By Izuchukwu, John
Industrial Management , Vol. 34, No. 2
The last decade of the twentieth century will be critical for business enterprises driven by engineering. Companies are being compelled by unprecedented economic, social and technological change to improve cost and efficiency throughout the life cycles of their products. The technology leaders in electronics, aerospace, automotive and other discrete manufacturing industries have reached a ceiling on the amount of productivity they can gain from the use of computerized support systems and applications for discrete tasks. The next important stage of computerization for them is the integration of these systems and applications into distributed networks capable of supporting concurrent engineering.
Concurrent engineering methodologies permit the separate tasks of the product development process to be carried out simultaneously rather than sequentially. Product design, testing, manufacturing and process planning through logistics, for example, are done side-by-side and interactively. Potential problems in fabrication, assembly, support and quality are identified and resolved early in the design process. The result is the ability to get high-quality products to market faster and at lower cost (see Figure 1). (Figure 1 omitted)
COMPETITIVE PRESSURES AND PROBLEMS
While the market for new engineered products is expanding rapidly throughout the world, this expansion brings with it a whole new set of business challenges. There are more competitors today. Markets are not homogeneous; they are fragmented into increasingly focused niches requiring greater flexibility in the product mix, shorter manufacturing production runs--and above all--higher quality. Technology is at once part of the competitive edge and, for the company struggling to better a rival's product design or manufacturing processes, a competitive pressure. Today, while both are important, the superiority of a product's technology simply does not carry as much weight as time-to-market.
Ralph E. Gomory wrote in the Harvard Business Review, "One cannot overestimate the importance of getting through each turn of the (product) cycle more quickly than a competitor...Even if a company starts out with an inferior product, it can overtake the industry leader if it has the capacity to turn out a new line six or 12 months more quickly."
This is well-illustrated in the automotive industry. Japanese auto makers captured a major share or the worldwide market by utilizing: statistical process management methodologies developed by Deming, Taguchi and others; teamwork with an emphasis on everyone's responsibility for quality; design for manufacturability; and continuous improvement rather than major technical breakthroughs. The MIT Commission on Industrial Productivity found that the Japanese can get a new model to market in 3.5 years, a year and a half faster than their American competitors can.
A worldwide overcapacity in manufacturing is putting severe pressure on the auto makers' profit margins. New product development is capital intensive. The program cost for a new automobile averages $2 billion. This includes design, engineering and tooling. The break-even point is the number of cars a manufacturer has to sell to overcome this fixed cost. To lower the breakeven point, the manufacturer has to sell more cars or lower the fixed cost. High-volume manufacturers are moving to more flexible manufacturing and smaller lot sizes to attack niche markets. Partnerships between companies and acquisitions are increasing. More important, the role of engineering in reducing fixed cost is being vigorously explored.
Electronics manufacturers are also experiencing enormous competitive pressures. In spite of explosive growth in worldwide markets, it is getting harder to succeed from a business standpoint. The market for semicustom ASIC (application-specific integrated circuits) chips in telecommunications, computer networks and automobiles is stronger than ever. …