FROM LEAN MANUFACTURING TO LEAN PRODUCT DEVELOPMENT ?· Key words: Lean product development, Lean manufacturing…

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<ul><li><p>Transfer inovci 29/2014 2014 </p><p> 12</p><p> Ing. Klaudia Mund, DTech </p><p>51 Charlbury Road, OX2 6UX Oxford, UK email: </p><p>Abstract </p><p>In todays world the excellence in product development (PD) is becoming an opportunity for competitive advantage and companies need to shift their focus to improvement of PD. Many lean transformations have focused on manufacturing, but the shop floor is only the starting point (Morgan &amp; Liker 2006:3). Product development can now be newly rethought through the adoption of lean manufacturing methods and principles. To understand the adaptation of lean principles from manufacturing to a PD environment, a brief explanation of differences between manufacturing and PD is provided in this article. </p><p>Key words: Lean product development, Lean manufacturing </p><p>INTRODUCTION </p><p>The initial focus for the application of the Toyota Way principles was the shop floor. Over the last decades Toyotas lean principles have been applied in various environments beyond manufacturing services, government, logistic, supply chain, aerospace, offices, project management and healthcare. Liker (2007:67) confirms the principles are equally applicable to engineering and can be extended to product development (Morgan &amp; Liker 2006:5). </p><p>Although manufacturing and product development have some similarities in terms of inventory, variability, or queues (Morgan &amp; Liker 2006), both have the same primary interest making money (Reinertsen 1997:19). However, these two processes are fundamentally very different (Ward 2009:2) and PD process has unique features (Ball &amp; Ball 2005; Bicheno &amp; Holweg 2009; Liker &amp; Hoseus 2009); Liker &amp; Morgan 2006; Reinertsen 2005; Womack &amp; Jones 1994). </p><p>KEY CHARACTERICTICS OF A MANUFACTURING AND A PRODUCT DEVELOPMENT PROCESS </p><p>Manufacturing and product development Manufacturing focuses on transformation of the raw material material value stream - via series of process steps into a final product. These process steps and tasks are usually stable and predictable and each step of the process adds value the product. Manufacturing involves a repetitive sequence of </p><p>tasks and activities where task time can be measured in minutes or even seconds. The critical point in manufacturing is variability, which destabilizes flow and creates wasteful inventory and must therefore be reduced and/or eliminated. </p><p>Product design, development and engineering environment is very complex, each with specific challenges. In contrast to manufacturing, PD is a one-time process with the main focus on flow of information, ideas and knowledge and data value stream. Also the work outcome in PD is information, which is intangible and invisible. The work starts with limited information and the amount increases during the development process. In a design process things constantly change and change is the key to the generation of information. </p><p>Change needs to be controlled, as the cost of making changes early in the process is exceptionally low, but late changes are very expensive (Reinertsen 1997:14). A product development process is less predictable, because the activities are executed simultaneously and the information is spread in many directions. The deliverables from the process require integration of inputs from diverse technical functions and from a large number of resources. Unfortunately, this phenomenon often causes a hands-off effect, especially at the interfaces between functional departments. </p><p>Variability in the PD process is inevitable and actually constitutes a desirable characteristic of design processes. Usually in PD variability is high and also central to the success. More importantly, variability is at the heart of the design processs capacity to generate innovation and adding value requires adding variability (Reinertsen 1997:16). Furthermore, Reinertsen distinguishes between bad variability, which decreases economic value and good variability, which adds economic value. Good variability in PD is therefore an economic necessity. </p><p>Inventories occur in both processes in manufacturing in the form of products and in PD, as information. According to Reinertsen (1997:12) manufacturing has a WIP (Work-in-process) inventory equivalent to the DIP (Design-in-process) inventory in PD. While the levels of WIP and of DIP inventories are a sign of process health, the DIP inventory is almost 10 times bigger and more expensive to hold than a WIP inventory. An inventory is closely related to queues existing in PD, typically in the testing, prototyping, CAD (Computer Aided Design) and software debug phases (Reinertsen 1997:67). Moreover, large batch </p><p>FROM LEAN MANUFACTURING TO LEAN PRODUCT DEVELOPMENT </p></li><li><p>Transfer inovci 29/2014 2014 </p><p> 13</p><p>sizes damage the speed, efficiency, cost, and performance of a development process, as pointed out by Reinertsen (1997:247). </p><p>PD is about managing flow of invisible information, as opposed to a flow of visible physical products in manufacturing, which makes the identification of waste difficult. The challenge in PD is to identify activities and tasks which are repeatable. The tasks are more complex than in manufacturing and have relatively long cycle times, calculated in weeks, months and even years. Ward (2009:120) emphasizes the importance of creating stable and cyclic processes with repetitive activities within each project in PD so as to eliminate variations. </p><p> Furthermore, capacity and scheduling issues in PD are quite complex because the workload is not constant. The organizations deal with multiple projects simultaneously and project managers must share resources across various concurrent projects. The average capacity utilization rate in PD is 98.5% (Reinertsen 2005:43), which is an extremely high level in comparison to manufacturing rates. </p><p>The main differences between manufacturing and PD identified in the literature are synthesized in following table: </p><p>FROM LEAN MANUFACTURING TO LEAN PRODUCT DEVELOPMENT </p><p> The adoption of lean manufacturing </p><p>principles into PD offers huge potential for reorganizing flow in the process and is based on five key methods: queue management, batch size reduction, cadence, rapid local adjustments, and waste elimination (Reinertsen 2005:43). Ward, Liker, Christiano and Sobek (1995:46) support this argument, asserting that the success and efficiency of the TPS are strongly influenced by product design. Walker, Crowson, and Boothroyd (2006:6) state that world-class manufacturing cannot be achieved without first having a world-class product design. </p><p>Toyotas LPD methodology leverages many of the core concepts of TPS, such as JIT, heijunka, jidoka, waste reduction, kaizen, Poka-Yoke and Takt time. </p><p>JIT Just-in-time - means to produce and deliver the right item at the right time in the right amount, at the right place. In other words, there are regular deliveries of customer ordered materials or goods in small quantities when required in a perfect quality. The main components of JIT production are kanban and production leveling named heijunka. </p><p> Manufacturing Product development </p><p>Work product Physical objects and products Information and virtual data </p><p>Value stream flow Linear Simultaneous and multidirectional </p><p>Work character Repetitive process Mainly non-repetitive </p><p>Variability Destabilizes flow and creates wasteful inventory needs to be eliminated High variability but necessary and beneficial </p><p>Requirements Known in advance, product must conform to it Created and modified in the process </p><p>Cycle time Short (minutes, seconds) Long (weeks, months, years) </p><p>Fixed cost High Low </p><p>Risk taking Unnecessary Essential </p><p>Capacity utilization High Very high (98.5%) </p><p>Queues Visible in form of inventory, manageable Invisible, unmeasured and unmanaged </p><p>Inventories Work-in process inventory Design-in process inventory </p><p>Resources Few manufacturing disciplines Large group of specialties from diverse technical disciplines </p><p>Table 1: Differences between manufacturing and PD processes Source: Researchers own construction based on Reinertsen (1997); Reinertsen (2005); </p><p>Morgan and Liker (2006) and Ward (2009) </p></li><li><p>Transfer inovci 29/2014 2014 </p><p> 14</p><p>Kanban means visual signal or a card and refer to a system for scheduling in the production line. It is based on visual tools, mainly cards steering production only of the items, which are requested by the customer. </p><p>Heijunka means production leveling that assures the sequencing of orders and the redistribution of produced quantities and varieties evenly over time. Both components emphasize effective changeover of machines, small lots, capable processes and multifunctional workers. </p><p>Jidoka refers to the practice of recognizing abnormal conditions and detecting failures and more importantly, it involves quick rectification and deletion of errors before they create waste in a process. </p><p>Kaizen means continuous improvement of products, processes and a whole organization. It refers to activities involving all employees from the president to the assembly line workers as the spirit of kaizen must be present on all levels of an organization that continually strives to improve functions and processes. Kaizen is founded on stable and standardized processes that provide opportunities for learning. </p><p>Poka-Yoke - enhances flow in a process and is applied in PD in form of checklists, standards, quality matrices or standardized processes. These concepts provide design guidelines, test and timing requirements and quality characteristics and assist engineers to prevent errors before they occur. </p><p>Takt time relates to Takt which is a German word, with its origin in music, and means a precise interval of time or uniform pace. Takt time in PD is calculated accrding to Keyte and Locher (2004:69) and Locher (2008:60) as: </p><p>Takt time = Effective working time in a period / Demand in a period </p><p>On the other hand manufacturing takt time is according to Dennis (2007:53) calculated as: </p><p>Takt time = Daily operating time / Required quantity per day </p><p>Morgan and Liker (2006:3) explain that the introduction of lean manufacturing can positively influence and improve quality, productivity and process efficiency in a production area. But manufacturing has little or no influence on product cost calculations, PD time, and selection of component suppliers - domains belonging to the PD system. Therefore the greatest opportunity to impact product cost, quality and even manufacturing efficiency is during product design and development (Morgan &amp; Liker 2006:305). </p><p>Walker et al. (2006:9) demonstrate the importance of product and process development </p><p>with reference to the Ford Motor Company as presented in Table 2. </p><p> Design Material Labor Overhead </p><p>Influence on final cost </p><p>70 % 20 % 5 % 5 % </p><p>Proportion of final product cost </p><p>5 % 50 % 15 % 30 % </p><p>Table 2: The cost of design in manufacturing Source: Researchers own construction based on </p><p>Walker et al. (2006:9) </p><p>Table 2 illustrates the high influence of product design and development on the final product cost and reveals that product design costs are only 5 % of the total product cost. Product design has the biggest influence (70%) on the final cost and material cost creates 50% of the final product cost. The selection of appropriate material for the final product is provided by product design and development and not in manufacturing. </p><p>Companies that implemented lean practices in manufacturing and PD achieved high levels of quality, productivity and flexibility (Cusumano 1994:27) and new PD and new product introduction are the areas where leading companies can gain competitive advantage (Bicheno &amp; Holweg 2009:224). Morgan and Liker (2006:5) stress that the basis for both LPD and lean manufacturing is the importance of appropriately integrating people, processes, tools, and technology with the focus on adding value to the customer. </p><p>CONCLUSION </p><p>Many companies have exploited the benefits from lean manufacturing and have shifted their primary competitive domain to PD. Although LPD is an emerging area of research, practical applications of lean concept in PD are quite rare and there is a lack of academic studies and literature. The significance of this article is in its contribution to the theoretical body of knowledge about LPD. </p><p>REFERENCES </p><p>1. Ball, F. &amp; Ball, M. 2005. Lean development. Business Strategy Review, 18-22, Autumn 2005. </p><p>2. Bicheno, J. &amp; Holweg, M. 2009. The lean toolbox: the essential guide to lean transformation. (4th ed.). Buckingham: PICSIE Books. </p></li><li><p>Transfer inovci 29/2014 2014 </p><p> 15</p><p>3. Cusumano, M. 1994. The limits of lean. Sloan Management Review, 27-32, Summer 1994. </p><p>4. Liker, J.K. 2007. Der Toyota Weg: 14 Managementprinzipien des weltweit erfolgreichsten Automobilkonzerns. (2nd ed.). Muenchen: FinanzBuch Verlag GmbH Muenchen. </p><p>5. Liker, J.K. &amp; Hoseus, M. 2009. Die Toyota Kultur: das Herz und die Seele von Der Toyota Weg. Mnchen: Finanzbuch Verlag. </p><p>6. Morgan, J.M. &amp; Liker, J.K. 2006. The Toyota product development system: integrating people, process and technology. New York: Productivity Press. </p><p>7. Reinertsen, D.G. 1997. Managing the design factory: a product developers toolkit. New York: The Free Press. </p><p>8. Reinertsen, D. G. 2005. Let it flow. Industrial Engineer. June 2005. </p><p>9. Reinertsen, D.G. 2007. Rethinking lean NPD: a distorted view of lean product development. Strategic Direction, 23(10):32-34. </p><p>10. Walker, J.M., Crowson, R.D. &amp; Boothroyd, G. 2006. Product development. In Crowson, R. D. (ed.) 2006. The handbook of manufacturing engineering: product design and factory development. (2nd ed.). (1-56). USA: Taylor &amp; Francis. </p><p>11. Ward, A.C. 2009. Lean product and process development. Cambridge: The Lean Enterprise Institute. </p><p>12. Ward, A. C., Liker, J. K., Christiano, J. J. &amp; Sobek, D. K. 1995. The second Toyota paradox: how delaying decisions can make better cars faster. Sloan Management Review, 43-61. Spring 1995. </p><p>13. Womack, J.P. &amp; Jones, D.T. 1994. From lean production to the lean enterprise. Harvard Business Review, 93-103, March-April 1994. </p></li></ul>