To reduce the cost of the product and its development, it is necessary to act mainly on the design by introducing the mode of “concurrent engineering“, during which different departments work simultaneously on different aspects and/or stages of product development.
It is then necessary to work on the product development process by employing the agile methodology, which by proceeding in small steps with continuous verification encapsulates concurrent engineering.
An integrated process is achieved that minimizes unnecessary work, greatly improving development speed and product quality. The construction is facilitated and can more easily integrate lean efficiency logics.
This applies to the world of industry and even more so to the world of construction.
Cost intervention areas in order of impact
As I indicated in my previous article The Cost Shadow in Product Development-Part 1 design activities have the greatest impact on cost generation.
When a new product is being developed, the room for manpower intervention in building the prototype(s) is very limited because the activities are often new and non-repetitive.
Once design choices are made, the space for negotiating material costs is equally limited.
The impact of the management part on product costs is modest in economic terms but is very high when looking at development time.
In fact, intervening on the management side produces limited cost recoveries. If we also recover 30 percent of the management costs that account for 30 percent of the total cost we are talking about less than 10 percent of the product cost.
Labor is normally diverted to perform other tasks if the work is not synchronized and if materials do not arrive.
A poor management process has a strong impact on the arrival of materials, and the lack of integration of development activities.
Acting on the management part therefore has a great impact on the project completion time and thus on the cost of delay.
Thus, the main areas of intervention to reduce the costs of the product and its development are:
- The design
- The management of the development process.
The positive impact on the cost of concurrent engineering.
The mode of concurrent design or concurrent engineering, during which different departments work simultaneously on different aspects and/or stages of product development, allows for a strong reduction in product costs.
Concurrent engineering is inherently complex because it takes into account a multitude of perspectives to be satisfied.
Design review meetings, during which the results of what has been developed are presented to stakeholders and comments and suggestions are gathered, are critical to enabling concurrent engineering.
Intensive concurrent engineering has positive impacts on product quality and allows for better organization of product construction.
The development management process and the effects on product cost
For process management, the greatest impact is with the agile approach, which by proceeding in small steps, with increments and product changes, allows for maximum reduction of work done unnecessarily.
With reference to the structured agile framework SCRUM, the sprint review event, during which the work developed by the team during the step or sprint is presented, is in fact a design review meeting.
I confess that during the many years of product development in different realities, with my teams we were never able to plan well for the actions that emerged from the design review meetings.
In fact, predictive planning with the Gantt does not lend itself to easily planning what emerges from development.
With the agile approach, the next-step or sprint planning phase allows the initiatives that emerge from the Design Review / Sprint Review to be structured by indicating what to develop and when.
The agile process for hardware products that encapsulates concurrent engineering alone is not enough.
There is also a need to develop pretypes that are forerunners of the product that cost a fraction of the cost of the product and are produced in a very short time. This allows the validation process to be strongly integrated with the design process.
The goal achieved is time reduction.
Concurrent engineering also focuses on assembly activities and related material flow, which, by employing lean efficiency logics, allows for shorter assembly times, mainly in the mass production phase.
This is now well established in companies that have explored agility in physical product development.
This is also very much true for the building construction sector, which are prototypes, and where executive design activities are done very partially.
The management of the construction development process from design to construction site is very inefficient and benefits greatly from the integration of agile approaches and lean logic.
I will return to this topic with an article dedicated to the construction sector that is being followed under the sponsorship of ANCE Verona.
