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Current Trends in Product Development

LUPEANU MIHAELA, NEAGU CORNELIU, NEACŞU ALINA


Department of Manufacturing Engineering
POLITEHNICA University of Bucharest
Splaiul Independenţei 313, postal cod 060042, sector 6, Bucharest
ROMANIA
mihaela.lupeanu@yahoo.com

Abstract: The high demand and competition of the market, caused by globalization and permanent technical innovation,
exerts an enormous pressure on companies. For hundreds of years, business leaders all over the world have engaged in an
on-going battle to gain sustainable competitive advantage, using and improving methods for innovating faster and better,
with high customer value. The present work is a report of the latest methods used by companies in product development.
This research defines only the concepts of the most utilized systems, considering that they are under industrial secrecy.
The use of scientific methods gives the industrial groups the possibility to implement their knowledge in industrial
environments and create case-studies for further publications.

Keywords: product development, innovation process, customers needs, competitiveness, quality standards, time-to-market.

1 Introduction economy, as well as for high standards of living and


Market leadership is achieved only by the fastest, most welfare. This importance is better illustrated in figure 1,
productive and best value global producers that use representing R&D expenditures across some developed
product performance, cost, quality and reliability as countries, as a percentage of the total gross domestic
assets. Product innovation is an essential factor to the product (GDP) of the specific country. In order to
companies that want to be competitive, and to survive to describe and better understand the role of product
the technological evolution and globalization. The way to development research and its effects, it is vital to look at
be competitive is to continuously improve both product the basis methods, the present complex strategies applied
and process. To facilitate major change, product worldwide and analyze the future trends involving
development institutions must utilize a safe and proven innovative disciplines.
methodology. Typically, for large organizations, product
development is done in-house. Small and medium size
enterprises often do not have in their ranks enough
personnel to dedicate to more fundamental research. They
usually partner with a research and development (R&D)
institution and develop new products [10]. Regardless the
size of the company, the key of competitiveness
nowadays, is the ability to adapt to the forever changing
market trends and the capacity to respond to external
signals with products not only with a competitive cost but
also with the quality that customers are willing to pay for.
Fig. 1 Gross expenditure on R&D as a % of GDP
(Source: OECD Main Science and Technology Indicators) [12]

2 Strategies and methods in Product Nowadays organizations have crossed beyond the
Development distinction between technological and non – technological
innovation by setting up and deploying a much broader
set of complementary strategies. Today’s firms tend to
2.1 Background adopt mixed modes of product development (PD) and
Research, innovation and development are of crucial innovation: certain types of methods tend to go hand in
importance for the competitiveness of the modern hand in the same firms and complement each other, while
other types tend to be independent or to substitute for Leggett renamed the term value analysis to value
each other. If a couple of years ago there were engineering, thus incorporating within the new concept
unanswered questions regarding collaborative methods in fresh developed strategies [14]. Value engineering may
product development and innovation, today’s researchers simply be described as an organized effort directed at
are trying to fill in the blanks with reports set up on an analyzing the function of an item or a product with the
international level [10, 11, 12]. objective of achieving the specified function at the lowest
This paper mentions some of the first product possible overall cost [4].
development methods (PDM) that were designed starting
the beginning of the 1940’s. These methods include
quality function deployment (QFD), value engineering

HOWS
Design
Requirements
(VE) and the theory of inventive problem solving (TRIZ).

HOWS
Parts
Requirements
The methods are now used within more complex

HOWS
Requirements
Process

WHATS
Customer
innovative strategies applied in the majority of 1 Requirements

HOWS
Requirements
Production

WHATS
2 Requirements

Design
organizations.

Requirements
Design

WHATS
3

Parts

Requirements
Details

WHATS
4

Product
Process
2.2 Traditional Product Development methods Production
This section is dedicated to three of the most utilized
methods in product development: QFD, VE and TRIZ. Fig. 2 The four phases of QFD. From customer
Quality function deployment (QFD) was originally requirements to client satisfaction. The hows on each
developed by Yoji Akao and Shigeru Mizuno in the early House of Quality becomes the whats in the next. (Adapted
1960s. They extended the original “house of quality” from José, 2004) [6]
(HOQ) approach by deploying “hows” resulting from the
top-level HOQ into lower-tier matrices (figure 2) The Teoriya Resheniya Izobreatatelskikh Zadatch
addressing aspects of product development, such as cost, (TRIZ) or Theory of Inventive Problem Solving (TIPS)
technology, and reliability. The basic quality function was developed by Genrikh S. Altshuller in the former
deployment methodology involves four phases that occur U.S.S.R. at the end of the 1940's. The TRIZ theory is
over the course of the product development process. based on the idea that many of the problems that
During each phase, one or more matrices are constructed engineers face contain elements that have already been
to plan and communicate critical product and process solved, often in a completely different industry for a
planning and design information. One guideline for totally unrelated situation that uses an entirely different
successful development of QFD matrices is to keep the technology to solve the problem. Based on this idea,
amount of information in each matrix at a manageable Altshuller collaborated with an informal collection of
level. Therefore, a larger, more-complex product should academic and industrial colleagues to study patents and
have its customers’ needs further classified into lower search for the patterns that exist. He developed the TRIZ
hierarchical levels [1]. QFD aims to assure that the initial methodology which is often used nowadays (figure 3).
quality of the product will satisfy the customer. It can be
applied either as an independent method or as a specific PROBLEM
TO Find
tool within some of the new product development SOLVE contradictions

methods (concurrent engineering for example). Further, Contradiction


Matrix
QFD can be customized to a specific project and it
focuses on delivering positive value by seeking out both
spoken and unspoken needs [2]. Apply
1
2
The history of value engineering (VE) may be traced SOLUTION Inventive 3
Principles
back to 1947, when General Electric (GE) management n

selected Lawrence D. Miles, a GE electrical engineer, to Inventive


Principles
devise appropriate approaches or methods that would be
helpful in generating tangible savings through material or Fig. 3 TRIZ methodology (Adapted from José, 2004) [6]
part substitutions, changes in manufacturing techniques,
or design [3]. Miles and Harry Erlicker, GE vice- Over the years scientists developed a large pallet of
president for purchasing, used the term value analysis. methods, strategies and tools that can be applied in any
PD stages, and can be adapted to certain specific needs of by striving for maximum overlap between activities that
each organization separately. This paper mentions only cannot be completely executed in parallel. Studies [5]
the most well known base methods, and some of the new show that CE led to an average of 40% reduction in
product development methodologies that include classic overall development time (figure 4). As shown, the
tools and that were applied in the last 15 to 20 years. For extended time spent on planning (about 10 times more
further research, documentation and technical aspects than in a sequential one) aims to make the later stages run
about all of these methods and a lot more we strongly as smooth and swift as possible. Studies [14] have
suggest a detailed study of the references shown at the demonstrated that being a few months late to market is
end of the paper. much worse than having a 50 percent cost overrun when
these overruns are related to financial performance over
the lifecycle of a new product or service.
2.3 New Product Development Methods (NPD)
Nowadays everything happens so fast that change in
production procedures may occur within a few weeks, so
SE 3% 27% 45% 15%
rigid bureaucracy and operations are seen more as
impediments than boosters for growth. The sequential
process implies that departments receive the result from
the previous department’s work without communicating CE 33% 22% 45% 8%

before. This leads to time consuming patching-up before


commencing the actual tasks. The efforts for dealing with Planning Design 40% time savings
this issue have included new product development (NPD) Process Design Manufacturing
methods where all participants gather at the start of a
project in order to avoid time consuming remodeling later Fig. 4 Time difference between sequential engineering
in the process. The most known methods include rapid (SE) and concurrent engineering (CE) (Adapted from
prototyping, concurrent engineering (CE), integrated Ingvild S., 2007) [5]
product development (IPD) – The Stage - Gate model,
dynamic product development (DPD) and business Despite striving to reach its full potential in terms of
process reengineering (BPR). design cost and lead time optimization, the method has
been criticized for not being very useful for radical
2.3.1 Concurrent Engineering (CE) innovation purposes – rarely including non-technicians.
Concurrent engineering is a systematic approach to the
integrated, concurrent design of products and their related 2.3.2 Integrated Product Development (IPD)
processes, including manufacturing and support [5, 9]. Another concept of collaborative new product
CE is a methodology which determines related development is Integrated Product Development (IPD).
customer needs, converts them into specific functional The method was introduced in the mid 80s as a reaction
specifications and engineering requirements and conducts to the mainly engineering-based CE methodology. In
competitive evaluations using very disciplined and addition to engineers from different disciplines, designers,
rigorous Quality Function Deployment (QFD) capabilities marketing experts and people from other branches were
and procedures. CE combines a multi-disciplined core also included in the process.
team, derived from all functional groups to drive product IPD is a philosophy that systematically employs an
development. A strong management steering team integrated team effort from multiple functional disciplines
simplifies bureaucracy and eliminates cross-functional to develop effectively and efficiently new products that
barriers. Manufacturing and key suppliers must be satisfy customer needs [5]. To ensure that the
involved early and often in the development process from development team stays on track and reaches the planned
concept initiation to customer delivery [7]. A multi- goals on time, some IPD-processes include an external
functional organization stands up for integrated solutions, steering group. One of the most known methods within
which involve blending processes (people) with this philosophy is the Stage-Gate© method which the
technology (tools) and infrastructure (environment). creators claim is used in 73% of North American
CE is a time – centered approach that aims at companies in 2006 [5].
achieving major time reductions by planning and The method has been criticized by some specialists
executing design and development activities in parallel, or who claimed that the steering group assessment halts the
project for an unnecessarily long time, making the differs from the two others by allowing change after the
process abrupt and discontinuous. planning stage is over. The most significant difference
between BPR and other NPD methods is its applicability
2.3.3 Dynamic Product Development (DPD) mostly in process development and not for product
Dynamic Product Development is one of the very last innovation.
contributions to new product development methods. The We can’t say which one of NPD methods is “the
term was introduced in 1997 when a project was best” in an innovation context, as this is highly related to
conducted at Halmstad University in Sweden with the aim the particular company in question. Aspects like
of developing the IPD process further [5]. As the methods organization culture, technology resources, financial
of CE and IPD, the DPD-principles include strong objectives, innovation radicality and composition of
customer focus and the use of visualization tools. One disciplines within the company should most probably be
difference though, is the use of an internal concept group taken into consideration when developing a collaborative
working as the steering group in order to avoid delays innovation strategy.
resulting from external interference. Furthermore, the
method is highly iterative (hence the term 'dynamic') and
allows for fundamental concept changes at later stages in 3 The Impact of Product Development
the development process. Concept changes after the
planning phase are not normally considered a part of CE
Methods
Regardless of the method used, they all have the same
and IPD, and creators of DPD consider them therefore as
main outcomes, of which can be mentioned: building
being too rigid for innovation purposes. This rigidity can
networks for knowledge exchange; providing high quality
lead to a result which isn't meeting current market
innovation support; creating an effective environment for
demands since these might have changed after the first
innovation; exploiting new technologies; new or
stages are finished. DPD, they claim, is thus a better way
improved products, processes, services; new businesses;
for ensuring market success [4, 13].
generation of intellectual property; strategic innovation
Another methodology which is based on cross-
etc. [10, 12].
functional teams and involves the use of classic methods,
strategies and supporting tools is business process
reengineering (BPR). BPR has the same driving factors as
all other PDMs (cycle time, cost, quality, asset utilization 3.1 Objectives
and revenue generated), but differs by the methods and One of PDM goals is to eliminate engineering changes
tools used [11, 13]. If CE uses QFD methods and made after design release, thus reducing cost, saving time
software, BPR stands for utilizing Functional Analysis and creating opportunities for quality. The cost of
supporting tools like activity based modeling (ABM) and engineering changes, involving production, tooling and
IDEFØ. equipment modifications, after production has started, can
exceed $150,000 per change (on average) in many
product industries. If changes are made before
production, in the build and test phase, the cost might be
2.4 Comparison of the methodologies
$10-20,000 per change (on average). If these same
Firms must innovate in order to survive. All of NPD
changes are made in the predictive simulation phase
methods require a very high degree of innovation overlaid
within the computer, the estimated cost, while impossible
with convergence of technology, marketing,
to nail down precisely, is $1,000 to $2,000 per
organizational restructuring, leadership, product design,
engineering change (on average). Product development
engineering and manufacturing capabilities. NPD
methods also advocates for world-class standards for
methods are quite similar, with cross-functional teams,
product quality [7, 8].
customer focus and use of visualization tools.
An estimated 75% or more of a product’s cost is
Nevertheless, there are some distinctive features for each
“locked-in” when the first layouts are developed during
individual method. The issue of steering groups was
the concept design phase. Product development methods
introduced mainly with the Stage-Gate© Model and is
attack total product costs when changes can be made
thus not much mentioned as a tool for the CE process.
easily and quickly in the computer. Using integrated
The biggest difference between CE and the two other is
target setting, simulation and business modeling, teams
probably the technological focus and the lack of extensive
evaluate multiple product and process alternatives and
use of customer representatives in the process. DPD
compare relative product and manufacturing costs of design knowledge (by focusing on users, creativity and
these alternatives. It is the objective of these methods to experience in a broader sense) will bring a company's
be 80% to 90% certain that the correct product concepts innovation efforts to a higher level. As for
and the correct manufacturing and assembly strategies anthropologists, their know-how of observing users in
have been selected at concept initial design. Thus, a their natural habitat, and so figuring out their real needs,
specific objective of these methods is reduction of overall is more and more regarded as a valuable tool for making
product costs by 25% to 30% compared with product more complete products and increasing brand loyalty.
costs of leading competitors that are still using today’s IDEO is today regarded as one of the most innovative
“build and test” serial product and process development consultancies in the world – possibly being one of the
methods (figure 5) [2, 7]. strongest catalysts for the new collaborative attitude. The
133% Quality newest concept promoted by IDEO specialists is “design
Objective
Acceptable Quality thinking” (figure 6). Design thinking is an approach that
100%
80% - 90% uses the designer’s sensibility and methods for problem
solving to meet people’s needs in a technologically
66% Conventional
PDM Quality feasible and commercially viable way. In other words,
Time & Cost
33% Objectives design thinking is human-centered innovation [15].
22 -25%
Conventional
5-7% Time & Cost
ENPERIENCE
Concept Detail Design Production Production INNOVATION
Initial Design & Validation Engineering
EMOTIONAL INOVATION
Fig. 5 Product Development Cost and Quality (Adapted - BRANDS
- RELATIONSHIPS BUSINESS
from Lemon, 2001) [7] - MARKETING (VIABILITY)

PROCESS INNOVATION

The final economic driver is time-to-market, from


concept development to fully implemented production.
Advanced technology introduced by competitors or DESIGN PEOPLE TECHNOLOGY
THINKING
demanded by customers makes current products obsolete (DESIRABILITY) (FEASIBILITY)

and forces new product development programs for


companies to remain competitive. Product life cycles are
becoming shorter and in most industries will be even
shorter in the future. Product development methods, when FUNCTIONAL INNOVATION

applied correctly, can shorten time-to-market by 35% to


Fig. 6 Design Thinking Concept (Adapted from Tim Brown,
50% [11]. 2009) [15]
Some equally important objectives are reduction of
capital investment for state-of-the-art automation by 40%
or more and significantly lowered overall product
3.3 Trends and Challenges ahead
business risk.
A growing focus on cross-functionality appears
throughout all new product development methods.
Different techniques, disciplines and tools are used
3.2 New Disciplines of Innovation together to create better approaches on development and
Customer emotionally centered disciplines are beginning innovation. Nevertheless, the advantages brought by the
to make important contributions to product development wide fields and connections covered through these multi-
methodologies. Two disciplines which are experiencing disciplinary methods, can also lead to a series of
growing respect in the business community because of important hindrances. The radical cultural differences
their knowledge of user experience are design and between disciplines represent a true challenge when
anthropology. Design consultancy IDEO, one of the trying to bridge the gap between the professions. “Where
leading companies on innovation today, uses both managers tend to focus on profits and returns, designers
designers and anthropologists actively in their focus on product and service quality; while managers are
development processes as their knowledge is regarded as in for survival, designers prefer reform; where managers
decisive for making products with a complete user think linearly, designers think laterally; managers are
experience. According to design thinkers, a better use of serialists, problem-oriented, and cautious, designers are
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