe that the implementation cycle could be reduced by at least
50%, in much the same way as we have seen with ERP implementations over the past ten
years.

The prerequisite to leveraging Information Technology in support of NPD is driving cultural

change through the establishment of processes and controls that put a premium on accurate
and timely recording of standardized product data. This must be a shared responsibility between
all functional areas of an organization, with a single point of accountability to ensure sustainable
and consistent data integrity.

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The following charts show the dramatic 53% reduction in information handoffs that are
achievable over a two year period through the use of centralized product data management
techniques and automated workflow tracking:

Current State Hand-off Chart

Mktg/PBU Mgr

Matl’s./Purch Prod/Design
Eng. Hand-off Statistics

Competitor Hand-offs 141

Competitor
Customer Product Info In: 92
Prod Mgr Product Info Out: 49

Information In
Mfg. Eng. Information Out
R&D Mgr

I/S

Vendor

Estimating Drafting

Plants Quality

Lab

Future State Hand-off Chart – a 53% Reduction!

NPD Work Cell

Mat’ls/Purch
Hand-off Statistics
Mktg/PBU Mgr.

Hand-offs 66
Prod Mgr Product Info In: 43
Prod/Design
Engr Product Info Out: 23

R&D Mgr Information In

Customer Information Out

Vendor
Mfg. Eng.

Est.

I/S

Plants

Detailer
Lab

Quality

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Experience has shown that there is a direct correlation between the reduction in the number of
informational handoffs in an end-to-end Product Development life cycle, and the reduction in
cycle time of that end-to-end process. Improve the information flow, both automated and
manual, and you will see a similar improvement in an organization’s ability to deliver new
products to an ever more demanding market. This is the Information Technology challenge.

Copyright © 2004 Andrew Herdan

All rights reserved.

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