WTF?! No-BS PM -- Manufacturing: Turning a Sample into a Product

You may be able to produce a hundred samples in your lab; your real challenge is to produce one million in production and make money out of it.

The most critical moment in any new product development is when it enters production. Let's face it: if you have a great product but you cannot produce it, you really don’t have a product. If your engineers can make samples in the lab but your production facility has great difficulty manufacturing the product in high volume, it won’t be a winning product for you. The key is to balance the requirements between time-to-market and mass-production. However, this balance can be very difficult to achieve and often leads to major conflicts between R&D and manufacturing.

It’s no secret that many companies struggle to resolve the conflict between these two functions. This conflict often hurts the company badly, as products may miss the market introduction window. There are always two sides to a story, but regardless of this, the fact is that a late product hurts everyone in the company.

The problem is, why are people not cooperating? One answer lies in the basic organizational structure and performance measurements. In Developing Products in Half the Time, the authors summarize this conflict in a very simple way: "It’s not surprising that manufacturing often sees new products as a problem rather than a benefit. After all, they get measured on the basis of monthly shipments and gross margins.... There is simply very little short-term incentive for most manufacturing organizations to support new products".

From the development function point of view, they could design a product that will cover every possible problem in production, but to do so would require so much time that, by the time it’s released, it would already be obsolete.

So the real question is: What is good enough for production and how do you achieve it? We suggest the following actions to address this conflict:

1. Create opportunities for overlapping: "Manufacturing is forced to be involved from the beginning.

If the manufacturing people join the team full-time from the beginning, they will either have to work on engineering or marketing tasks, or identify opportunities for overlap so they can begin work on manufacturing tasks, even if this must be done with only partial information."

2. Change incentives for manufacturing: This is a long-term approach that gives credits and incentives to manufacturing for introducing new products.

3. Provide a champion for new products in the factory: This champion should be from manufacturing, but reports to development during product development and introduction. Because he is from manufacturing, he will have more credibility and influence within the factory than would someone from development.

4. Members of the development team should spend real time on the factory floor: When the team spends time to understand production processes, they get valuable manufacturing experience that should go into product design. They also establish contacts and relationships with manufacturing for future process and equipment development discussion.

The suggestions outlined are good tactical ones. The process enables manufacturing to get more involved in the new product development process, but it does not resolve the fundamental conflict. Some questions remain:

1. How do you get manufacturing interested in producing a new product?

2. How can manufacturing become a willing partner for new product introduction?

3. What is in it for the head of manufacturing?

4. What would you do if you were the leader of these two functions? When R Wang was an operations manager for a disk drive company, his division manager always told him, " You must keep your organization lean and mean. But your engineering people must be capable. They must be able to handle all types of product and process problems. Nobody will disagree with you that quality is the most important job, but how to solve a quality problem is the heart of the issue.

Your engineering people must have a can-do and will-do attitude. The question is, how do you instill this attitude in manufacturing for new product introduction?" Clearly, manufacturing has no function if they have no products to build, and since all products become obsolete over time, unless there is a steady flow of new products they will eventually find themselves jobless. If they understand this, they will fight to take new products into production.

They must also be capable of handling problems after they begin mass production. To achieve this goal, some possible strategies follow:

1. Create competition among factories if you have them. The factory that can produce the new product at lowest cost and highest quality "wins" the job.

2. Manufacturing can/will make money from new product introduction.

3. Process and equipment development should report to manufacturing.

4. Enable manufacturing with a strong advance engineering team.

Creating Competition among Factories / Manuf.

When Wang was a regional program manager for a semiconductor company in Singapore, the company would hold an "Annual Operations Plan" meeting that would decide that year's operational budget and what products to allocate to which factory in Asia Pacific. Plant managers would first present their plans, and value-added activities that they could implement, and identify products they would like to produce.

Everyone was eager to take on more new products, of course, along with the investment and new technology that attends them. This was a great motivation for the factories. They all knew very well that if they did not get new products, the factory would run out of work and have overcapacity. In fact, the net result was that not a single plant manager complained about problems with any new products they had taken on previously; they only wanted more new products, regardless of what would happen during production later on.

If you have only one factory, you could invite your sub contractors into the discussion. The objective is to make them willing partners. They should be the ones telling you that they want to take on new products. Following is a simple process for achieving this result:

1. Before the project starts, invite your project manager to present a project overview to your factory and/or subcontractor representatives to enable them to understand the project scope, the target quantity, tar get production schedule, target factory price, and resources required to support this project.

2. Give them one or two weeks to think and plan.

They must review the impact of this project on their factory and come back with a proposal that should cover the target factory prices and full-time re sources they will provide to support this project.

3. A committee chaired by the manufacturing manager should review their proposals, and then decide who gets this job. Let the best proposal win.

The outcome of this process is a firm commitment from the factory. At the same time, enabling the manufacturing people who are assigned to this project will create a strong bond between them and the project team. Such team spirit from the factory is very important to the project, as it will smooth over problems and difficulties later on. Since it’s now an achievement for the factory to be awarded a new product (after all, they have to be better than other factories), they have to do everything possible to win the work. The manufacturing boss will also do everything possible to make this happen, because his or her own reputation is at stake (as he or she chairs the selection committee.) Capture the True Cost of Introducing a New Product

Even given a commitment from manufacturing, if they feel they are treated unfairly it will evaporate. The factory must not be penalized for something over which they have no control. Therefore, it’s essential to establish a cost center in the factory to capture all new product introduction costs and charge them back to development. This is not just for ac counting purposes, but to capture the true development costs for better future planning and business case justification. In most new product justifications, the development cost does not cover the scrap cost, labor cost, and equipment downtime during prototype and pilot production stages. Initial production is normally not as efficient as the final production run, after the learning curve has been traversed. Under normal conditions, production has to shoulder all these additional costs, which adversely affects their overall performance.

Having the new cost center record these costs puts them in the right perspective.

It's essential to give credit to the factory if they drive the various costs below the introduction targets. Each project will have a budget for sample run, scrap cost, equipment cost, and so on. If the factory team helps to reduce costs in the actual prototype manufacture, sample build, and pilot production, they deserve credit. In the costing system, if production spends less than the development target budget, it should be positive IFO (income from operations) for the factory-which gives them incentive, because they can be rewarded when they do well. If they spend over the target, the additional cost should be shared with development.

The details of this scheme can be worked out based on the company's finance and accounting system, but the concept is that the project team should have a budget for all the new product introduction costs as part of the business case justification. The cost for prototype and pilot production should be planned and allocated to the factory that is doing the job. Of course, for the company, it’s just a left pocket/ right pocket issue, but it provides measures that help to motivate the factory to excel in the project team in order to benefit from this new product introduction.

Process and Equipment

Development Ownership

Traditionally, process and equipment development are considered development functions. Since manufacturing is the final customer for the process and equipment, development should involve manufacturing during the design stage. How ever, manufacturing may feel that it’s too early for them to get involved or, due to other pressing production problems, they may shy away from the development process. On the other hand, because the factory is often far from the development center, engineers may feel that they will start the work first and talk to the factory later. In the end, the discussion never takes place.

Ownership is another problem.

Development managers

always feel they are responsible for designing new products, but they don’t feel strongly that they should own the manufacturing process or equipment development. After all, they de sign products. It’s manufacturing's responsibility to figure out how to build them. You may think this wrong, but it’s the perception of the development mangers and it’s hard to change.

In the case of production, they have long-term interests in the process and equipment design. When equipment is developed, it will be difficult for them to create a budget to re place that equipment as it wears out. As such, production has more reasons to own the process and equipment development. Therefore, we suggest that the process and equipment development function should report to manufacturing; that is, the process development council and equipment development council should report to manufacturing instead of reporting to development or the innovation department. This ensures that the process and equipment development processes have a direct link to manufacturing. When the production team is involved directly in the project, they get more direct feedback from production on the process and equipment before it’s finalized for prototype build and pilot production. During the product development phase, a full-time manufacturing engineer should work with the project team and report to the project manager. The engineer should actively participate in project planning and prepare the team for prototype building and a trial-run schedule. He/she should also advocate the decision to start up production, and communicate this readiness to manufacturing.

Enable Manufacturing with a Strong Advanced-Engineering Team

Ask yourself: If I were the development manager, would I want a strong manufacturing partner that resolves all the product or process problems after the product development stage, or a weak manufacturing group that always needs help to resolve product or process problems after the product is introduced? This is not an easy question to answer, because there are pros and cons. Still, a strong and capable manufacturing department that will resolve most production problems be fore asking for support is preferable. When they lack this capability, you often find that new product development personnel (call that "project resources") are pulled off the job to solve urgent product problems, thus delaying development of new products. The net result is that the deadline for the new product does not change, and when these engineers come back to the job they are forced to rush to finish their designs, thus creating another product with design flaws. The circle is a vicious one, and has no end as long as this system prevails.

There are certainly times when development engineers will have to solve problems with products already in the field, but keep this to a minimum if you want to accelerate new product development. If you think the cost of supporting such a group is high, consider the cost of losing customers because of recurring problems with product de sign quality! When you place the process and equipment development under manufacturing, there is another benefit-the process and equipment development teams will better communicate with the manufacturing engineering team, and there will be cross-fertilization between the groups. The development team will know more about the process and equipment problems in a real production environment, while the production team will learn more about the process and equipment design. This benefits and strengthens both teams in the long run.

THE ONE-TEAM CONCEPT

Almost any project expert will tell you that you must have only one team for a project, and that all team members should report to just one project manager. However, in many cases, because manufacturing is located at a distance from the development center, the site leader and team members are almost certain to have their own normal duties on top of their project activities. They will usually report to a functional boss on a solid-line basis and to the project manager on a dotted line. This is always the source of difficulties, conflicts and problems.

While it may be difficult to change this arrangement, there is another way to manage. The site project leader and team members should report directly to the development project manager (hereafter simply called the project man ager). If there is any additional duty that they can perform without affecting project progress, site management should communicate this request to the project manager for approval. Only when the project manager agrees with the re quest are the site members permitted to carry out those duties. This may sound like simple common sense, but many organizations have more than one project leader, all reporting to different bosses and claiming that they still report to the project manager. Under these conditions, the project manager has little or no control of the activities of off-site personnel, which makes tracking, monitoring, and control ling the project impossible. In view of geographical location differences, the line of command and reporting is very critical for project success.

When implementing the above strategy, to win support from manufacturing, the site manager should change the line of reporting as suggested once the factory is committed to the project. He or she also should propose a resource allocation plan, thus providing a clear mandate to the project manager to execute the project.

Cooperative Attitude

The most important objective of these actions is to foster a co-operative attitude. The development and manufacturing teams must work closely, as they are members of one team.

An old story illustrates this point. A merchant once set forth on a journey to a mountainous region. He brought along many goods, an old donkey, a young mule, and a horse. He rode the horse and loaded his goods on the other two animals. The young mule looked quite strong, so he loaded most of his heavy goods on it and put only some light goods on the old donkey. At first the young mule carried his load with ease, but when he began to ascend the steep path of the mountain, his load became too much for him to bear.

He began to travel with great pain.

The young mule then spoke to the old donkey in the hope that he would help him lighten his load. But the don key paid little attention to his request. He then turned to the horse hoping he could help him instead. But the horse said to the mule, "I am carrying the master, putting some goods on my back will make the master very uncomfortable." So the horse too turned down the young mule's request and carried on.

Not long afterward, the young mule dropped dead under his heavy burden. Not knowing what else to do, the man placed all the goods carried by the mule on the donkey and the horse and continued to ride the horse for the rest of his journey.

The donkey and the horse, groaning beneath their heavy burdens, said to themselves, "We deserve this punishment. If we had only been willing to assist the mule a little, he wouldn't have died and we wouldn't be carrying his load." The leader's role is to foster a cooperative attitude between development and manufacturing. If the leader is un willing to promote this cooperative working attitude, the company-like the mule-will fall, and everyone will suffer.

The Role of Site Project Manager

When a product is initiated in the development center but the manufacturing center is at a different site, a site project man ager must be assigned to the manufacturing center. The objective is to involve the manufacturing site at the outset of the project and ensure that the industrial inputs are taken into consideration when developing the new product. This is especially important when the development center is utilizing a new platform or technology. When a product is being developed in the mass-manufacturing center, the project manager may combine both roles. One of the site project manager's most important roles is bridging the differences between the development center and manufacturing.

The Development Project Manager

The development project manager (again, simply called project manager hereafter) is responsible for the overall project from the concept stage through the closeout stage. He or she ensures the project's success.

The project manager's roles and responsibilities are:

1. Establish project deliverables (product function and features, quality, time, and cost): The project manager should define and finalize project deliverables based on the defined project scope. He or she should review these deliverables with the project sponsor and stakeholders to secure their agreement up front in order to minimize changes during the project execution stage.

2. Overall project planning and execution: The project manager should establish and oversee the overall project plan, and work with the subteam leaders to support it.

3. Resource planning and execution: While management should allocate full-time core-team members to the project team, the project manager should follow up to ensure that the resources are available according to the project plan.

4. Budget control and reporting: The project manager should control project expenditures and report progress to management.

5. Project business case review and reporting: During project execution, the project manager should up date the project business case and report major changes to management.

6. Communication with stakeholders: One of the major roles for the project manager is to keep an open communication channel with project stakeholders.

Should there be major changes, the project manager should try to gain consensus from the stakeholders and should strive to avoid any surprises.

7. Communication with key customers: The project manager should continue the ongoing communication with key customers and ensure that customers are aware of project progress and changes.

8. Communication with key suppliers and subcontractors: Should there be any changes in the project;

the project manager should ensure that they are communicated to suppliers and subcontractors. This is to ensure that suppliers are kept up to date on changes and to avoid miscommunications.

9. Risk assessment and preventive actions: An important role for the project manager is to continuously assess risks and ensure that proper preventive actions are taken.

10. Project progress and reporting to management: The project manager should report project progress to management and highlight major problems that re quire management attention.

Site Project Manager Roles and Responsibilities

The site project manager's primary job is to support the project manager to ensure that industrial requirements and in puts are considered at the beginning of the project and are implemented during its execution. The site project manager will also lead site implementation work during the project Implementation stage. The site project manager will also en sure that the product improvement team (PIT) is established to take over the product after the project closeout stage. His or her major roles and responsibilities are:

1. Participate in and contribute to project planning and evaluate the project plan to ensure that manufacturing interests are addressed. This is critical, as early participation of the industrial team will ensure that the project manager has adequate industrial inputs to consider.

2. Detailed project planning relating to site activities per the project master plan, and the plan's execution at the site. Monitor and control the site project implementation according to the project master plan.

3. Project budget for site activities (including production equipment and production line budget, etc.).

Site budget control is one the site project manager's most important responsibilities.

4. Ensure that adequate site resources are allocated for the project. Raise the red flag when resources problems are not resolved.

5. Take the lead for site trial-run activities (production evaluation run before starting production), results, and reporting. Communicate the results, findings, is sues, and actions to the project manager.

6. Ensure that the infrastructure (people, equipment, etc.) is ready for the trial run. Also responsible for ensuring that the normal trial-run parts are avail able. The project manager is responsible for any unique/special parts for the trial run.

7. Site production ramp-up plan and its capacity; e.g., line layout, setup, molds, equipment, and training.

8. Lead the project when it’s implemented in production. This is a joint responsibility with the project manager to ensure successful site implementation.

9. Exchange site project progress and overall project progress with the project manager in a timely manner.