Definition of Productivity:

• Productivity is a measure of how much input is produced to a given output i.e. it is ratio of output to input
• Productivity is the ratio between the amount produced and the amount of resources used in the course of
production. The resources may be any combination of materials, machines, men and space.
• European productivity council defines “productivity is an attitude of mind. It is mentality of progress, of the
constant improvement of that which exists. It is the certainty of progress, of the constant improvement of that
which exists. It is the certainty of being able to do better than yesterday and continuously. It is the continual effort
to apply new techniques and methods. It is the faith in human progress.”
• According to Peter Drucker, “productivity means a balance between all factors of production that will give the
maximum output with the smallest efforts.”
• I.L.O generally takes productivity to mean. “The ratio between the volume of output as measured by production
indices the corresponding volume of labor input as measured by employment indices.”
• Organization of European Economic Community (OEEC) defines productivity as the ratio between the
production of given commodity measured by volume and one or more of the corresponding input factors also
measured by volume.

Thus there can be a number of measures indicating the level of performance corresponding
to each input. In general sense, productivity is measure of how much input is required to produce a given output.

Importance of Productivity: Effectiveness of production and operation system may be viewed as the efficiency
with which inputs are converted into outputs. The conversion efficiency can be gauged by ratio of the output to
the inputs and is commonly known as productivity of the system. Productivity is the ratio of input facilities to the
output of goods
and services.
Productivity = Output/Input
Goods or services
= -----------------------------------------------------------------------------------
Capital, manpower, materials, machines and land and building
The higher the productivity of the operating system, more efficient the operation function said to be. Management
of operation system thus is essentially concerned with the management of productivity. Another way of looking
at the concept of productivity is to look at the amount of waste generated in the system. If waste is unnecessary
output and/or defective output from the system, then the productivity of the system can be improved by
eliminating / minimizing the waste occurring in the system.

Concept of Productivity: In general sense, productivity is some relationship between inputs and outputs of an
enterprise. It is quantitative relationship between what we produce and the resources sed. The concept of
productivity measurement is many sided. It can relate to every item/activity on which money is spent to get the
final product Some of the definitions given below explain the concept of productivity.;

Importance of Productivity: The concept of productivity is of great significance for undeveloped and developing
countries. In both the cases there are limited resources which should be used to get the maximum output i.e. there
should be tendency to perform a job cheaper, safer, and in quicker ways. The aim should be optimum use of
resources so as to provide maximum satisfaction with minimum efforts and expenditure. Productivity analyses
and measures indicate the stages and situations where improvement in the working of inputs is possible to increase
the output.
The productivity indicators can be used for different purposes viz. comparison of performance for various
organizations, contribution of different input factors, bargaining with trade unions etc.

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Factors affecting Productivity: All the factors which are related to input and output components of a production
process are likely to affect productivity. These factors can be divided into 2 main categories, namely:
Category 1
Primary factors are effort and working capacity of an individual.
• Organization factors are related to the design and transformation process required to produce some item,
the nature of training and other skill imported to workers to perform certain operations in a production
process, control and various other incentives.
• Conventions and traditions of the organization e.g. activities of labor unions, medical facilities, worker
and executive understanding etc.
Category II
• Factors related to output: research and development techniques, improvement in technology and efficient
sales strategy of the organization will lead to improvement in output.
• Efficient use of input resources , better stores control , production control policy , maintenance of
machines etc will minimize the cost of production

The factors listed in category I and II can be further divided into 4 major classes viz.
• Technological
• Managerial
• Labor, and
• External factors
The technological factors can increase the output per unit of input substantially. They can be defined in
terms of technology employed, tools and raw material used.
The labor factors are characterized by the degree of skills of the works force, health, and attitude towards
management, training and discipline
Managerial factors can be located in organizational structure, scheduling of work, financial management,
layout innovation, personnel policies and practice work environment, material management etc.
External factors or innumerable and identifiable in the environment which an organization has to interact
e.g., the power and transport facilities, tariffs and taxes etc have important bearing on the levels of
productivity. Some of these factors are controllable and some are uncontrollable and demarcation should
be made between the two.

Techniques to Improve Productivity: Productivity can be considerably improved by improving the performance
of various factors affecting productivity. The measures to improve productivity can be:
• Better planning and training of employees, improved jobs and communication and effective management
through CPM/PERT methods.
• Use of time and motion studies to study and improve work performance. It enables to assess the quantum
of work which can be used for planning and control.
• Better transportation and material handling systems.
• By providing work incentives and other benefits to workers.
• Workers involvement in decision making and working of organizations.
• Improvement in technology of production process and nature of raw material and the quality.
• Simplification, standardization and specialization techniques.
• Better and efficient utilization of resources at the disposal of the enterprise.
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 • Use of linear programming and other quantitative techniques for better decision making.
• ABC analysis to identify more important items and then apply inventory control to reduce capital
investment.
• Value engineering to reduce material content by good design.

Measurement of Productivity: There are a number of ways to measure productivity. The main criterion of
measuring productivity is:
• In term of input performance by calculating changes in output per unit of input.
• On the basis of output performance by calculating changes in input per unit in output.

Following are some of the measures in common use

Labor Productivity= Amount of output / Amount of Labor
Where output can be measured in total quantity produced and labor can be measured in total manpower required
to produce that output. Output and labor can also be measured in terms of their value in money units.
Capital Productivity = Turn/Capital employed

Profit Productivity = Profit / Investment

Energy Productivity = Output/Quantity of energy used
A general measure of productivity can be defined as;
Productivity = Output/(Labor + Capital +Other inputs)
Each kind of measure needs some specific kind of information. The appropriate measure can be selected on the
basis of information available and the objective of investigation. In fact the measure of productivity indicates the
performance of inputs namely labor and capital in an enterprise. Increase in output is not an indication of increase
in productivity. Production is an absolute measure and productivity is a relative measure.

FRAME WORK FOR MANAGING OPERATIONS

An operation manager whose job is to manage the process of converting inputs (land, labor, capital and
management) uses the following three approaches:
• Classical
• Behavioral
• Modeling
Classical management has contributed to scientific management and process orientation theories. The basis of
scientific management is a focus on economic efficiency at the production core of the organization. Economic
efficiency refers the ratio of outputs to inputs. Management is concerned with labor efficiency. The school of
process management views management as a continuous process of planning, Organizing and controlling.
• Planning includes all activities that establish a course of action. These activities guide future decision
making,
• Organizing includes all activities that establish a structure of tasks and authority,
• Controlling includes all activities that ensure that actual performance is in accordance with planned
performance.
Behavioral management is one of the primary theories of management emphasizing human relations and
behavioral sciences. Human relations phenomenon recognized by behavioral scientists that people are complex
and have needs and that the subordinate-supervisor relationship directly affect productivity. Behavioral science
explores how human behavior is affected by leadership, motivation, Communication, interpersonal relationships
and attitude change.
Modeling management is concerned with decision making and systems theory and mathematical modeling of
these theories. The decision making orientation considers making decisions to be the central purpose of
management. System theory stresses the importance of studying organizations from a “total system” point of
view. According to this, identifying subsystem relationships, predicting effects of changes in the system,
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properly implementing system change are all part of managing the total organization. With its foundations in
operations research and management science, mathematical modeling focuses on creating mathematical
representation of management problems and organizations. For a particular problem, the variables are expressed
mathematically, and the model is used to demonstrate different outcomes that would result from the various
possible managerial choices.

To study the Operation Management the following three approaches are created for the frame work for
managing operations:
• Planning: The operation manager defines the objectives for the operations subsystem of the organization and
the policies, programs and procedures for achieving the objectives. This stage includes clarifying the role and
focus of operations in the organizational overall strategy. It also involves planning, facilities designing and
using the conversion process.
• Organizing: Operation managers establish a structure of roles and flow of information within the operation
subsystem. They determine the activities required to achieve the operation’s subsystem’s goals and assign
responsibility authority for carrying them out.
• Controlling: To ensure that the plans for the operations subsystem are accomplished, the operation manager
must also exercise control by measuring actual output and comparing them to planned output. Controlling costs,
quality and schedules is at the very heart of operations management.

Beside planning, organizing and controlling the various activities of the operation subsystem, the Operation
manager is also concerned with the following two approaches;
• Behavior: Operation managers are concerned with how their efforts to plan organize and control effect
human behavior. They also want to know how the behavior of subordinates can affect management’s planning,
organizing and controlling actions. In operations we are interested in the behavior of managers as well
especially their decision making behavior
• Models: As operation manager plans, organizes and controls the conversion process, he encounters many
Problems and must make many decisions. They can frequently simplify these difficulties by using models.

QUESTIONS
1. What do you understand by operation and production management?
2. Define operation processes and explain its key components.
3. Discus the various stages in the evolution of production and operation management discipline
4. What is the strategic perspective of operation and production management?
5. What are the future trends in production and operation management?
6. How will environmental issues impact on the future of production and operations?
7. What is the function of a Production manager? Is this function different from the function of a marketing
manager?
8. “The management of the transformation process is what we mean by production management. Its study is
quite independent of whatsoever specific technologies are involved and is concerned with employing
methodology to operate and administer transformation systems with effectiveness.” Discuss and explain the
above statement
9. What do you mean by Productivity? What is its importance? How would you measure productivity? Explain
in brief.
10. Explain tools of productivity that are used to attain higher productivity
11. How would you describe the input-output analysis method in production process? How it can be used in
finding productivity of the enterprise

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 PRODUCT AND PROCESS DESIGN
A company has to be good at developing new products, without products there would be no customers.
Without customers, there would be no revenue. Developing a new product is a major activity. Thomas Alva
Edison, with as many as 1,300 inventions and 1100 patents to his credit ,said about the product development
process,” Genius is 1 per cent inspiration and 99 per cent perspiration,” Product development requires more of
perspiration and less of genius to be successful. The company also must manage them in the face of changing
tastes, technologies and competitions. Every product seems to go through a life cycle—it is born. Goes through
several phases, and eventually dies as newer products come along that better serve the consumers needs.

The product life cycle presents two major challenges:

• First, because all products eventually decline, the firm must find new products to replace aging ones
(the problem of product development).
• Second, the firm must understand how the products age and adapt its marketing strategies as product
pass through life cycle stages (the problem of product life-cycle strategies

Product development is an important aspects of the operation management function in every organization,
be it services or manufacturing. An organization armed with good product development process will be in a better
position to bring new products and services to the market ahead of competition and will be able to retain customers
and its market share in the sector. A successful product development requires a total-company effort. The most
successful innovating companies make a consistent commitment of resources to product development, design a
new product strategy that is linked to their strategic planning process, and set up formal and sophisticated
organizational arrangements for managing product development process. The product development process for
finding and growing new products consist of eight major steps as explained below;
• Idea generation
• Idea screening
• Concept development and testing
• Marketing Strategy Development
• Business analysis
• Product Development
• Test marketing
• Commercialization

Idea Generation: It is a systematic search for new product ideas. A company has to generate many ideas in order
to find good ones. The search for new products should be systematic rather than haphazard. Top management
should state what the products and markets to emphasize. It should state what the company wants from its new
products, whether it is high cash flow, market share or some bother objective. To obtain a flow of new-products
ideas, the company can tap many sources. Major sources of product ideas include internal sources like customers,
competitors, distributors and suppliers. It has been found that more than 55 percent of all product ideas come
from internal sources.
Idea screening: The purpose of idea generation is to create a large number of ideas. The purpose of the succeeding
stages is to reduce that number. The first reducing stage is idea screening. The purpose of screening is to spot
good ideas and drop poor ones. Most companies require their executive to write up the new product ideas on a
standard format that can be reviewed by a new product committee. The write up describes the product, the target
market, the competition and makes some rough estimate of market size, product development time and costs,
manufacturing costs and rate of return. The committee then evaluates the idea against a set of general criteria.
Concept Development and testing: Customers do not buy product ideas, they buy the product concepts. The
concept testing calls for testing new product concepts with a group of target consumers. After being exposed to
the concept, consumers then may be asked to react to it by asking a few questions.

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Market strategy development: The next step is market strategy development, designing an initial marketing
strategy for introducing the concept to the market. The market strategy statement consists of three parts:
• The first part describes the target market; the planned product positioning, market share and profit goals
for the first few years.
• The second part of the marketing strategy statement outlines the product planned price, distribution and
marketing budget for the first year.
• The third part of the marketing strategy statement describes the planned long-run sales, profit goals, and
marketing mix strategy.
Business Analysis: Once management has decided on its product concept and marketing strategy, it can evaluate
the business attractiveness of the proposal. Business analysis involves a review of its sales, cost, and profit
projections for a new product to find out whether they satisfy the company‘s objectives.
Product development: If the product concept passes the business test, it moves into product development. Here,
R&D or engineering develops the concept into a physical product. The R&D department will develop one or more
physical versions of the product concept, R&D hopes to design a prototype that will satisfy and excite consumers
and that can be produced quickly and at budgeted cost. When the prototype is ready it must be tested. Functional
tests are then conducted to make sure that the product performs safely and effectively.
Test Marketing: If the product passes functional and consumer tests, the next step is test marketing, the stage
at which the product and marketing program are introduced into more realist marketing setting. This allows the
marketer to find potential problems so that these could be addressed.
Commercialization: is introducing the new product into the market

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Tools for Product Development: The following are various product development techniques adopted by different
organizations;
1. Standardization: This means fixation of some appropriate size, shape, Quality, manufacturing process, weight and
other characteristics as standard to manufacture a product of desired variety and utility e.g. manufacture of television
sets of standard size of the screen using standard components and technology; shaving blades are made of standard
size and shape to suite every kind of razor. The concept of standardization is applicable to all factors of production
namely men, materials, machines and finished goods. These standards can become the basis to evaluate the
performance of various components of production in a manufacturing process.

In the words of Behel, Smith and Stackman:

“A standard is essentially a criterion of measurement, quality, performance, practice established by custom, consent
or authority and used as a basis for comparison over a period of time. The setting of standards and the coordination of
the industrial factors to comply with these standards and to maintain them during the periods for which they are
effective is known as industrial standardization”
According to Dexter S Kimball of production control operation in the manufacturing sense is the reduction of any one
line to fixed types, sizes and characteristics.” Standardization becomes the basis of production control operations and
works as a catalyst in directing and operating the working of business enterprise. It identifies and compares various
products, systems and performances in an enterprise. It is the function of the department responsible for designing the
product to provide the guidelines and infrastructure for standardization of the whole system keeping into consideration
the designing stage towards standardization may be too expensive to be rectified.

Advantages of standardization:
• Standardization in designing, purchasing of raw material, semi finished and finished goods and of the
manufacturing process tries to eliminate wastage and reduces the cost of production. Reduction in varieties of
raw materials means reduced investments in stocks and less attention to stock control.
• Standardize product components reduce tool cost, permits larger and more economical lot sizes of
production, avoids losses for obsolescence and reduces capital requirements for work in process.
• Production in larger quantities can be planned which results in less set-up costs.
• By minimizing the operations in production process it provides facility to introduce mechanization and use
of more specialized tools and equipments.
• Service and maintenance costs as well as marketing expenses are reduced.
• Encourages the manufacturer to products of new style, use and performance with an object to generate more
customers.
• The value of the standardized product lying in stocks or in stocks or in transit can be easily for the purpose
of advancing loans.
Disadvantages of Standardization: Product standardization leads to some disadvantages also. These are:
• Too much standardization has an adverse affect on the efficiency and morale of the workers. They in the
long run feel bored and fed-up in doing the same routine again. The sprit of challenge and initiative vanishes
with passage of time.
• During the initial process of product Development where frequent improvements and changes may be
necessary to bring the product and production process up to the mark, standardization may create obstacles in
innovations.
• For small scale enterprises standardization may not be advantageous.

2. Simplification: In production, simplification can be done at two places namely (i) for product or) for work.
Simplification in product development is used for products; In fact simplification should be done before
standardization.

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In the words of F. Clark and Carrie, “simplification in an enterprise connotes the elimination of excessive and
undesirable or ‘marginal lines’ of product to hammer out waste and to attain economy connotes the elimination of
excessive and undesirable or ‘marginal lines’ of product to hammer out waste and to attain economy coupled with the
main object of improving quality and reducing costs and prices leading to increased sales.”
W.R Spiegel and R.H Lansburg also defines,” Simplification refers to the elimination of superfluous varieties, size
dimensions etc.” Simplification can be advantageous to both producer and the consumer of a product.

3. Specialization: Specialization implies expertise in some particular area or field. It is experienced that as the
companies expand the range of their products, manufacturing system, involves more and operations for transforming
inputs into output. This often result an increase in operation cost and decline profits. The problem can be solved by
identifying the products contributing to losses and then eliminate their production. This will lead to confine the
production of profitable items only and consequently a reduction in number of operation required in the process. The
minimization of operation can lead to use of expert knowledge, skill and techniques in production system, the nature
and the type of product. Operation required manufacturing it and the nature of the market. Specialization implies
reduction in the variety of products manufacturing by the organization.
Advantages of specialization are:
• Specialization and standardization leads to higher productivity.
• Incase in output and reduction in per unit cost of production ,
• Savings in purchase of raw material and improvement in the quality of the finished goods.
Disadvantages of specialization are:
• Less flexibility in adjustment to changed situations.
• Monotony and boredom may adversely affect the efficiency.

4. Diversification: It implies policy of producing different types of products by an enterprise. Thus it is reverse of
simplification are associate with the nature of the industry e.g. in the case of capital goods industry simplification is
more important as the customers give preference to economy, accuracy and performance of the product, whereas in an
consumer goods industry diversification leads to produce variety of goods in ;terms of style, shape, color, design etc.
The establishment facing tough competition is forced to diversify this activates to capture the market. In general
diversification can be adopted for the purpose the market. In general diversification can be adopted for the purpose of
(a) utilization of idle/surplus resources, (b) stabilization of sales, (c) to cope with demand fluctuations and (d) for
survival of the organization.
Advantages of Diversifications are:
• Increase in sales due to production of different kind of products. This also leads to increase in volume of
business.
• Needs of wider section of consumer are fulfilled.
• Risk minimization’ in the case of quick and unpredictable demand variations.
• Uniform and balanced production programme can be chalked out without any consideration of wastage by
production by products.
• Elimination of wastage by producing by-products
Disadvantages of Diversifications are:
• Due to increase in number of operations the production process becomes quite complicated and some times
expensive.
• Production Planning and control operation becomes complicated and time consuming requiring extra Efforts.
• The size and the variety of items in; the inventory increases with diversification introducing more problems.
• Worker of different types of skill and expertise are required.

5. Automation in Business Enterprises: The concept of automation has brought another revolution in industrial
world. This has resulted in phenomenal growth in industrial arena by providing wide range of products with minimum
cost and efforts. Automation implies use of machines and equipments for performing physical and mental operations
in a production operation in place of human beings. Automation can be visualized as an electronic brain with capacity
of taking routine and logical decisions connected with control and planning functions of management. Routine
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decisions can belike scheduling, routing, dispatching and inspection of modifications of operations to see that the
whole system operates according to the planned strategy.

Automation can be done at various levels of the manufacturing system in parts or as a whole. Some of the situations
can be:
• Handling of raw materials, semi finished goods or finished goods. Instead of doing the work manually the
operation can be done by means of trolleys, conveyer belts, overhead cranes, lifts etc. This eliminates chances
of losses due to handling and saves valuable time.
• Sophisticated, reliable and efficient machines and equipment can be used in production process. This will
ensure both quality and quantity of the product desired.
• Inspection and quality control operations can be done by means of mechanical devices. This eliminates
chances of human bias and error.
Advantages of automation are:
• Better quality of goods and services,
• Reduction in direct labor cost,
• Effective control on operations,
• Greater accuracy, more output, greater speed,
• Minimization of waste,
• Production planning and control is to be done in the beginning only,
• Working conditions can be improved greatly since much of the work follows an orderly path,
• The waste does not come into much contact with the equipment; also the design of the special purpose
equipment is usually superior to that of general purpose equipment. This improves overall safety considerably,
• Direct and indirect costs, Inventories, Set-up times and lead times are all reduced. The space and equipment
utilization is improved,
• Since the human inputs in the production are minimized, the quality is also improved. Human beings are
more erratic than machines,
• Throughput time is reduced and therefore service to the customers is enhanced.
Disadvantages of automation are;
• High capital investment,
• High maintenance costs and requirement of labor of high caliber,
• Requires highly skilled manpower,
• Can create unemployment,
• Scheduling and routing operations are difficult and time consuming,
• Restriction in designing and construction of buildings,
• Larger inventories,
• Continuous power supply,
• Automation equipment is highly inflexible i.e. if a new product is to be introduced the existing equipment
may have to be salvaged entirely,
• Any break down anywhere would lead to complete shut-down.

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Importance of cost consideration
When designing a new product, it’s important to consider the cost variables that go into each phase of manufacturing.
In analyzing each phase and cost factor, one can determine target sales prices and profitability but just as importantly,
how much product re-design and various features cost. Design-To-Cost (DTC) analyses allow manufacturers greater
insight into the individual processes, and characteristics of their products design. As part of Design-for-Manufacturing
(DFM) best practices, It’s import to consider the cost of various production processes early on in the design process.
The creation of over-complicated features, tight tolerances, and in-depth manufacturing requirements can result in
extremely technical and expensive production processes, tooling, and fixtures.
Studies have shown that the choices an engineer makes during the design phase make up over 70% of the life cycle
costs of a new product. The impact of a thorough DTC and DFM analysis pays dividends long-past prototyping and
first article approval. Product Development Consulting services exist to support of manufacturing design and cost, but
most importantly help ensure that your production plans are set-up for long-term profitability and success. Below are
just a few important factors to consider when designing your product.

RECURRING PRODUCTION COSTS

A recurring production costs is just what it sounds like—a cost that is incurred repeatedly throughout the manufacturing
lifetime of a product. These production costs include things such as production labor, materials, process costs,
overhead, and outside processing. Recurring costs will drive the majority of your overall program cost so practicality
is important when selecting materials, suppliers, and various other production standards. Although these costs are
typically not hidden, citing over-complicated requirements can lead to significant increases in cost.

NON-RECURRING COSTS
Non-recurring costs are one-time costs that generally occur during the developmental stages of product design. These
costs include research and development, prototyping, tooling, and even expedited transport or production lead times.
Although it can be easy to overlook non-recurring costs because they should be infrequent, the complexity of your
product design will drive the amount of non-recurring investment needed. Substantial savings can be generated over
the lifecycle of the product via cost analysis of non-recurring factors and can ultimately prevent product re-design.

EXTERNAL PRODUCT COSTS

External product costs include logistics, packaging, currency exchange, VAT tax, and customs. Working with logistics
consulting services can help you gain a comprehensive sense of what long term costs and how to maximize efficiencies.
Additionally, taking into account specified product coatings or packaging needs and their impact on logistics costs can
hold significant weight in determining your final product cost.

SALES COSTS
Sales cost help account for the cost of inventory, customization, warranties and any associated administrative or sales
costs. Depending on how customizable your product is to customer demand, there can be large fluctuations in
manufacturing costs or inventory requirements. Using risk mitigation tactics in your product design can help offset
some end-product costs.

BOTTOM LINE
When designing a new product, critical cost factors can often be overlooked, that can either make or break a company’s
profits. Using design-to-cost and design for manufacturing strategies will help you minimize production cost and avoid
product or process redesign later. Consider investing in product development consulting services to help you determine
the best DTC strategy for your products.

Importance of quality consideration

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 Every new product design and development (NPD Process) starts with basic propositions to understand
the purpose of the product, which will lead to the creation of competitive differences in the market and drive an
organization to develop capabilities internally or through partners. Continuous process improvement is also
important in the product development workflow to reduce the development lead time. Companies should develop
communication channels within cross-functional teams to transform their needs and requirements into best
practices, rules or standards. This will help minimize rework efforts and emphasize adherence to reduce internal
indirect failures leading to unplanned rework in new product design and development. Organizations must
increase personnel cost-effectiveness with help of the latest available automation tools. Transformation of
technology can change the entire development approach and provide opportunities to increase efficiency and
business profit margin. For the implementation of a closed loop system, all cross-functional teams should
communicate with each other exchanging feedbacks and challenges. For this implementation, organizational
teams should understand each other’s functional objectives.

Many organizations still follow traditional development processes - however, in the recent times, the trend
has changed. This is the right time to implement latest technologies to upgrade the development team, otherwise,
it may slow down the pace of work. Traditional development process enforces decision makers to use old
documents and methods to resolve issues because a significant part of the process is manual. Every product
manufacturing has its own unique set of challenges with an associated indirect cost. One must try to find solutions
for bottlenecks inside product manufacturing processes so as to minimize cost in every area right up to the product
warranty stage.

Following are some of the areas where organizations benefit and reduce internal failures by adopting DFM&A
guidelines during design
1. Management time: Costs of management efforts to resolve quality issues
2. Redesigning products: Cost of redesigning to remove the cause of defects3. Redesigning quality processes: Cost of
improving corrective and preventive actions process to identify root causes
4. Rework: Costs of correcting quality issues on existing product
5. Rework inspection: Cost of inspecting a product after rework
6. Variability in product quality: Cost of product give-away
7. Retesting processes: Costs of testing processes after making changes
8. Unplanned downtime: Cost of unused production time due to quality failures
9. Schedule disruption: Cost of rescheduling operational activities of development/Manufacturing
10. Additional material procurement: Cost to replace defective or missing material
11. Materials shortages/Unusual requirements: Costs of changing production plans due to quality issues
12. Supplier rework: Costs attributed to supplier defects
13. Downgrading: Cost of lower the price point of the product with quality issue
14. Production scrap: Cost of product that cannot be reworked or reused
15. Scrap disposal: Cost of getting rid of a product that cannot be reworked or reused
All of these contribute to internal failure costs and associated effort.
Actual Cost of “Good Quality” = Cost of “Poor Quality” + Cost of “Good Quality”

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 VALUE ANALYSIS/VALUE ENGINEERING
INTRODUCTION
Value analysis is one of the major techniques of cost reduction and cost prevention. It is a disciplined
approach that ensures necessary functions for minimum cost without sacrificing quality, reliability,
performance, and appearance.
According to the Society of American Value Engineers (SAVE), Value Analysis is the systematic
application of recognized techniques which identify the function of a product or service, establish a
monetary value for the function and provide the necessary function reliably at the lowest overall cost.
It is an organized approach to identify unnecessary costs associated with any product, material part,
component, system or service by analysing the function and eliminating such costs without impairing the
quality, functional reliability, or the capacity of the product to give service.
WHEN TO APPLY VALUE ANALYSIS
One can definitely expect very good results by initiating a VA programme if one or more of the following
symptoms are present:
1. Company’s products show decline in sales.
2. Company’s prices are higher than those of its competitors.
3. Raw materials cost has grown disproportionate to the volume of production.
4. New designs are being introduced.
5. The cost of manufacture is rising disproportionate to the volume of production.
6. Rate of return on investment has a falling trend.
7. Inability of the firm to meet its delivery commitments.
Value Analysis vs. Value Engineering
Often the terms value analysis and value engineering are used synonymously. Though the philosophy
underlying the two is same, i.e. identification of unnecessary cost, yet they are different. The difference
lies in the time and the stage at which the techniques are applied.
Value analysis is the application of a set of techniques to an existing product with a view to improve its
value. It is thus a remedial process.
Value engineering is the application of exactly the same set of techniques to a new product at the design
stage, project concept or preliminary design when no hardware exists to ensure that bad features are not
added. Value engineering, therefore, is a preventive process.

Value - The term ‘value’ is used in different ways and, consequently, has different meanings. The
designer equates the value with reliability; a purchase person with price paid for the item; a production
person with what it costs to manufacture, and a sales person with what the customer is willing to pay.

Value, in value investigation, refers to “economic value”, which itself can be divided into four types:
cost value, exchange value, use value, and esteem value. These are now briefly described.

Cost value. It is the summation of the labour, material, overhead and all other elements of cost required
to produce an item or provide a service compared to a base.

12
Exchange value. It is the measure of all the properties, qualities and features of the product, which make
the product possible of being traded for another product or for money.
In a conventional sense, exchange value refers to the price that a purchaser will offer for the product, the
price being dependent upon satisfaction (value) which he derives from the product. Value derived from
the product consists of two parts “use value” and “esteem value”, which are now described.

Use value. It is known as the function value. The use value is equal to the value of the functions
performed. Therefore, it is the price paid by the buyer (buyer’s view), or the cost incurred by the
manufacturer (manufacturer’s view) in order to ensure that the product performs its intended functions
efficiently.

The use value is the fundamental form of economic value. An item without “use value” can have neither
“exchange value” nor “esteem value”.

Esteem value. It involves the qualities and appearance of a product (like a TV set), which attract persons
and create in them a desire to possess the product. Therefore, esteem value is the price paid by the buyer
or the cost incurred by the manufacturer beyond the use value.

Performance
The performance of a product is the measure of functional features and properties that make it suitable
for a specific purpose. Appropriate performance requires that (a) the product reliably accomplish the
intended use of work or service requirement (functional requirements), (b) the product provide protection
against accident, harmful effects on body and danger to human life (safety requirements), (c) the product
give trouble-free service cover during its specified life span (reliability requirements), (d) service and
maintenance work can be carried out on the product with ease and with simple tools (maintainability
requirements), and (e) appearance of the product creates an impression on the buyer and induces in him
or her the desire to own the product (appearance requirements).
Performance and cost must be interwoven. Desired performance at the least cost should be achieved by
selecting appropriate materials and manufacturing operations, which is the measure of value. Therefore,
the value of the product is the ratio of performance (utility) to cost.
Thus, Value = Performance (utility) / Cost
Value can be increased by increasing the utility for the same cost or by decreasing the cost for the same
utility. Satisfactory performance at lesser cost through identification and development of low cost
alternatives is the philosophy of Value analysis.

FUNCTION
Function is the purpose for which the product is made. Identification of the basic functions and
determination of the cost currently being spent on them are the two major considerations of value
analysis.
Function identifies the characteristics which make the product/component/part/item/device to work or
sell. “Work functions” lend performance value while “sell functions” provide esteem value. Verbs like
“support”, “hold”, “transmit”, “prevent”, “protect”, “exhibits”, “control”, etc., are used to describe work
functions, while “attract”, enhance”, “improve”, “create”, etc., are used to describe “sell” functions. For
example, in a “bus driver cabin”, the functional analysis of some of the parts are given in Table below.
13
Classification of the functions
Rarely do all functions assume equal importance. Usually, some functions are more important than
others. Functions can be classified into the following three categories:
1. Primary function
2. Secondary function
3. Tertiary function
Primary functions are the basic functions for which the product is specially designed to achieve. Primary
functions, therefore, are the most essential functions whose non-performance would make the product
worthless, e.g. a photo frame exhibits photographs, a chair supports weight, a fluorescent tube gives light.
Secondary functions are those which, if not in-built, would not prevent the device from performing its
primary functions, e.g., arms of a chair provide support for hands. Secondary functions are usually related
to convenience. The product can still work and fulfill its intended objective even if these functions are
not in-built and yet they may be necessary to sell the product.
Tertiary functions are usually related to esteem appearance. For example, Sunmica top of a table gives
esteem appearance for the table.
Let us consider a single example of painting a company bus to explain all the above three functions.
Here, the primary function of painting is to avoid corrosion. The secondary function is to identify the
company to which the bus belongs by the colour of the paint (e.g. blue colour for Ashok Leyland Ltd.).
The tertiary function is to impart a very good appearance to the bus by using brilliant
colours.
AIMS
The aims of value engineering are as follows:
1. Simplify the product.
2. Use (new) cheaper and better materials.
3. Modify and improve product design.
4. Use efficient processes.
5. Reduce the product cost.
6. Increase the utility of the product by economical means.

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7. Save money or increase the profits.

The value content of each piece of a product is assessed using the following questions:
1. Does its use contribute to value?
2. Is its cost proportionate to its usefulness?
3. Does it need all its features?
These three questions pertain to the function of the part which may decide the elimination of parts.
_ Is there anything better for the intended use?
_ Can company or vendor standard be used?
_ Can a usable part be made by a lower-cost method?
_ Is it made with the proper tooling, considering volume?
_ Does the part yield suitable profit?
_ Can another vendor furnish the same at a lower cost?

VALUE ENGINEERING PROCEDURE

The basic steps of value engineering are as follows:
(a) Blast (i) Identify the product.
(ii) Collect relevant information.
(iii) Define different functions.
(b) Create (iv) Different alternatives.
(v) Critically evaluate the alternatives.
(c) Refine (vi) Develop the best alternative.
(vii) Implement the alternative.
Step 1: Identify the product. First, identify the component for study. In
future, any design change should add value and it should not make the product
as obsolete one. Value engineering can be applied to a product as a whole or to
sub-units.
Step 2: Collect relevant information. Information relevant to the
following must be collected:
_ Technical specifications with drawings
_ Production processes, machine layout and instruction sheet
_ Time study details and manufacturing capacity
_ Complete cost data and marketing details
_ Latest development in related products
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Step 3: Define different functions. Identify and define the primary, secondary and tertiary functions of
the product or parts of interest. Also, specify the value content of each function and identify the high cost
areas.
Step 4: Different alternatives. Knowing the functions of each component part and its manufacturing
details, generate the ideas and create different alternatives so as to increase the value of the product.
Value engineering should be done after a brain storming session. All feasible or non-feasible
suggestions are recorded without any criticism; rather, persons are encouraged to express their views
freely.

Basic principles of brain storming

Some of the important principles of brain storming which are useful in value analysis are now listed.
(i) A quality idea comes from quantity of ideas. If the number of ideas generated is more, the more good
solutions do turn up.
(ii) Creative ideas emerge from unconventional thinking. This is possible when members of the group
“talk off the top of their heads” and voice weird ideas as they flash through their minds, regardless of
how stupid or impractical they may appear. Often, non-technical personnel can prove to be the greatest
innovators in technical areas since their viewpoints are objective and they do not
know that some of their ideas are technically not feasible at all. So it is preferable to include one or two
non-technical persons in the study team. Members are to be told by the team leader in the beginning of
the session itself, not to breathe a word of criticism of even the most weirdest idea.
(iii) Spontaneous evaluation of ideas curbs imaginative thinking and retards the flow of creative ideas.
The group should not evaluate the alternatives suggested by its member immediately since immediate
evaluation may curb imaginative thinking and slow down the flow of creative ideas.
(iv) Hitch-hiking on the ideas often lead to better ideas. Participants have to improve upon ideas of other
members either directly or by combining more ideas in addition to contributing ideas of their own. A
brilliant idea may not be a practical one initially, or it may look to be silly or useless but discussions can
convert it into a valuable one.
(v) Creativity is a regenerative process and the recording of ideas as they emerge helps serve as a
catalyst to generate more ideas. Memory may not retain all ideas or recall them when they are needed.
So, a stenographer may be asked to record ideas simultaneously. A tape recorder can also be used for
this purpose or even ideas can be written on a blackboard. These recorded ideas can be reviewed at some
later date.
(vi) When ideas cease to flow, short diversions enable the mind to rebound with new ideas after
recuperation. Members of the syndicate may reach a stage where new ideas do not come. At such a stage,
short diversions—rest, favourite sport, hobby, lunch or tea break, etc.—may be taken during which
members are advised to sleep over the ideas and report fresh after the break. Such short diversions enable
mind to recoup and rebound with new ideas.

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Step 5: Critically evaluate the alternatives. Different ideas recorded under step 4 are compared, evaluated
and critically assessed for their virtues, validity and feasibility as regards their financial and technical
requirements. The ideas technically found and involving lower costs are further developed.
Step 6: Develop the best alternative. Detailed development plans are made for those ideas which emerged
during step 5 and appear most suitable and promising. Development plans comprise drawing the
sketches, building of models, conducting discussions with the purchase section, finance section,
marketing division, etc.
Step 7: Implement the alternative. The best alternative is converted into a proto-type manufacturing
model which ultimately goes into operation and its results are recorded.

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ADVANTAGES AND APPLICATION AREAS OF VE
The advantages of value engineering are as follows:
1. Cost Reduction
Value engineering helps to reduce the cost of production without reducing the quality of the product.
2. Improved Quality
It helps to improve product quality and design to attract more customers.
3. Customers' Satisfaction
It helps to increase customers' satisfaction by fulfilling their expectations and needs without increasing
the cost.
4. Simplify The Process
Value engineering simplifies the production process by eliminating unnecessary functions.
5. Higher Profit
Business firm can make more profit because of lower production cost and higher sales volume.
6. Resource Utilization
It promotes proper utilization of resources to enhance production process.
7. Modernizing
Value engineering focuses on modern, cheaper and efficient techniques and approaches to improve the
productivity.
8. Standardization
It gives emphasize on the standardization of firms' products and services.

Applications
The various application areas of value engineering are machine tool industries, industries making
accessories for machine tools, auto industries, import substitutes, etc.

QUESTIONS
1. Define value analysis(VA)/ value engineering (VE).
2. Discuss the symptoms favouring the applications of VA/VE.
3. Define value. What are the types of value?
4. What are the types of functions? Explain them with examples.
5. What are the aims of value engineering?
6. Briefly explain the steps of value engineering.
7. Discuss the advantages and application areas of value engineering.

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PRODUCT LIFE CYCLE
All products and services have certain life cycles. The life cycle refers to the period from the product’s
first launch into the market until its final withdrawal and it is split up in phases. During this period significant
changes are made in the way that the product is behaving into the market i.e. its reflection in respect of sales to
the company that introduced it into the market. Since an increase in profits is the major goal of a company that
introduces a product into a market, the product’s life cycle management is very important. Some companies use
strategic planning and others follow the basic rules of the different life cycle phase that are analyzed later. The
understanding of a product’s life cycle, can help a company to understand and realize when it is time to introduce
and withdraw a product from a market, its position in the market compared to competitors, and the product’s
success or failure. For a company to fully understand the above and successfully manage a product’s life cycle,
needs to develop strategies and methodologies, some of which are discussed later on.

PRODUCT LIFE CYCLE MODEL DESCRIPTION

The product’s life cycle - period usually consists of five major steps or phases: Product development, Product
introduction, Product growth, Product maturity and finally Product decline. These phases exist and are applicable
to all products or services from a certain make of automobile to a multimillion-dollar lithography tool to a one-
cent capacitor. These phases can be split up into smaller ones depending on the product and must be considered
when a new product is to be introduced into a market since they dictate the product’s sales performance.
Fig. 1: Product Life Cycle Graph

There are four/five stages in the life cycle of a product are discussed below:
A) Introduction Stage:-
At this stage the product is launched into the market, hence awareness and acceptances are less or low. So here
the emphasis/focus, should be on promotional activities so as to acquaint customers with the product and gain
acceptance from customers.
In the initial stage of PLC of product, with distinctive speciality a firm can concentrate on core product and its
benefits to the customer.
Advertising and sales promotions are extensively used in order to build awareness, encourage, or to motivate the
customers to buy a new product.
B) Growth Stage:-
During this stage mass market acceptance will take place through early adopters. Growth will be rapid, profits
will emerge and all initial costs covered during this period. In this stage there is increase in the number of
competitors, major product improvements, etc.
Because competition might lead to price reductions of product. An expansion of the distribution network will be
sought in order to facilitate market penetration ( by reducing price or offering small packages, sachets)
C) Maturity Stage:-

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When the product reaches maturity, sales growth continues but at a diminishing rate due to declining number of
potential customers. This stage represents the most competitive stage in the life of a product but one in which
profits are flowing in steadily. Special promotional efforts are needed to attract new users to the product.
Eg. During this stage emphasis is given in opening new distribution channels and retail outlets or to give sales
promotion for the customers or traders.
C/D) Saturation Stage:-
At this stage or point of PLC, now many competitors in the market are present. profits per unit have further
declined or reduced and there is no growth in sales. It is time to consider new markets, changes in prices,
promotion and introduction of new product versions or new products in different formats or at new places
(distribution network) or for new customer segment.
E) Decline Stage:-
The product reaches a stage of declining sales as it faces competition from better products or better substitutes
developed by the competitors. At this stage the product has to be redesigned or the cost of production reduces so
that they can continue to make some contribution to the company or to reduce promotional activities or cost and
to offer the product for limited number of customer (selective distribution strategy). The manufacturer may have
to accept the gradual decline and ultimate withdrawal of the product from the market or may try to regenerate it
by introducing new product applications, new packaging or design, a different advertising theme, new selling
methods, new distribution channels or new markets segment.

Strategies during Product Development Stage:-

Introduction Stage, Growth Stage, Maturity Stage and Decline Stage
1. Strategies during Product Development Stage:
i. Focus is on product features, warenty & guarantees.
ii. Emphasis is on cost reduction of production.
iii. Trials are the main tools
iv. Exploring of the market starts
v. Publicity of the product and Advertising.
vi. Minimum expenses to be maintained during PLC period.
vii. Production capacity must be fully utilized.
viii. Quality must be checked
ix. Focus on work is to be given
x. A good introducer of the product is required

Benefits of Product Lifecycle Management (PLM) :-

Sound product lifecycle management has many benefits, such as getting the product to market faster,
putting a higher quality product on the market, improving product safety or useful , increasing sales opportunities,
and reducing errors and waste of manufacturing. Specialized computer software is available to assist with PLM
through functions such as document management, use of ERP Modules, design integration, and process
management etc.
Other benefits include:
A) Improved product quality and reliability.
B) Reduced prototyping costs.
C) More accurate and timely requests for quote (RFQ).
D) Quick identification of sales opportunities and revenue contributions
E) Savings through the re-use of data or other resources.
F) A framework for product optimization.
G) Reduced waste in production process.
H) Improved ability to better manage seasonal fluctuation management or changes of technology.
I) Improved forecasting to reduce material costs and to search for other raw materials.
J) Maximized supply chain collaboration by the use of JIT (Just in Time).
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Characteristics of PLC stage:-
There are the following major product life cycle stages:
1. Market introduction stage:-
This is the stage in which the product has been introduced first time in the market and the sales of the product
starts to grow slowly and gradually and the profit received from the product is nominal and non-attained. The
market for the product is not competitive initially and also the company spends initially on the advertisement and
uses various other tools for promotion in order to motivate and produce awareness among the consumers,
therefore generating discerning demands for particular brand.
a) operation costs are very high.
b) slow sales volumes to start at the introduction stage.
c) little or no competition.
d) demand has to be created.
e) customers have to be prompted to try the product
f) makes little money at this stage or less or no profits.
2. Growth stage:-
In the growth stage, the product is visibly present in the market, the product has habitual consumers, and there is
quick growth in product sales. More new customers are becoming aware your product and trying to buy it . The
customers are becoming satisfied with the product and are buying it again and again. The ratio of the product
repetition for the trial procurement has risen. Competitors have started to overflow the market with more
appealing and attractive inventions.
a) costs reduced due to economies of scale or Of BPE (Break Even Point).
b) sales volume increases significantly.
c) profitability begins to rise slowly.
d) public awareness increases as the rate of Advertising increases.
e) competition begins to increase with a few new players in coming to the market.
f) increased competition leads to price decreases.
3. Maturity stage:-
In maturity stage, the cost of the product has been decreased because of the increased volume of the product and
the product started to experience the curve effects. Also, more and more competitors have seen to be leaving the
market. In this way very few buyers have been left for the product and this results in less sales of the product.
The decline of the product and cost of attaining new buyers in this level is more as compare to the resulted profit.
a) costs are decreased as a result of production units increasing and experience curve effects.
b) sales volume peaks and market saturation is reached.
c) increase in competitors entering the market.
d) prices tend to drop due to the proliferation of competing products.
e) industrial profits go down

4. Saturation and decline stage:-

In this stage, the profit as well as the sales of the product has started to decline or shrink because of the deletion
of the product from the market. The market for the product in this stage started to show negative rate of growth
and decrease of cash flows.
a) costs become counter-optimal
b) sales volume declines or decrease .
c) prices, profitability decrease.
d) profit becomes more a challenge of production/distribution efficiency than increased sales
.

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What is concurrent engineering?
Concurrent engineering is a development and design method where all project phases happen
simultaneously. This technique effectively increases productivity while lowering costs. The principle
behind concurrent engineering encourages and improves collaboration among different teams,
departments and disciplines. This creates a single goal that combines all parties' objectives and satisfies
the project's engineering requirements through critical elements.
Many companies adopt concurrent engineering to reduce the duration of product development and
marketing. Though the first stages of implementing this approach may be challenging, the competitive
advantage it offers is a powerful incentive. As a long-term business strategy, concurrent engineering
minimizes the need for multiple design networks. Instead, it creates an environment conducive to
developing products correctly the first time.
Key elements of concurrent engineering
There are several elements that contribute to the success of concurrent engineering. The elements are:
1. People
Concurrent engineering heavily relies on project development as a collaborative task involving
multiple departments. During concurrent product development, an organization brings in skilled
employees at the right time to reduce product development time.
When hiring or building project teams, your company may focus on candidates with the right skill sets
and experience based on the following key aspects:
• Being able to work on an integrated team
• Being able to collaborate and communicate effectively with all employees or departments
• Being able to support goal alignment across the organization
2. Process
Successfully completing a project often involves several processes, or series of steps that teams follow
to achieve a particular goal. These can vary from project planning, troubleshooting, milestone tracking
and information sharing. In concurrent engineering, implementing processes is vital to supporting
teams' decision-making and execution of daily tasks.
The processes many companies use in concurrent methods are:
• Product planning and workflow management, including critical development elements like milestone
setting for cross-departmental interaction and vital design phases
• Workflow for information management, including managing any changes, sharing data and
controlling unwieldy growth
• Functional and nonfunctional requirements for monitoring breakpoints across departments using the
techniques available, such as quality function deployment
• Design of workflow evaluation processes
• Design of analysis strategies, such as brainstorming
• Systematic investigation of the possibility and effect of flaws in new product designs
• Design of experiments for the systematic identification of critical process/project parameters that
affect performance

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3. Technology
The success of a project under concurrent engineering depends on the practical introduction of the correct
tools, technologies and techniques. This is essential for the seamless integration of processes. Before
implementation, identify the technologies and tools that match your organization's size, methods you use,
number of team members and product type. The next step is identifying the training requirements and
teaching employees to use the technologies and tools you select. Standard tools are software for project
management, quality function deployment, failure mode analysis and evaluation.

Benefits of concurrent engineering

Concurrent engineering deals with factors that directly affect a company's profitability and market share:
lead time, unit cost, product quality and design. Here are other benefits of this method:
Innovative solutions
It's common for skills within different departments or among employees to overlap. This allows teams
to address joint tasks with similar backgrounds while bringing unique perspectives. Even employees in
the same department can have different viewpoints depending on their skill sets.
Since projects are open to collaboration in concurrent engineering, each team member with a specialty
adds value. Cross-department meetings can identify possible setbacks and create unanimously accepted
solutions. By applying these insights, organizations may prevent significant mistakes.
Early modifications
The initial stages of concurrent engineering may be challenging because new projects may lack a steady
pace. However, this means they're open to alterations early on, which can be helpful. Concurrent
engineering focuses on identifying and resolving issues in the initial stages. Many iterations may take
place to achieve goals like actively reducing scrap production, manufacturing lead times and the number
of future changes. This helps give project teams better control over the characteristics of the final product.
Minimized risk of loss
Since multiple teams or departments take part in concurrent engineering, many people have relevant
information about the project and its development cycle. This can dramatically reduce any negative
impact on the product's overall success if a team member has to step away from the project. It's also
easier to add new members because of the unlimited access to information concerning the project.
Read more: Risk Management: A Definitive Guide
Reduced time to reach the market
The most significant benefit of concurrent engineering is reducing the project's duration, so the product
reaches the market quickly. Working on multiple stages of the project simultaneously reduces the time
spent on it. The result is a massive advantage over competitors since companies can enter new markets
with innovative products before anyone else.

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QUESTIONS
1. Discuss the concept of product development. Explain various steps in product development.
1. Explain with examples the various design tools used while designing.
2. How is design of services different from design of product s?
3. Discuss the advantages and disadvantages of flexible manufacturing systems.
4. Name some types of the processes.
5. What is process reengineering, explain the advantages of reengineering?

Concurrent engineering
Concurrent engineering is a systematic approach to the integrated, concurrent design of products and their
related processes, including manufacture and support. This approach is intended to cause the developers from
the outset, to consider all elements of the product life cycle from conception to disposal, including quality, cost,
schedule, and user requirements.
Concurrent Engineering is a long-term business strategy that provides long-term benefits to any business or
manufacturing process. In this methodology, several teams within an organization work concurrently to develop
products and services. Product design, quality, unit cost, and manufacturing time are the most important
parameters that impact the profitability of an organization. Concurrent engineering helps in improving these
factors and provides companies with a highly competitive edge. In this article, we will learn about the definition
and principles of concurrent engineering, Its benefits, elements, challenges, and product development process
using concurrent engineering.

Definition of Concurrent Engineering

Concurrent engineering is a systematic method of designing and developing products where
different activities run simultaneously. This is also known as simultaneous engineering. By
performing different tasks simultaneously, concurrent engineering decreases production time
leading to reduced costs. The philosophy of concurrent engineering is derived from Japan.

Elements of Concurrent Engineering

There are four basic elements in the concurrent engineering principle. They are

1. Cross-functional teams: Cross-functions teams are formed by people from different work
areas related to that particular process or product development.
2. Concurrent product realization: Performing several tasks simultaneously is the basis of
concurrent engineering.
3. Incremental information sharing: Information must be shared immediately it is available to
succeed in concurrent engineering. Even the information can be shared in the form of advance
information if the actual information approval process takes time.
4. Integrated project management: It ensures the responsibility of the project to the key
professionals.

Principles of Concurrent Engineering

The concurrent engineering principle utilizes the right human resource at the right time to accelerate
product development while keeping the rework to a minimum. The working principle of concurrent
engineering is based on the following factors:
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Teamwork: This is the basic requirement for concurrent engineering philosophy. Collaboration,
cooperation, and interpersonal relationship are integral parts of concurrent engineering.

Multidisciplinary team: Multidisciplinary team for product/service/process development including

experts from each discipline is important for the success of concurrent engineering principles.

Effective Communication: To get the most benefit from the concurrent engineering strategy,
effective communication is a prerequisite. Fast Information exchange between members, suppliers,
customers, and manufacturers is important. It must be ensured that all members are aware of what
other members are doing.

Management Support: Proper management support helps in the implementation of the concurrent
engineering principles.

Involvement of Customers and Suppliers: The success of product development in concurrent

engineering depends on the proper integration between the customer, suppliers, and manufacturer.
This reduces the design error and reworks significantly.

Concurrent Engineering vs Sequential Design

The concurrent engineering principle has mostly altered the conventional sequential design strategy
to a great extent. The linear fashion of sequential design philosophy is now related to the integrated
development method of concurrent engineering. The main fault with the sequential design method is
that if something goes wrong the process must be altered heavily which impacts the economy of the
product development. Whereas the concurrent engineering methodology smoothly resolves the
problem and encourages positive changes that allow an evolutionary design approach. The difference
between the two approaches can easily be recognized from the Wikipedia image attached in Fig. 1
below.

Fig. 1: Sequential design vs Concurrent Engineering Approach

25
Concurrent Engineering
26
Why concurrent engineering?
Increasing product variety and technical complexity that prolong the product development
process and make it more difficult to predict the impact of design decisions on the functionality
and performance of the final product.
Increasing global competitive pressure that results from the emerging concept of reengineering.
The need for rapid response to fast-changing consumer demand.
The need for shorter product life cycle.
Large organizations with several departments working on developing numerous products at the
same time.
New and innovative technologies emerging at a very high rate, thus causing the new product to
be technological obsolete within a short period.

Concurrent Engineering
Concurrent engineering, also known as simultaneous engineering, is a method of designing and
developing products, in which the different stages run simultaneously, rather than consecutively.
It decreases product development time and also the time to market, leading to improved productivity and
reduced costs.
Concurrent engineering is a method of designing and developing engineering products in which
different departments simultaneously work on the different stages of engineering product development.
If managed well, it helps to increase the efficiency of product development and marketing, considerably
reducing the time and contributing to the reduction of the overall development cost while improving
the final product quality.

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 Concurrent Engineering interactions

Elements of concurrent engineering

Concurrent engineering presents an environment that encourages and improves the interaction of
different disciplines and departments towards a single goal of satisfying engineering product
requirements. A PPT framework or the Golden Triangle can summarise key elements of concurrent
engineering.

People, process & technology framework

People, processes, and technology are crucial to any organisation and essential in implementing
concurrent engineering to achieve shorter development time, lower cost, improved product quality and
fulfil customer needs.
People
Concurrent product development is a multidisciplinary team task, and companies must utilise the right
skilled personnel at the right time to accelerate product development. It is also necessary to find people
with the right skills and experience along with the following key aspects;
● Multidisciplinary team to suit the product at the start of the NPD
● Teamwork culture at the core of the program

28
● Good communication and collaboration between teams – sharing relevant and up-to-date information
across departments and personnel
● The harmonized goal across the company from the top management to the bottom of the organizational
structure
Process
A process is a series of product development steps that need to happen to achieve a goal. These can be
project planning stages, milestone management, problem-solving methodologies, product development
key stages, information sharing workflow, etc., as people are ineffective without processes to support
their tasks and decisions. Following are some of the processes that can be adopted in concurrent
engineering;
● Project planning processes and workflow management include key new product development elements
such as key design stages, milestones for cross-departmental interaction, etc.
● Workflow for product data management includes sharing information, managing engineering change,
controlling specification creep, etc.
● Product requirement tracking and checkpoints using techniques such as Quality Function Deployment
(QFD) across departments
● Design evaluation workflow processes
● Design analysis methodologies such as brainstorming
● Failure Mode and Effects Analysis (FMEA) allows for a systematic investigation of the occurrence and
impact of possible flaws in the new product design.
● The use of Design of Experiments (DOE) enables the systematic identification of critical product/process
parameters that influence performance.

Technology
For concurrent engineering to be successful, the effective introduction of tools, techniques, and
technologies to aid a smooth integration of people and processes is vital. The following key aspects
should be considered before any implementation.
● Identifying the correct tools and technologies that suit the company size, number of team members,
processes implemented and product type
● Identifying the training needs and training people to use the tools and technologies identified above
These are just a few supportive tools that can be used in a concurrent engineering environment.
● Project management software
● Product data management & product lifecycle management suites
● Quality Function Deployment (QFD)
● 3D CAD and rapid prototyping technologies, such as additive manufacturing

29
● Suitable FEA tools
● Evaluation tools such as DFM, DFA, DFMA and DOE
● Failure mode analysis tools such as FMEA

Advantages and disadvantages of Concurrent engineering

Advantages of concurrent engineering
● It encourages multi-disciplinary collaboration
● Reduces product cycle time
● Reduces cost
● Increases quality by supporting the entire project cycle – enhanced quality.
● Increases productivity by stopping mistakes in their tracks
● It gives a competitive edge over the competitors
Disadvantages of concurrent engineering
● Complex to manage
● It relies on everyone working together; hence communication is critical
● Room for mistakes is small as it impacts all the departments or disciplines involved

Concurrent engineering is a powerful workflow methodology, if implemented correctly, that will

positively impact product quality and the objectives of the company. However, each company has no
one-size-fits-all methods or procedures, and product development will differ. Hence, catering and putting
a suitable system in place across the PPT framework is crucial to the success and a challenge faced by
product managers.

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