Organizing for Effective Platform Development ME 546 Designing

Organizing for Effective Platform Development ME 546 - Designing Product Families - IE 546 Timothy W. Simpson Professor of Mechanical & Industrial Engineering and Engineering Design The Pennsylvania State University Park, PA 16802 USA phone: (814) 863 -7136 email: tws 8@psu. edu http: //www. mne. psu. edu/simpson/courses/me 546 PENNSTATE © T. W. SIMPSON

2 Single-Use Camera Example • Fuji introduced Quick. Snap 35 mm single-use camera in the U. S. market in 1987 • Kodak, which did not have a single-use camera of its own, was caught unprepared • The single-use camera market grew by more than 50 percent per year for the next 8 years: In 1988, 3 million single-use cameras were sold q By 1994, over 43 million were sold q • Kodak introduced its first model over a year later, but Fuji had already developed a second model, the Quick. Snap Flash PENNSTATE © T. W. SIMPSON

Combating the Negative Image of Single-Use 3 • Initially called “Kodak Fling” cameras, single-use cameras viewed as “disposables” or “throwaways” • In 1990 -1991, a massive redesign effort began to facilitate recycling and part reuse q Integrated design, development, manufacturing, business, and environmental personnel to create a new design that was easier to disassemble, inspect, reuse, and reload • By weight, 77 -86% of a Kodak single use camera can be reused or recycled • Kodak now provides the best example of “closedloop” recycling in the world PENNSTATE © T. W. SIMPSON

4 Kodak’s Platform Strategy • From April 1989 and July 1990, Kodak redesigned its base model and introduced three additional models • Because of their platform strategy, Kodak was able to develop its products faster and more cheaply, delivering twice as many products as Fuji • By 1994, Kodak had captured more than 70% of the U. S. market PENNSTATE © T. W. SIMPSON

Teaming for Concurrent Engineering at Kodak PENNSTATE 5 © T. W. SIMPSON

Fun. Saver I Project Timeline (Weeks 21 -40) PENNSTATE 6 © T. W. SIMPSON

Kodak Single-Use Camera Family 7 http: //www. kodak. com/global/en/consumer/film/otuc. shtml PENNSTATE © T. W. SIMPSON

Fuji Single-Use Camera Family PENNSTATE 8 © T. W. SIMPSON

Fuji 35 mm Quick. Snap Camera Family PENNSTATE 9 © T. W. SIMPSON

Fuji 35 mm Quick. Snap Camera Family (cont. ) PENNSTATE 10 © T. W. SIMPSON

Fuji’s Quick. Snap Colors Family 11 http: //www. fujifilm. com/bridgepages/colors. html PENNSTATE © T. W. SIMPSON

Overview of Today’s Lecture 12 • Platform-Based Product Development q Chapter 3 • Development Drivers and Project Frameworks • Risks & Downsides of Platforming PENNSTATE © T. W. SIMPSON

Platform-Driven Product Development (Chp. 3) 13 Source: (Halman, et al. , 2005) PENNSTATE © T. W. SIMPSON

14 ASML Product Roadmap • Product-driven platform-based development of family 3 platforms for 3 market applications q 80% commonality within family; low commonality b/n families q Source: (Halman, et al. , 2005) PENNSTATE © T. W. SIMPSON

15 Skil Product Roadmap • Component-based platform-driven development Product platform for each tool type q 80% commonality within family; 50% commonality b/n families q Source: (Halman, et al. , 2005) PENNSTATE © T. W. SIMPSON

16 SDI Product Roadmap • Technology-driven platform-based development 2 platforms multiple products many market applications q 70 -80% commonality within products of same family q Source: (Halman, et al. , 2005) PENNSTATE © T. W. SIMPSON

Development Drivers vs. Approaches 17 • We can also examine the different “drivers” (e. g. , platform and product) for both top-down and bottom-up approaches to product family design from the companies we have discussed Source: (Alizon, et al. , 2007) PENNSTATE © T. W. SIMPSON

Top-Down Platform-Driven Development 18 Source: (Alizon, et al. , 2007) PENNSTATE © T. W. SIMPSON

Top-Down Product-Driven Development 19 Source: (Alizon, et al. , 2007) PENNSTATE © T. W. SIMPSON

Bottom-Up Platform-Driven Development 20 Source: (Alizon, et al. , 2007) PENNSTATE © T. W. SIMPSON

Bottom-Up Product-Driven Development 21 Source: (Alizon, et al. , 2007) PENNSTATE © T. W. SIMPSON

Examples of Drivers 22 Source: (Alizon, et al. , 2007) PENNSTATE © T. W. SIMPSON

Platform Projects vs. Derivative Projects • Do they differ in terms of product tasks? q 23 Source: (Tatikonda, 1999) Yes, they differ in the amount of new technology development undertaken and project complexity as well as market newness • Do they differ in terms of project success? q No, not in achievement of project objectives, level of company satisfaction, and perceived customer satisfaction or smoothness of project execution • Do they differ in terms of how they are executed? q No, platform and derivative projects generally are executed in similar ways • Do managerial approaches affect project success? q Yes, contingency planning, project-based evaluation of personnel, and overlap of design and manufacturing are associated with higher project execution success for both platform and derivative projects • Does either project type suffer from the use of interdependent technologies and novel project objectives? q Yes, they are associated with project execution failure for platform projects PENNSTATE © T. W. SIMPSON

Platform Projects vs. Derivative Projects (cont. ) 24 • Results are based on interview and survey data from 108 new product development projects from a variety of assembled products industries • Platform and derivative projects differ significantly in their task characteristics and market newness, but do not differ significantly in their planning, execution, smoothness, and success • The results suggest that firms can continue to employ a single product development management process for both platform and derivative projects, as long as modest customization of the process is made for the given project type PENNSTATE © T. W. SIMPSON

25 Recall: Kodak’s Platform Strategy • From April 1989 and July 1990, Kodak redesigned its base model and introduced three additional models • Because of their platform strategy, Kodak was able to develop its products faster and more cheaply, delivering twice as many products as Fuji • By 1994, Kodak had captured more than 70% of the U. S. market PENNSTATE © T. W. SIMPSON

Kodak’s Project Plan 26 Reference: Wheelwright, S. C. and Clark, K. B. Leading Product Development Free Press, New York, 1995. PENNSTATE © T. W. SIMPSON

27 Aggregate Project Planning Process Changes 1 Advanced R&D Projects Product Changes New Core Product Next Generation Process New Core Processes Single Dept. Upgrade Tuning and Incremental 2 Breakthrough Projects Next Generation Product Addition to Product Family Add-ons and Enhancements Source: (Wheelwright and Clark, 1995) PENNSTATE Platform Projects 3 4 Derivatives (Enhancements, Hybrids, and Cost Reduced Versions) 5 Allied Partnerships © T. W. SIMPSON

28 Aggregate Project Plan Classifications • Advanced R&D Projects q Innovations and technology development that provides a precursor to commercial development • Breakthrough Projects q Projects that involve significant change in the product and process establish a new core product and process • Platform Projects q Projects provide a base for a product and process family that can be leveraged over several years • Derivative Projects q Cost-reduced versions of an existing product or platform or add-ons or enhancements to an existing production process • Allied Partnerships q Partnerships in any of these project areas to leverage development resources and activities PENNSTATE © T. W. SIMPSON

29 Aggregate Project Planning at Pre. Quip • Pre. Quip’s Development Projects (30) before the Aggregate Project Plan R&D Breakthrough projects Mass spectrometers Liquid chromatographs Gas chromatographs Data processing and handling products Platform projects Derivative projects R&D Allied and Partnership projects Breakthrough Platform Derivative Source: (Wheelwright and Clark, 1995) PENNSTATE © T. W. SIMPSON

30 Aggregate Project Planning at Pre. Quip • Pre. Quip’s Development Projects (11) after the Aggregate Project Plan R&D Breakthrough projects Mass spectrometers Liquid chromatographs Gas chromatographs Data processing and handling products Platform projects R&D Derivative projects Allied and Partnership projects Breakthrough Platform Derivative Source: (Wheelwright and Clark, 1995) PENNSTATE © T. W. SIMPSON

Management’s Involvement (Traditional) 31 • Traditional Product Development Process q Management involved throughout entire process Source: (Sanchez and Collins, 2001) PENNSTATE © T. W. SIMPSON

32 Risks with Platform-Based Development • ASML q q q Source: (Halman, et al. , 2005) Development time and costs of platform Rigidity in design Restrictions on the integration of new technologies Incorrect forecast of future user needs Change form one platform to another • Skil q q High cost and time for integration of existing elements Platform development becomes easily a goal in itself Mistakes made in the beginning have a high impact Failure to forecast customer needs correctly • SDI q q Development time and costs to meet specifications of all target markets Development process becomes more complex Restrictions for all market segments Selecting the right platform PENNSTATE © T. W. SIMPSON

33 Management’s Involvement (Modular) • Modular Product Development Process q Management involved more at front-end and for integration Source: (Sanchez and Collins, 2001) PENNSTATE © T. W. SIMPSON

34 The Downsides of Platforming • Developing a product platform can cost 2 -10 times more than a single product (Ulrich & Eppinger, 2000) q In automotive industry, up to 80% of total vehicle development cost is spent on platform including engine and transmission (Muffato, 1999); ~ 60% according to (Sundgren, 1999) • Data collected at one firm over a five-year period further showed the platform-based development approach to be negatively correlated with profitability (Hauser, 2001) • Sharing components across low-end and high-end products can increase unit variable costs due to overdesigned low-end products (Gupta & Krishnan, 1998; Fisher, et al. , 1999) • Platforms are not appropriate for extreme levels of market diversity or high levels of non-platform scale economies (Krishnan and Gupta, 2001) • Platform development requires multifunctional groups, and problems may arise over different timeframes, jargon, goals and assumptions (Roberston and Ulrich, 1998) PENNSTATE © T. W. SIMPSON

Planning Product Platforms 35 • Robertson and Ulrich (1998) advocate a three-step approach: 1) Product plan – which products to offer when 2) Differentiation plan – how products will be differentiated 3) Commonality plan – which components/modules will be shared Source: D. Robertson and K. Ulrich, 1998, "Planning Product Platforms, " Sloan Management Review, 39(4), pp. 19 -31. PENNSTATE © T. W. SIMPSON

36 References Cited • Erens, F. , 1997, Synthesis of Variety: Developing Product Families. Eindhoven, The Netherlands, University of Technology. • Fisher, M. L. , Ramdas, K. and Ulrich, K. T. , 1999, "Component Sharing in the Management of Product Variety: A Study of Automotive Braking Systems, " Management Science, 45(3), 297 -315. • Gupta, S. and Krishnan, V. , 1998, "Integrated Component and Supplier Selection for a Product Family, " Production and Operations Management, 8(2), 163 -182. • Hauser, J. R. , 2001, Metrics Thermostat, Journal of Product Innovation Management, 18(3), 134 -153. • Krishnan, V. and Gupta, S. , 2001, "Appropriateness and Impact of Platform-Based Product Development, " Management Science, 47(1), 52 -68. • Lutz, R. A. , 1998, Guts: The Seven Laws of Business that Made Chrysler the World's Hottest Car Company, New York, John Wiley. • Muffatto, M. , 1999, "Introducing a Platform Strategy in Product Development, " International Journal of Production Economics, 60 -61, 145 -153. • Robertson, D. and Ulrich, K. , 1998, "Planning Product Platforms, " Sloan Management Review, 39(4), 19 -31. • Sanchez, R. and Collins, R. P. , 2000, "Competing—and Learning—in Modular Markets, " Long Range Planning, 34(5), 645 -667. • Sundgren, N. , 1999, "Introducing Interface Management in New Product Family Development, " Journal of Product Innovation Management, 16(1), 40 -51. • Tatikonda, M. V. , 1999, "An Empirical Study of Platform and Derivative Product Development Projects, " Journal of Product Innovation Management, 16(1), 3 -26. • Ulrich, K. T. and Eppinger, S. D. , 2000, Product Design and Development, New York, Mc. Graw-Hill, Inc. • Wheelwright, S. C. and Clark, K. B. , 1992, "Creating Project Plans to Focus Product Development, " Harvard Business Review, 70(2), 70 -82. PENNSTATE © T. W. SIMPSON