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Applying Lean to New Product Development

By Marc Hafer CEO, Simpler Consulting

Waste isn’t to be found only in a company’s operations and manufacturing activities. It can be a drag on innovation in the R&D department as well.

As businesses in every sector make their way through an uncertain economy, launching new products that deliver value to customers and create new revenue streams is a critical but difficult task. The ability to launch products quickly and cost effectively has never been more important but also never more challenging.

In recent years, there has been a shift in the engineering process to meet the demand of bringing new products to market. Companies across all industries typically develop one concept of a product and see it through many iterations to completion. This causes engineers to focus on fire fighting rather than innovation—some companies find themselves investing heavily in research and development (R&D) for products that are delayed or never reach the market, thereby reducing their return on investment. Bringing a new product to market while the world’s economies are still uncertain is an expensive proposition. The 2011 Global R&D Funding Forecast, created by analysts at Battelle (Cleveland), anticipates total global spending on R&D in 2011 to increase 3.6%, to almost $1.2 trillion.

Applying lean concepts to the product development process ensures that the pace of knowledge capture and decision making supports the creative process of product development. This enables better decisions to be made throughout the product development process—leading to reduced costs and lead times while improving quality. 

While many companies have become proficient at applying lean techniques to operations and manufacturing, with product development they still rely on the traditional iterative practice of design, build, and test as a path to innovation.

Lean transformation often starts with manufacturing and spreads into the support functions, enabling reduction of waste to improve productivity, performance, and the release of capacity in delivery value streams. Why then does lean seem to hit a brick wall in engineering and creative/marketing departments, which are the heart of the development value stream? Perhaps the reason for this goes back to lean fundamentals: what is customer value and what should flow?

Gathering customer needs and wants is the starting point of all lean journeys. Engineering/scientific and creative/marketing activities must use these needs and wants to come up with ideas that enhance customers’ lives. Engineers and marketers must be directly linked with these needs to understand how to apply their skills in the least wasteful way. For engineering, waste includes products/features that do not satisfy customer needs.

In product design, flow is the application of knowledge and information that moves the solution towards completion. Fundamental to this flow is learning. Without learning, new knowledge is not created and, hence, flow is not steady or predictable. Establishing flow with new product development is instrumental in eliminating waste and reducing time to market. It is a key component of creating a lean process, when work is done on demand in a continuous sequence of value-adding steps without delays, reversals, or rework.

Rework is probably the biggest cause of waste in the engineering process because many believe it is a necessary iteration required of the design process. It is not. Lean techniques shift energy and effort upstream specifically to the exploration phase. Having provided ample time for exploration and discovery in order to define the customer pain point you’re trying to relieve, when it’s time to execute, there is a narrowing of decisions based on lead times to launch, technology, features, price point, and specifications. A strong focus keeps the process on track through product launch and significantly reduces costly rework.

Engineering and design is about the transformation of information using learning and the capture of that knowledge so it can be used by the company to deliver the right products. The lean product development process enables engineers and marketers to identify the learning opportunities and knowledge required to deliver a project and accelerate time to market. This is achieved by promoting flow in the development value stream and organizing the entire process, rather than just sub-elements, and applying lean principles throughout. Standard work becomes methodologies that entice engineers to think of many solutions rather than jump at the first. Visual management becomes an obeya (“war room”) where the team can get work done. Pull becomes the signal to learn more in order to answer the questions the project has revealed.

If the analogies are as easy to describe as above why then do engineers and marketers still struggle?

Lean approaches in manufacturing had the same effect 25 years ago as industries tried to wrestle balancing flow with economies of scale. Companies must learn from the past and coach engineers to become comfortable with lean. Experimenting regularly and quickly to increase understanding is a more effective and less costly means to develop new products. Companies must clearly establish that the value proposition of the development value stream lies in making decisions that result in flow without rework and overproduction and that best satisfy customer needs.

Engineering and creative types behave the way they do in most cases because managers force them to. Very often they operate in functional silos. They push for task completion dates without understanding in advance the knowledge required to make decisions. They seem to expect every test to be a success. Instead, businesses should promote front-end loading of projects with knowledge building in order to eliminate engineering changes on the back end and shorten the time and cost to market. They should promote creative teamwork and building the development value stream team.

Implementing lean development processes is a truly transformational effort that cannot be limited to engineering/scientific functions. All parts of the business need to adopt behaviors that value learning, knowledge, and providing products that truly satisfy customer needs. Too many product development consultants focus solely on changing the engineering process. Instead, they need to help companies transform their organization by involving many disciplines, including engineers, marketers, sales staff, manufacturing, and senior executives. Together, they need to define what success looks like, both for the product in development and for the organization. The result is a shared stake in making things happen. Not just getting products to market faster, but getting them to higher profitability, and, ultimately, creating products with greater appeal and better margins.

Here is an example of how that can happen: Elekta AB (Stockholm, Sweden) is a leading supplier of radiation oncology solutions. Over the last 30 years, Elekta’s oncology unit has been responsible for introducing many of the critical technological advances in radiation oncology.

The market is highly competitive, with several medical device giants in the space, including Varian Medical (Palo Alto, CA) and Siemens Healthcare (Erlangen, Germany). Elekta found itself in a “features war” with these large device makers. To stay competitive, Elekta recognized it needed to focus on developing new products and bringing them to market faster.

In July 2008, Elekta and global management consulting firm Simpler Consulting began applying lean to one of Elekta’s most challenging projects, the development of a high performing multileaf collimator. The multileaf collimator in conjunction with existing Image Guided Radiation Therapy systems would work to shape radiation beams and deliver optimized dose distribution for fast and focused treatment. Elekta was already a year into the design process when it began collaborating with Simpler Consulting.

Simpler worked with the Elekta engineers to set targets and measurable values against both customer needs and functional features. Through this process, the team discovered fundamental elements of the design were not clearly understood in the prototype.

Lean techniques were used to identify all known requirements, missing design knowledge, and design choices that were yet to be made. These were then used to identify a “Decision Flow,” which identifies the sequence of decisions to minimize wasted design effort. For each decision, the knowledge required to make a good decision is identified. This is important, as it prevents a decision merely being made by whoever is the most authoritative voice in the room (which is often how decisions are made within a team) versus finding the facts to discover the right choice that needs to be made.

New discoveries inevitably change the tasks required to complete a project. For this reason, lean encourages companies to only plan tasks in detail to an eight-week horizon. This process, known as “vertical value stream mapping,” outlines the tasks that need to be done to make decisions. In this process, the decisions that need to be made form the “backbone” and guide the project, while tasks and timing on the project constantly change.

Simpler created a task-based plan for eight weeks of activity. The plan was displayed in a highly visible location; the wall of the team’s room. By creating the task list as a team, everyone had ownership of the project. Additionally, a “Team Board” was created and the team met every morning for a maximum of 20 min, creating an efficient way for the lead engineer to gain updates on the team’s activities. Simpler finds that by simply engaging employees to work as a team in this way, companies can experience 20–30% efficiency gains.

By implementing lean techniques to create a “team-centric” approach and reduce risk at an early stage of the project, in 16 months Elekta was able to minimize manufacturing, assembly, servicing, cost, and performance issues, and unveil the multileaf collimator in Chicago at the largest industry meeting of the year, the 51st Annual Meeting of the American Society for Radiation Oncology.

In all industries, the ability to get a product to market quicker, and ahead of the competition is critical. However, the many fundamentals of innovation and design are often overlooked as product engineering has become progressively more dependent on technology and paperwork. As a result, companies are investing a large amount in R&D to bring new products to market but do not get the desired return on investment. Lean helps companies to reduce waste and improve efficiency in their product development. ME 

This article was first published in the November 2011 edition of Manufacturing Engineering magazine.

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