Web used to speed products to market
Not that long ago, Fleetwood Enterprises Inc. was to the recreational vehicle industry what Sony Corp. is to consumer electronics: the unquestioned leader in product innovation, invariably the first to market with features that made buyers reach for their checkbooks.
Then the wheels came off. In the mid-1990s, as the Riverside, Calif., company grew to nearly $3 billion in sales, the pace of product innovation slowed. Smaller, nimbler competitors with a fraction of Fleetwoods market share began introducing popular features, such as pop-out wall units that extend RV living space, months or years before Fleetwood. When the companys market share and unit shipments began to stall, Fleetwood management in 1999 ordered an overhaul of the companys entire product development process in order to speed new designs to market. The changes included deployment of new collaborative design software that allowed different divisions to collaborate on new designs. The result: Two years later, Fleetwood is back in the product innovation drivers seat.
"Over the last several years, we got away from being first to market to being very late to market," said Dennis Ogawa, vice president of RV product development at Fleetwood. With the changes, "were doing over twice as much [development] work with 50 percent less staff and have slashed development cycles by nearly 50 percent," he said.
Companies have long struggled with how to automate new product design functions. While many have spent big bucks over the last few years automating and re-engineering supply chain and manufacturing planning processes, most have ignored critical new product design processes that, because they often require collaboration among multiple parts of an organization and with suppliers, can become complex and time- consuming. The dilemma has only been exacerbated by the trends of globalization and outsourcing. Individual or even enterprisewide CAD systems aimed at engineers were hardly the answer.
Now, however, Fleetwood and many organizations like it are beginning to use new Web-based collaboration tools to cut the cost and time it takes to get new products to market. The tools are the first wave of what many experts say will be a broader initiative by many enterprises to revamp most aspects of how they design, service and support products. That trend, which some experts are calling PLM (product lifecycle management) and others collaborative commerce, includes everything from project management to direct materials sourcing and products that track and manage a product over its life cycle.
Whatever the nomenclature, the software products reach for the same goal: to foster collaboration across departments such as engineering and manufacturing as well as with external suppliers and customers early in the design loop. The idea is to avoid mishaps that add months and dollars to a development project, resulting in drastic reductions in cycle times (and faster time to market), improved product performance and decreased costs.
"Its not that everyone suddenly thinks design collaboration is sweet and sexyits just sweeter and sexier because of the Net," said Navi Radjou, an analyst with Forrester Research Inc., in Cambridge, Mass. "Weve been spending millions on improving procurement, manufacturing and logistics, but the area that can really make the most impact and save companies the most money is in optimizing design capabilities." The reason, Radjou and others say, is that anywhere from 70 percent to 80 percent of a products cost over its life cycle is determined during the design phase.
While Fleetwood and other early adopters are proving a payoff is possible, there are challenges. One is to establish confidence in Internet security, since Web-based design collaboration means youre sharing highly confidential intellectual property. Enterprises are also likely to face problems getting engineers to willingly embrace input from others. But to really make the technology work, experts say, companies will need to make dramatic changes to their product development and supplier management business processes and start with projects that have a clear value propositionfor instance, developing a product where slashing time to market is a critical competitive issue.
Despite the obstacles, analysts say they expect the market to be huge. AMR Research Inc., of Boston, predicts that overall growth for the PLM segment should jump from 30 percent last year to 50 percent this year, with revenues projected to soar from $1.2 billion last year to slightly over $8 billion by 2005. According to a recent Forrester study of 50 product development executives at large manufacturers, 72 percent said collaboration with suppliers using these types of tools will be critical to their success over the next two years.
As a result, software vendors are rushing toward the market. Traditional engineering-oriented companies such as Parametric Technology Corp., of Needham, Mass., and Structural Dynamics Research Corp., of Milford, Ohio, are extending their CAD and PDM (product data management) tools into collaborative design suites built from the ground up for the Web. Enterprise software vendors such as SAP AG, of Walldorf, Germany; Oracle Corp., of Redwood Shores, Calif.; and i2 Technologies Inc., of Dallas, are also moving into the space, as are a flock of newcomers that includes Alventive Inc. and NexPrise Inc., both of Santa Clara, Calif.
For Sikorsky Aircraft Corp., a $1.4 billion division of United Technologies Corp., some automationeven in a limited pilot stageis better than the traditional, laborious process of tracking complex design data by hand or through word of mouth among departments within an enterprise. The maker of commercial and military helicopters typically deals with design cycles that cover a period of eight to 10 years, making organization of the information an administrative nightmare.
"In a lot of cases, our programs outlast the people supporting them due to relocations or retirements," said Darryl Toni, senior technical engineer for structures, in Stratford, Conn. "We needed a way to catalog a history of data that lets us go and pull information that five or 10 years ago was locked in peoples file drawers or, in [the] worst case, was in the heads or hard drives of folks not readily available."
About 18 months ago, Tonis group tested the waters of collaboration with NexPrises ipTeam in a pilot that was part of the companys contract award for the RAH-66 Comanche helicopter. The contract, with the U.S. Department of Defense, is for 13 demonstration units to be delivered in 2004 and 2005, with 1,300 units to be completed by 2006.
Using NexPrises software, Sikorsky has been able to reduce costs and the time associated with producing expensive design documentation, essentially shaving up to six months of work and millions of dollars from the project, Toni said. The company has also garnered efficiencies by having a common repository of rules and documentation, which avoids duplicating work.
Before using the collaborative design tools, many engineers would work autonomously on pieces of a project, receiving component test results occasionally. Frequently, those results required component redesign, but often an engineer wouldnt find that out until after putting in much more work on the rejected design. With a common, up-to-date repository of designs and test results, Toni said, that kind of wasteful, iterative development is reduced. Customers such as the DOD can also use the system to see specifications and give input so changes can be made earlier in the design phase.
The company, which has 240 users on the ipTeam for the RAH-66 Comanche unit, is now trying to implement the software companywide as well as open access to supplier partners. "Now that we have shared data that everyone can access, we avoid duplication, reduce the need for formal reporting, and improve our ability to review and approve work," Toni said.
CargoLifter Development has a slightly different agenda for its collaborative design implementation. Time to market is whats driving the startup division of Brand, Germany, logistics company CargoLifter AG, which is building the CL 160, a pioneering 820-foot airship (bigger than the Hindenburg). Although it currently has no direct competitor, the CL 160 is a moving target. "Life is anything but static, and we want to get to market quickly," said Gregory Opas, head of engineering support for CargoLifter Development.
Thats where Parametrics Windchill collaborative product development software suite comes in. Starting in early January last year, various CargoLifter groups involved in the project began using the tools for the design task of matching requirements and geometric models to specific parts. Now, 320 people at the companys production facility regularly use the tools, and CargoLifter is starting to get suppliers involved.
"Often, 40 to 60 percent of the program time you sit idle waiting for suppliers to submit something to you, or theyre waiting while you submit the specs," Opas said. "Were effectively trying to get rid of wait time. A supplier will get access to live, hot data so they can see where were going on various aspects of the specs and tailor their submission of components to suit that." Additionally, sharing information helps in the identification of conflicts early in the design process, he said, allowing CargoLifter to make changes "before they cut steel."
Fighting guerrilla wars
Although its too soon to quantify results, Opas is happy with the companys progress. CargoLifter is now doing IT audits on its suppliers to see if they can conform to the security and data management standards theyve established as necessary for using the tools. The company expects to begin collaboration with one supplier this month.
Overall, there have been only a couple of rough patches. The biggest, Opas said, has been getting design engineers comfortable with a sharing culture and changing the way they work. "Even though we have the benefit of starting business processes from scratch, its still been difficult," he said. "In our case, everyone has come from somewhere else and has their own way of doing things, so we have multiple guerrilla wars" to fight.
CargoLifter encourages engineers to use the technology and accept the requisite business process changes, in part, by appealing to their competitiveness. Managers highlight cycle time successes that some groups made using the tools. That way, Opas said, everyone wants to use the new tools to see if they can get the same results.
CargoLifter isnt the only enterprise focusing on getting engineers to accept the collaborative tools. At disk drive maker Seagate Technology Inc., training and executive sponsorship have been key factors in getting buy-in. Top Seagate management embraced collaborative design technology as part of the companys plan to inject agility into its design processes. "Our business is characterized by very short design cycles and short product lives, so the need to collaborate is especially true," said Pete Diepersloot, senior engineering director responsible for engineering systems at Seagate, in Scotts Valley, Calif. "In order to survive, we have to move quickly."
Seagate, which started working with SDRCs CAD tools in 1993 and Metaphase PDM tools three years ago, has now deployed them throughout the company and is evaluating SDRCs new Web-based TeamCenter collaborative tool to bring suppliers into the design collaboration loop.
To encourage widespread adoption, the development crew conducted regular road shows to talk to employees about cultural changes and why they were important to the companys long-term success. There have also been regular online training sessions and cross-functional team efforts to define what the new business processes for collaboration should be, Diepersloot said. In two years, Seagate has managed to reduce development cycle time from two to three years to 18 to 24 months.
While such results are impressive, they cant be attributed to collaborative software alone.
Boeing Canoga Park, a division of Seattle-based aerospace vendor The Boeing Co. that makes rocket engines and the power systems for the space station, has been able to achieve great efficiencies with the NexPrise collaborative tools but not without first spending significant time examining and overhauling its product development processes.
"The software itself will not save you one dime," said Bob Carman, program manager for space and communications, in Canoga Park, Calif., who led a pilot project on virtual teams in the mid-1990s that became the foundation for the NexPrise deployment. "The things that save money and time are the things you are willing to change in your current processes and how radically youre willing to change them."
The groups revamped collaborative culture has led to some tangible results, Carman said. For example, during development of the RS68 Delta 4 rocket engine, NexPrise has helped 15 teams cut more than $200,000 in costs because they no longer have to travel to deal with design changes. The NexPrise tools have also been instrumental in reducing the number of parts on the engine because Boeing can solicit input from experts early in the design process, he said.
On its critical Southwind 2002 motor home linedue in showrooms later this yearFleetwood has also been able to reduce part counts, in its case by 30 percent. But, more importantly, the RV maker was able to pack the new unit with state-of-the-art features such as a streamlined heating/cooling system and DVD changer while still getting it to market fastin five months vs. the usual 10 to 12 months.
A big part of the improvement was due to the deployment of collaborative design software from Alventive, coupled with a new set of business processes that allow for more cross-functional, parallel new product development to take place rather than the inefficient, sequential processes of old.
Now, Fleetwoods Ogawa said, the company can respond to market changes quickly or test drive an enhancement without having to ride out a protracted and laborious development cycle.
Said Ogawa: "Weve got our pulse on the marketplace again."
Indeed, from where Ogawa sits, it looks as if theres nothing ahead of Fleetwood but open road.