manufacturing, as the examples of studies in the previous chapter revealed: thus lean principles can be applied to PD as well. The initial focus of the Toyota Way application was on the shop floor, but the principles are equally applicable to engineering (Liker 2007:67). Moreover, Morgan and Liker (2006:5) claim that the management principles
99 of the TPS can be applied to any technical or service process and can be extended also to PD.
Manufacturing and PD environments might have some similarities in terms of inventory, variability, or queues. Reinertsen (1997:19) claims that both have the same primary interest – making money. However, these two processes are fundamentally very different (Ward 2009:2). Specifically, a PD process has unique and distinct characteristics. To understand the adaptation of lean principles from manufacturing to a PD environment, a brief explanation of differences between manufacturing and PD is required. In order to identify distinct characteristics and features of both environments, the following literature sources were reviewed and analyzed: Bicheno and Holweg (2009); Morgan and Liker (2006); Liker and Morgan (2006); Reinertsen (1997); Reinertsen (2005) and Ward (2009).
Manufacturing focuses on a value stream flow of physical raw material and transformation of the material via a series of process steps. These process steps and tasks are usually stable and predictable with value added to the product at each step of the process. Manufacturing involves a repetitive sequence of 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. For this reason manufacturing organization requires a specific group of manufacturing specialists from various technical disciplines.
A product development and engineering environment is very complex with specific challenges. In contrast to manufacturing, PD is a one-time process with the main focus on a data value stream and flows of information, ideas and knowledge. The work outcome in PD is information, which is intangible and invisible. In a PD process 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.
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
100 large number of resources. Unfortunately, this phenomenon often causes a hands-off effect, especially at the interfaces between functional departments.
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 process´s 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.
Both processes have inventories – manufacturing, in the form of products and 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 sizes damage the speed, efficiency, cost, and performance of a
development process, as pointed out by Reinertsen (1997:247).
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. But Morgan and Liker (2006:68) confirm that PD can be viewed as a ‘repeatable process of steps that are interrupted by waste’. Ward (2009:120) too, emphasizes the importance of creating stable and cyclic processes with repetitive activities within each project in PD so as to eliminate variations.
Another huge challenge in PD is management of the flow of invisible information, as opposed to a flow of visible physical products in manufacturing. The invisibility makes the identification of waste difficult. 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 juggle the sharing of resources across various concurrent projects. The average capacity utilization rate is 98.5% (Reinertsen 2005:43), which is an extremely high level in comparison to manufacturing rates.
101 The main differences between manufacturing and PD identified in the literature were synthesized by the researcher as follows in Table 5.1.
Manufacturing Product development
Work product Physical objects and products Information and virtual data
Value stream flow Linear Simultaneous and multidirectional
Work character Repetitive process Mainly non-repetitive
Variability Destabilizes flow and creates wasteful inventory – needs to be eliminated High variability but necessary and
beneficial
Requirements Known in advance, product must
conform to it Created and modified in the process
Cycle time Short (minutes, seconds) Long (weeks, months, years)
Fixed cost High Low
Risk taking Unnecessary Essential
Capacity utilization High Very high (98.5%)
Queues
Visible in form of inventory,
manageable Invisible, unmeasured and unmanaged
Inventories Work-in process inventory Design-in process inventory
Resources Few manufacturing disciplines Large group of specialties from diverse technical disciplines
Table 5. 1: Differences between manufacturing and PD processes Source: Researcher´s own construction based on Reinertsen (1997);
Reinertsen (2005); Morgan & Liker (2006) and Ward (2009)
Additional differences are related specifically to Research and Development environments and need to be considered for applications of lean management principles in PD. According to Lenders et al. (2007:18) PD requires more flexibility, because of continuously changing market and customer requirements in relation to a long development time. Moreover, R&D processes provide limited possibilities of automation and detailed definitions of tasks are questionable in a development process.