Improving The New Product Development Process

Engineering Management Journal
ISSN: 1042-9247 (Print) 2377-0643 (Online) Journal homepage: http://www.tandfonline.com/loi/uemj20
Improving the NPD Process by Applying Lean

Principles: A Case Study
Bimal P. Nepal, Om Prakash Yadav & Rajesh Solanki
To cite this article: Bimal P. Nepal, Om Prakash Yadav & Rajesh Solanki (2011) Improving the
NPD Process by Applying Lean Principles: A Case Study, Engineering Management Journal,
23:3, 65-81, DOI: 10.1080/10429247.2011.11431910
To link to this article: http://dx.doi.org/10.1080/10429247.2011.11431910
Published online: 20 Apr 2015.
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Improving the NPD Process by Applying Lean Principles: A Case Study
Bimal P. Nepal, Texas A & M University
Om Prakash Yadav, North Dakota State University
Rajesh Solanki, RTI International Metals
Abstract: This article extends the new product development sequentially. Past studies show that to reap the full benefits from
(NPD) literature by presenting a case study of a lean product best practice techniques, such practices should be implemented
development (LPD) transformation framework implemented at a across the board, with inclusion of suppliers and customers in an
U.S. based manufacturing firm. In a departure from typical LPD integrated manner (Nepal et al., 2007).
methods, in this article the design structure matrix and the cause Furthermore, flexibility of the product development system
and effect matrix are integrated into the lean transformation is considered an important enabling factor for success in a volatile
framework, allowing analysis of the underlying complexity and rapidly changing marketplace (Sobek et al., 1998). According
of a product development (PD) system, and thus facilitating to Yadav et al. (2007), “flexibility and effectiveness of PD processes
determination of the root causes of wasteful reworks. Several depend on various other factors, such as design activities and
strategies to transform the current PD process into a lean process tools used, their planning and scheduling, information flow
are discussed. Besides the two-phase improvement plan, a new structure, quality and availability of information, and decision-
organizational structure roadmap and a human resources plan making approaches.” While design tools and techniques are
are also suggested to support the recommended changes in the critical enablers, an integrated PD process or system is pivotal to
Downloaded by [Monash University Library] at 00:59 16 April 2016
NPD process. The results of the first phase show a 32% reduction the overall success of any PD factory.
in PD cycle time due to the proposed NPD process. The article To cope with increasing pressure for time and cost
concludes with lessons learned and implications for engineering reduction, manufacturers have successfully embraced lean and
managers based on the case study. Six Sigma principles in PD projects. The lean thinking business
strategy emphasizes elimination of waste to create the most
value for customers while consuming the fewest resources
Keywords: Lean Product Development, New Product (Walton, 1999). These same principles can be equally applied to
Development, Case Study, Design Structure Matrix PD (Walton, 1999; Morgan, 2005). In particular, reduction in
excessive process variability, creation of pull-based flow driven by
EMJ Focus Areas: Innovation & New Product Development customer requirements, and the elimination of waste are seen as
key elements of lean product development. While application of
these techniques offers the potential for significant improvements
in development cycle time and cost, in reality this transfer is
A
dvances in manufacturing and operations management complex (Karlsson and Ahlstrom, 1996). Unlike manufacturing,
have succeeded in shrinking the manufacturing PD is a non-repetitive, non-sequential, unbounded activity that
productivity gap. For instance, in the automotive produces information, and where cogent risk-taking might be a
industry, this gap has shrunk from 16.5 hours per vehicle in 1996 key to adding value (Browing, 2003; Reinertsen, 2009). Variability
to 7.33 hours per vehicle in 2005 (Teresko, 2007). This trend is inherently and necessarily higher in product development than
essentially suggests that manufacturing efficiency will no longer manufacturing. Similarly, due to low expense and long cycle time,
be an order-winning strategy, although its importance should the relative economic importance of wasted cycle time enabling
not be underestimated. On the other hand, researchers argue earlier accrual of revenue from new products compared to wasted
that the success of any company depends on the organization’s expenses can be much higher in PD than it is in manufacturing
ability to innovate and introduce new desirable products at a (Cooper and Edgett, 2008).
much faster rate than their competitors (Kearney, 2005; Yadav This article presents a “reflective case study” (Kotnour
et al., 2007). There is undeniable evidence that an efficient and and Landaeta, 2004) of a lean PD transformation framework
effective product development (PD) process is key to the survival used at a U.S.-based manufacturing company. Furthermore,
of any manufacturing company in today’s globalized economy. If the transformation framework integrates traditional lean
managed and executed properly, an efficient PD process enables a manufacturing tools like value-stream mapping (Womack and
manufacturer to bring to market new products more quickly than Jones, 2003) with other Six Sigma and project management tools,
their competitors. The potential for individual best practices, such as the cause and effect matrix and the design structure
design activities, tools, and techniques to boost performance matrix (DSM). The DSM advantageously allows design engineers
measures can be fully realized only if these components are to understand the underlying complexity of the PD process by
integrated into an effective overarching system. It is, therefore, identifying dependency among design activities. By doing so,
essential that integrated PD processes be developed and engineers can determine root causes for wasteful iterations.
implemented as coherent systems. All aspects of the PD process An implementation timeline and strategies to transform the
should be coordinated and developed simultaneously, rather traditional (or current) PD process into a leaner PD process by
than being viewed as separate sets of PD activities occurring embedding lean principles are also presented. The remainder of
the article is organized as follows: the evolution of PD processes
Refereed research manuscript. Accepted by Special Issue Editor Geert Letens. Due to a printing error in the March 2011 issue, this
article is being reprinted in its entirety.
Engineering Management Journal Vol. 23 No. 3 September 2011 65

is presented, including a brief review of the lean product Concurrent engineering (CE), another product development
development literature; next is a case study on the lean PD process widely described in the PD literature, requires the
transformation framework; following that is a description of key involvement of cross-functional teams starting with initial
improvement areas and lessons learned from the case study; and, development stages to plan for product development and
the article concludes with some thoughts and implications for manufacturing processes simultaneously (Quesada et al., 2006).
engineering managers. Concurrent PD processes can also be classified as point-based
concurrent engineering and set-based concurrent engineering,
Overview of Product Development Processes depending on how soon the initial set of conceptual ideas converge
The most generic PD process, the stage-gate process (Cooper, to a final design (Sobek et al., 1999; Ford and Sobek, 2005). In
2008), was developed and implemented in many U.S. industries the point-based approach that most U.S. original equipment
during the late 1980s and early 1990s (Holmes and Campbell, manufacturers (OEMs) follow, the best conceptual design is
2004; Yadav et al., 2007). The stage-gate process consists of discrete selected and frozen early on during the end of conceptual stage
phases from product planning to product release as illustrated in design review process based on criteria minimizing the complexity
Exhibit 1. The term stage-gate refers to a design review process and limiting production cost. On the other hand, in set-based CE
undertaken at the end of each phase. Based on the status of earlier developed and implemented by Toyota, rather than selecting the
milestones (and also inputs from the senior management), the so-called best alternative design, the company develops a set of
course for the next development stage is determined. viable alternatives from multiple perspectives. As they progress
The major goal of the stage-gate process is to improve business to the next stage, they gradually eliminate the relatively poor
performance and to develop higher quality products for enhanced alternative based on multiple criteria such as quality, reliability,
revenue growth (Thomke, 2007; Cooper, 2008). This process manufacturability, and cost, and eventually converge to a final
provides a mechanism for controlling quality and reliability issues design (Ford and Sobek, 2005).
during the gate reviews. In the traditional version, however, neither Over the years, product development literature has evolved
feedback nor cross-stage iterations are planned, making the stage- from a traditional sequential, technology push-and-market-pull
gate inflexible (Unger and Eppinger, 2009). It is important to note model to a more overlapped and integrated process, employing
that the back arrows in Exhibit 1 indicate the learning process for internal cross-functional teams and early supplier involvement
future development projects, not the feedback of information for to reduce time-to-market (Yadav et al., 2007). In other words,
the ongoing product development project. A serious limitation companies are now moving toward applying lean thinking,
to the efficiency of this process is the lack of control of time and viewing product development from a system perspective (Cooper
schedule within each phase. In today’s globalized competition, and Edgett, 2008). Although lean principles originated from the
where time-to-market is a winning strategy, efficiency complements manufacturing domain, they can produce even greater results in
traditional factors such quality and reliability (Rosas-Vega and a PD environment given that the product development process
Vokura, 2000). The traditional stage-gate product development typically exhibits a wider variability than that of manufacturing
process requires long design review cycle times and an excessive (Smith, 2008). Further, while aerospace and automobile
amount of documentation, and gives less attention to early stages industries were among the first to adopt lean principles in PD,
of PD, thereby causing further reduction in design productivity recently many other industries have also followed suit (Cook and
(Minderhouds, 1999; Unger, 2003; Cooper and Edgett, 2008; Semouchtchak, 2004; Czabke, 2008; Broring and Cloutier, 2008;
Nepal and Monplaisir, 2009). Carleysmith et al., 2009).
Furthermore, in a linear development process such as a stage-
gate process, incorporation of new information (in design terms, Issues in New Product Development
engineering change) becomes expensive due to resulting reworks New product development issues highlighted in the PD literature
and process delays (Summers and Scherpereel, 2008). To deal can be broadly classified into three categories – management
with this issue, some companies have adopted a spiral product issues, technical issues, and relational issues – as described in the
development process (Cooper and Edgett, 2008). The spiral PD following sections.
process has a faster development cycle than the traditional stage-
gate process (Unger and Eppinger, 2009). It follows build-test- Management Issues. Product development is a complex process
feedback-and-revise loops multiple times until the final product that is best managed as a project. Both internal and external
is developed per the desired specification and quality level. issues drive the efficiency of the PD process. Internal process
Exhibit 1. A Generic Stage-Gate Product Development Process (adapted from Yadav et al., 2007)
Exhibit 1. A Generic Stage-Gate Product Development Process (adapted from Yadav et al., 2007)
Need Design Concept Detail Testing and

Production Marketing
Recognition Specifications Development Design Refinement
Gate 1 Gate 2 Gate 3 Gate 4 Gate 5 Gate 6
Exhibit 2. Proposed Lean Product Development Transformation Framework

66 Engineering Management Journal Vol. 23 No. 3 September 2011
management involves planning activities and coordinating 1996; Thomke and Fujimoto, 2000). These problems are internal
resources among multiple players across various functional relational issues that occur due to lack of trust and clarity in
departments; however, unlike classical construction management- information sharing. For example, in order to ensure smooth and
type projects, PD projects at times involve planning iterations instant flow of information, it is important to clearly specify the
to improve quality, making the scheduling of design activities source of information, the mechanism of information exchange,
a difficult task because of rework and dependency among key the format of information sharing, the information request
activities. Since PD process consists of several (desirable as procedure, and finally, the means of getting information directly
well as undesirable) iterations, the management of smooth flow from the source to the point of need. This process requires clearly
of information (design flow) is a critical issue, especially when defined pathways in order to avoid inefficiencies of routing
quality of information and execution time fall short of required information exchange through management hierarchy and the
targets. The management of the workflow (or information flow) requirement of many approvals to get information.
is closely associated with technical and relational issues and On the other hand, external relational issues involve mainly
therefore requires a comprehensive approach to deal with it. suppliers. We believe that an effective supplier performance
External management issues primarily include supplier measurement and relationship management process should
management, involving setting clear goals for suppliers, clearly include the following: 1) clarity of expectations, 2) gathering
communicating expectations and requirements, setting targets of suggestions for concept design improvement to achieve
and prototypes in order to enforce goals, managing supplier lower cost and higher reliability, 3) target dates (time frame), 4)
PD processes, and making unambiguous connections between mechanism for observing or monitoring progress, 5) mechanism
people. Furthermore, supply base management has far-reaching to address design specification deficiencies, 6) supplier
effects beyond PD time and cost in terms of an OEM’s overall development program, and 7) training and development to
success in the market. For example, in the automotive industry, improve competencies. While there is an agreement on the need
suppliers contribute more than 70% of the vehicle content, or total for collaboration between organizations, a structured framework
vehicle value (Leenders et al., 2002); therefore, the quality and for such collaboration is still lacking (Binder et al., 2007). By
performance of parts from a supplier significantly determine the establishing internal customer and supplier interaction, the
final vehicle quality (Froker, 1997). Womack et al. (1991) suggest same partnership and relational model approach can be applied
that working simultaneously with suppliers can not only shorten to intra-organizational performance improvement. Certainly,
product development time but also improve product quality and having a new set of tools and technologies is not enough for
product costs. Binder et al. (2007) highlight the paradigm shift successful implementation of innovative ideas. The new tools and
in automotive product life cycle practices. The authors argue that techniques should be properly integrated across the PD process
after “Fordism” and “Toyotism,” current business philosophy to provide seamless flow of information by implementing lean
in the automotive industry is characterized by a partnership principles (Yadav et al., 2010). The lean product development
and relational model, as opposed to traditional adversarial and case study presented in this article illustrates how lean thinking
contractual models. Despite these efforts by the large companies, can help integrate design tools and techniques to accomplish the
research shows that many companies are still not successful in ultimate goal of reducing time to market and overall cost of the
terms of early supplier integration into NPD projects (Handfield NPD process.
and Lawson, 2007), thereby affecting the overall productivity of
the PD process. Lean Thinking in Product Development
Lean principles, widely recognized as the essential principles of
Technical Issues. Numerous tools, such as quality function the Toyota Production System (TPS) (Ohno, 1988), have been
deployment, design of experiments, design optimization, risk successfully embraced by the manufacturing arm of Toyota
management, and reliability analysis are used at various stages of Motor Corp. While the application of lean techniques offers the
product development process. Achieving seamless integration of potential for significant improvements in product development
these tools in the PD process, however, has been a great challenge. cycle time and cost, in reality this transfer is complex (Larlsson
The outputs (data) from one set of tools are not compatible and Ahlstrom, 1996). In order to make the transformation
with supporting the analysis of other tools, causing the loss of process easy and effective, it is important to clearly understand
information during transition and transformation, or sometimes and define non-value added activities in the PD processes. Just as
failing to convey relevant information to the succeeding tool. in manufacturing processes, the non-value added activities in the
Thomke (2006) points out the weakness of automotive companies PD process can be defined as follows (Ohno, 1988; Liker, 2004;
“using new tools merely as substitutes, adding (instead of Morgan, 2005; Reinertsen, 2009):
minimizing) interfaces, and changing tools, but not people’s • overproduction: designs turning faster than testing
behavior.” In addition, it is extremely important to integrate tools, capabilities, or overdesign.
technology, knowledge, and hardware/software with suppliers • defects: misunderstood customer requirements resulting
(Hobday et al., 2005), since supplier content is normally higher into unacceptable specifications.
in any moderately large and complex product (Monczka et • transportation: many handoffs of information and too many
al., 2008). required approvals.
• overprocessing: not invented here; rework as a result of late
Relational Issues. One of the widely cited problems in design problem discovery (undesired iterations).
factories is late design change and its impact on overall • inventory: queues of unprocessed information (poor
development time and cost. As a major step to minimize these sequencing of design tasks).
problems, researchers and practitioners have underscored the • unnecessary movement: poor data organization.
need for early tracking of problems through collaboration and • waiting: resource conflicts; late information, hardware,
front loading (Brown and Eisenhardt, 1995; Griffin and Hauser, software (poor sequencing).

• underutilization of staff knowledge and skills: problems not example, at Toyota plants, each production line typically can
solved at the lowest levels; decisions taken without consulting accommodate more than one type of product (Spear and Bowen,
local experts; customer and employee feedback ignored in 1999). A consistent motto of Toyota engineers is to simplify and
new designs. to specify the paths to be followed by the product regardless of
whether designing or manufacturing the product.
Furthermore, in order to accomplish this transformation of
PD processes into a lean PD process, Ward (2007) describes five Teaching and Learning. In lean product development organizations
pillars of lean PD: 1) value focus, 2) entrepreneur system designers, such as Toyota, teaching and learning evolve through unique
3) set-based concurrent engineering, 4) flow-based pull systems, relationships among managers, supervisors, and workers. While
and 5) cross-functional teams with experts. Similarly, Browning supervisors and higher-level managers are deeply involved in the
(2003) also emphasizes the importance of defining value of the details of engineering design, they rarely tell their subordinates
PD activities before eliminating waste, while adding that in order what to do, instead answering questions with questions (Sobek
to accomplish the real benefits of a lean process, it should be et al., 1999). They force engineers to think about and understand
looked at from a system’s perspective. the problem before pursuing an alternative, even if the managers
already knew the correct answer. Supervisors normally come
Lean Principles to the worksite and ask series of questions (Spear and Bowen
In this section, we present a few lean principles that can be adapted 1999), such as: How do you do this work? How do you know you
to a PD environment. Womack and Jones (2003) describe the are doing this work correctly? How do you know that outcome
following five principles related to lean thinking: 1) specifying value is free of defects? What do you do when you have a problem?
from the customers’ perspectives, 2) identifying the value stream, 3) The iterative questioning and problem-solving approach leads
making the value-creating activities flow, 4) customer pulled-value, to effective learning and builds knowledge implicitly. Further,
and 5) pursuit for perfection. Toyota has been implementing these Toyota uses checklists to ensure that the proposed design follows
principles in both manufacturing and product development (Liker, standard process and testing procedures during design reviews
2004). In particular, the reduction of excessive process variability, and final approval. Thus, the tacit knowledge of an experienced
the creation of flow, and the elimination of waste are seen as key engineer is transferred to the new generation of engineers
elements of lean principles in product development (Reinertsen, through active learning, and checklists become the “playbooks”
2009). This section highlights the application of those principles in to minimize variation between different managers across a large
the context of a PD environment based on a benchmarking study organization such as Toyota Motor Corp. The result of this unusual
of Toyota Product Development Systems. manager-worker relationship is a higher degree of sophistication
in problem solving and learning at all levels of the organization
Standardization of Processes. At Toyota, all activities are highly (Yadav et al., 2010).
specified with respect to content, sequence, timing, and outcome
(Spear, 1999). Through standard operations in manufacturing, Coordination and Rich Communication. To transform an idea
Toyota achieves multiple goals such as high productivity, into an innovation, it is important to have effective coordination
balanced production lines, minimum level of work-in-process among groups and individuals who are sufficiently knowledgeable
inventory, and reduced variability in operations (Monden, about the problem at hand. Lack of communication can cause
1997; Spear and Bowen, 1999). Furthermore, this approach rework and late design changes during product development. In
increases learning efficiency, allowing new employees to learn to one study conducted on the product development process of a
perform their jobs in just three days (Shingo, 1989). In product U.S. car company, we found that over 70 percent of rework was
development, standardization implies maintaining a standard due to lack of communication and poorly defined engineering
format or reporting system for information exchange and other specifications (Yadav et al., 2010). The primary reason for poor
routine tasks. Toyota has successfully standardized much of its communication is the lack of effective coordination among
product development process as well. Routine work procedures people within organizations.
– such as design blueprints, A3 reports, and feedback forms for It is argued that the best mode of communication and
design reviews – are also highly standardized (Sobek et al., 1998). coordination in product development is a face-to-face talk
All reports follow the same format, allowing employees to easily with people from other functional areas and suppliers.
locate the definition of the problem, the responsible engineer and Communication in the form of written reports and memos lacks
department, the results of analysis, and the recommendations the richness of information and the interactive qualities needed
(Yadav et al., 2010). for problem solving (Yadav et al., 2010). On the other hand,
face-to-face meetings are costly in terms of time and efficiency,
Simple and Specified Pathways for Information Flow. The objective and usually involve limited value-added work per person. Also
of this principle is to develop a clear connection between the they easily lose focus and drag on longer than necessary. In lieu
teams and activities so that a leveled flow of information can of regularly scheduled meetings, therefore, Toyota emphasizes
be maintained throughout the PD process (Yadav et al., 2010). written communication supported with visuals and, where
Simple and specified pathways encourage PD organizations to possible, captured in an A3 format (Sobek et al. 1998). If there are
create a standard format for information request and information disagreements, then it is considered best to hold a well planned,
exchange by identifying the source and the mechanism for agenda-based meeting to hammer out a decision face-to-face. In
information flow. It ensures that all pathways are set up in such fact, to improve communication and minimize waste specifically
a way that every product, as well as all information, flows along due to rework because of misinformation or communication
a simple and specified path; however, the stipulation that every gaps, Toyota uses the principle of “go-see” and involves
product follows a simple and pre-specified path doesn’t mean suppliers early on during the concept phases of the product
that each path is dedicated to only one particular product. For development process.

Continuous Improvement. Standardization, learning, coordination, based on its requirements, the suppliers’ capability, its willingness
rich communication, and path simplification are the essential to share information with the supplier, and on both companies’
building blocks for improvement of a PD process and provide a strategic requirements. Kamath and Liker (1994) identify a range
specific base to continuous improvement. These principles provide of postures that Toyota and suppliers can adopt within a long-
vehicles and preconditions for improvement. The Toyota product term cooperative relationship.
development system encourages its engineers to look at problems In summary, lean thinking has been garnering significant
closely and experiment to improve their own work systems attention in product development organizations because of its
through a scientific problem-solving approach for minimizing potential to save both time and cost. The precedent lean literature,
risk. This “catch ball” system between managers and workers however, is largely limited to industries producing very large
implicitly teaches people how to improve while not expecting products, such as the automotive and aerospace industries. This
them to learn from personal experience (Yadav et al., 2010). The article extends the lean literature by demonstrating the application
distinctive feature of Toyota’s continuous improvement effort on of lean PD in different types of products varying in size and
product activities, supplier-customer relationship, or any other complexity. More importantly, the lean approach adopted in this
process is that the pathways must be made in accordance with article integrates other process optimization tools, such as the
a scientific method under the guidance of a teacher and at the design structure matrix, to be better able to explore disconnects
lowest possible organizational level (Spear and Bowen, 1999). To within the PD systems. This examination of disconnects cannot
make changes, people are expected to communicate the explicit be accomplished by value-stream mapping alone. In other words,
logic of the hypothesis using the problem-solving format, which the current state-of-the-art process is analyzed by using tools such
requires that employees fully explore all their improvement as the design structure matrix and the cause and effect matrix,
opportunities with their manager/teacher through a series of in addition to value stream mapping (VSM), for determining
catch-ball discussions. waste, rework (undesired iterations), and other non-value added
activities. Based on findings from the analysis of the current state
Supplier Relationships. The Toyota principle fosters suppliers’ process, we apply lean principles mentioned earlier to create the
and partners’ growth for mutual benefit (Liker, 2004). Toyota future state process. The next section details the approach adopted
ensures that every connection between people is standardized, for the lean PD transformation framework.
direct, and unambiguous. It specifies the form and quantity of
the goodsExhibit
and services
1. A to be provided,
Generic the way Product
Stage-Gate requests are made
Development Lean
ProcessProduct Development
(adapted from Yadav Transformation
et al., 2007) Framework: a
by each customer, and the expected time in which the request Case Study
will be met. It creates a direct supplier-customer relationship In this article, we present a case study of a lean product development
between the individuals who are responsible for providing and project for a moderately large and complex product used in office
receiving a particular good or service. This clarity of how people buildings. This product is developed and manufactured by a U.S.-
connect with Need
one another Designleaves no grayConcept zones in decidingDetail
based company, which is referred to here as ABC Manufacturing.
Testing and
who provides what to whom and when (Sobek et al., 1998). As In Production Marketing
Recognition Specifications Development Design Refinementto protect the identity of the company, further details
order
mentioned in Yadav et al. (2010), for outside suppliers, Toyota of the company and its product are not revealed. The proposed
manages its supplier relationships very tightly. It sets clear and lean PD transformation process utilizes a five-step framework
understandable goals, communicates consistently to suppliers, for transforming a traditional product development process into
and subsequently uses Gatetargets
1 and Gate
prototypes
2 to Gate
enforce
3 these Gate 4 a lean productGate 5 development Gate 6process (see Exhibit 2): 1) problem
goals. These targets play different roles in different supplier definition, 2) analysis of current state PD process, 3) lean strategy
relationships and in determining the nature of relationship. formulation, 4) development of future state or lean PD process,
Toyota maintains different types of relationships with suppliers and 5) implementation of the new PD process.
Problem definition
Implementation and Analysis of the current state

continuous improvement NPD Process
Creation of the future state Formulation of lean process

(Lean) PD Process strategies

While this framework clearly shows similarities with classical through the product development process into the complete
process improvement frameworks, such as the Six Sigma DMAIC engineering of a product to be built by manufacturing (Liker,
approach, Deming’s PDCA-cycle, as well as the five improvement 2004). The Toyota process subsystem can be characterized by the
steps defined by Womack and Jones (2003), the following sections following principles (Morgan and Liker, 2006): 1) development
illustrate how the application of specific tools in each step of of a value-stream map to separate customer–defined value-
the proposed framework is important to support the creation added activities from waste; 2) front-loading of the PD process to
of a lean product development process; therefore, the following minimize expensive engineering change; 3) creation of a leveled
section details each step of the proposed framework. process flow by identifying tasks and dependencies so they can be
scheduled as parallel, sequential, or integrated; 4) standardization
Step I: Problem Definition of processes to increase flexibility and reduce variations; and 5)
A key step in the problem definition phase is to benchmark or set-based concurrent engineering.
identify gaps in the as-is (current state) process as compared with
the best-in-class industry leaders. The benchmarking process was People Subsystem. The people subsystem includes the selection
divided into two phases. The first phase was limited to reviewing and recruitment of engineers and their training and development
internal documents and interviewing stakeholders of the PD in the organization’s leadership style, structure, learning process,
process, including major suppliers. In the second phase focus and other subtle interactions that are critical for success, such
was on learning best practices from the company that is a leader as corporate culture. A measure of the strength of the culture is
in lean PD. Following is a brief description of both internal and the degree to which these interactions are truly shared across all
external benchmarking studies. members of the NPD organization. Toyota has a very strong lean
culture compared with most companies (Liker, 2004). Toyota
Benchmarking of Internal Process of ABC Manufacturing. In develops a chief engineer role to lead product development
2006, the senior management of ABC Manufacturing challenged efforts, and its PD teams are composed of cross-functional
its product development organization to reduce their time- experts, including suppliers (Oppenheim, 2004). The other key
to-market cycle time by 50% for the next development cycle. characteristics of people subsystems are: 1) cross-functional
With the help of their Lean Six Sigma colleagues, the NPD team integration, 2) higher-level technical competence in all engineers,
identified methods to reduce cycle times by implementing lean 3) building on learning and continuous improvement, and 4)
methods. The current PD process was highly disintegrated and full integration of suppliers into the PD process (Morgan and
poorly coordinated, causing long waiting times. Although good Liker, 2006). Supervisors and higher-level managers significantly
processes were in place, they were not standardized; therefore influence the learning and problem-solving skills of the people
creating an imbalance in the workflow, and ultimately, tremendous system by playing the role of coaches and mentors.
waste. The senior leadership tasked the NPD organization with
the following expected deliverables: Tool Subsystem. Tools and technology are embedded into a
• create value-stream map of the current process and identify scientific approach to bring a vehicle into being. This subsystem
value-added versus non-value-added activities not only includes CAD systems, machine technology and
• consider all past projects for compatibility to the VSM findings digital manufacturing, and testing technologies, but the tools
• develop a future-state VSM by eliminating non value added that support the efforts of people involved in the development
activities project, whether for problem solving, learning, or standardizing
• provide rationale as to how and why these activities are “non- best practices and values (Liker and Morgan, 2006). The idea is to
value adding” embed the scientific problem-solving approach into tools and into
• determine what must change in the process, methods, or the process itself. While Toyota uses only reliable and thoroughly
organization, etc. tested technology, it is still a believer of the old-fashioned
• establish cycle time bands, current and target method of visual control tools (e.g., boards). The company uses
• develop a project and change management plan by identifying technology to enhance visuals controls but not to replace them
sponsor, team, key elements and timeline (Liker 2004). Toyota has successfully embedded appropriate tools
and techniques into its scientific problem-solving approach to
Benchmarking of Best-in-Class PD Process. Considering Toyota develop an integrated problem solving approach.
being the industry leader in lean product development, this Based on the benchmarking studies, the following
section presents the findings of studies on Toyota. The major objectives were set for improving the current PD process of ABC
sources of this benchmarking were published literature (Ward Manufacturing:
et al., 1998; Sobeck et al., 1998; Liker, 2004; Morgan, 2005) and • reduction of the product development cycle time by 50%
interviews with researchers of the Toyota Product Development • improving electronic product development capability
System (TPDS). TPDS is the result of an evolutionary process for • increasing the number of ideas with high market share
improving the company’s PD process via continuous learning and and payback potential by driving “big win” innovation and
improvement. There are three primary subsystems within the understanding market needs
TPDS that form a complex socio-technical product development • increasing the number of products launched per year
system and are worth mentioning here. • improving the quality of new product launches by reducing
the number of defects and overall warranty
Process Subsystem. The process subsystem contains all tasks and • developing system standards and process enablers
the sequence of tasks required to bring the product from concept
to the start of the production, that is, information, customer Step II: Analysis of the Current State PD Process
needs, past product characteristics, competitive product data, The current process was analyzed using tools such as VSM,
engineering principles, and other inputs that are transformed the cause-and-effect matrix, and DSM. The VSM was mainly

employed for identifying the non-value-added activities (NVAs), The as-is process steps shown on the activity logs were transferred
such as reworks and waiting. Once NVAs were identified, the into VSM icons as shown in Exhibit 4.
DSM in the next stage was created to facilitate understanding of
the nature and the root causes of those NVAs. In addition, we also Major Instances of Waste. Our analyses on the current state of the
used the cause-and-effect matrix to prioritize the root causes by VSM for the project under study showed several opportunities for
determining the significance level of an activity with respect to cycle time reduction by eliminating the NVA activities. For example,
its impact on PD process performance. The following paragraphs there were six instances that caused major delays in the process:
describe how these tools were applied to improve the current • no business case process (30 weeks),
ABC PD process. • incomplete VOC data (19 weeks),
VSM is a proven technique for displaying processes and • non-standard tolerance stack methods (12 weeks),
information flows during the product development process and • inaccurate cost modeling (15 weeks),
for identifying waste in the system. It is a powerful analytical tool • supplier pricing quoted from models (6 weeks), and
for reducing waste and synchronizing activities in manufacturing • resource changes (5 weeks).
and product development. Before mapping the current value
stream of any process, we define the “value” of activities based Using DSM to Analyze the Rework. In the NPD processes,
on process objectives and the role of each activity in satisfying information exchange, which involved feedback and iteration
customer requirements. Thus, any unintended additional design of activities, is the lifeblood of experimentation and innovation.
or engineering work that would not add any value to the customer Excessive iteration or continual back-and-forth of work, however,
(either internal or external) was considered as waste. unnecessarily consumes time and resources. Additionally, the
For data collection, several face-to-face workshops were increasing pressure of global competition is forcing organizations to
conducted with the corresponding engineering and marketing manage PD processes more effectively and eliminate the necessity
teams. Based on these workshops and project data, an engineering of iterations or rework, if possible, to save time and resources. The
activity log was created, as shown in Exhibit 3. The activity careful analysis of existing PD processes indicates that an iterative
log captured the list of activities occurring during product process may turn out to be marginally beneficial or even wasteful;
development; that is, after the project scope was defined based on therefore, to understand the necessity of rework and to map the
market potential through the program close or product launch. current PD process, we propose to use a DSM. Since a DSM
The activities in Exhibit 3 are listed in a chronological order. (Eppinger, 2001) focuses on the representation of information flow
Further, two types of timing are documented in the activity log: in a project rather than work flow, it will clearly reveal information
total time spent on an activity and the corresponding cycle time exchanges involving design driven iteration and those that do not.
reduction opportunities. The time spent is defined as the duration Depending on the information flow requirements, it further helps
of time between receipt of information and delivery of the design classify the tasks into three different categories:
to the next level of customer. The difference (time spent in the • sequential tasks: tasks which rely on information generated
system less actual activity time) highlights the opportunity for by earlier tasks;
reduction of time for that activity. Although one could have • parallel tasks: tasks that can be carried out simultaneously, as
directly created a value-stream map without creating an activity there is no information exchange between them; and,
log, we propose to have both, because the activity log on a separate • coupled tasks: interdependent tasks that share information
spreadsheet allows 3.
Exhibit usAtoSample
construct theofDSM
List for further analysis.
the Engineering Activity Log and among
Cycleeach
Timeother (require iterations).
Reduction Opportunities for
Project 1
Exhibit 3. A Sample List of the Engineering Activity Log and Cycle Time Reduction Opportunities for Project 1

Exhibit
Exhibit 4.
4. Current
Current State
StateVSM
VSMfor
forthe
theDevelopment
Development of
of aa New
New Large
Largeand
andComplex
ComplexPD
PDProject
Project(Product
(Product1)
1)
Further, DSM is a tool proven to optimize information In order to streamline the PD process and reduce development3
flow by rearranging the sequence of tasks. By doing so, we can time, we redesigned the PD process by eliminating tasks, added
minimize iterations, plan concurrent activities for interdependent new tasks, and/or combined tasks, as shown in the DSM-After
tasks, and reduce information exchanges by either transferring (see Exhibit 5b). We added few tasks in the beginning to ensure
key knowledge between teams, or by adding one or more new effective mapping of customer and business requirements while
tasks. In this article, we used DSM to first map the current PD generating new concepts in an effort to avoid later design changes
process (see Exhibit 5a), which allowed us to gain insights about and iterations. Although we still expect some iteration between
existing tasks, including their sequence, and number of iterations design validation and testing and the concept of the design
being performed. Based on that knowledge, we were able to phase, the frequency and intensity of rework will be very low.
distinguish essential iterations from non-value added ones. For The first two tasks, determine customer requirements and identify
example, DSM-Before in Exhibit 5a shows the very first task, business case, are parallel tasks with no mutual information
define project scope, does not feed any (useful) information to exchange, and, therefore, can be carried out simultaneously.
succeeding tasks. Moreover, defining project scope before even Additionally, supplier selection and integration and determine
carefully identifying customer and market requirements is not product specifications are coupled tasks, sharing information, and
a useful exercise. During our discussion with the design team, thus we recommend that they be performed concurrently in close
therefore, we agreed that this redundant task can be eliminated. collaboration to avoid any design changes later, saving time and
We also discovered several iterations – X marks above the diagonal effort. We have added another task, program execution plan, and
represent iterations – among concept design, design verification, combined it with define marketing plan as a major gate to ensure
testing tasks, and few other tasks as shown in the DSM-Before. that all previous tasks have been performed effectively and that
The main causes of these iterations were insufficient identification selected design concept(s) possess all required characteristics
of customer requirements and lack of alignment in customer and before undertaking last three major tasks. Furthermore, this
business requirements while developing new concepts. In the effort has also helped us in planning and scheduling of tasks and
current PD process, this deficiency gets exposed at later stages in assigning the key knowledge (expert) between teams to reduce
during the design verification and testing phase only when necessity of information exchange. For further understanding
designs fail to fulfill functional requirements. The impact of these and application of DSM, readers are advised to refer to Eppinger
iterations was that few people worked carefully on capturing (2001). It is important to note that integration of the DSM into
customer requirements in the early stage because everyone knew the lean PD transformation framework supports the principle (c)
that extensive rework would occur down the line. of the process subsystem discussed in section above.

Exhibit 5a: DSM Showing the Dependency Among the Activities – DSM Before (As-Is)
Exhibit 5a. DSM Showing the Dependency Among the Activities – DSM Before (As-Is)
Exhibit 5a: DSM Showing the Dependency Among the Activities – DSM Before (As-Is)
Requirement
PlanningPlanning
& Testing
Requirement
Testing Testing
Req. Req.
Design Manufacturing
Customer
Spec. Spec.
project Scope
& Testing
Concepts
NPD project
Design Verification
Define Marketing
Select Concepts
Early Prototype
Define product
Design Manufacturing
Customer
Define Scope
Concepts
project
Design Verification
Determine
Define Marketing
Generate
Select Concepts
Early Prototype
Define product
Define project
Justify
Justify NPD
Determine
Generate
Define project Scope
Determine Customer Requirement X X X X
Define project
Generate Scope
Concepts X X X X
Determine
Select Customer Requirement
Concepts X X XX X X X XX XX
Generate
Justify NPDConcepts
project X X X X X XX XX
Select Marketing
Define Concepts Requirements X X X XX XX X X X
Justify product
Define NPD project
Specifications X X XX X X XX XX XX
Define Manufacturing
Design Marketing Requirements
Planning XX XX XX
Define product Specifications
Early Prototype Testing X X X X X XX X X
DesignVerification
Design Manufacturing Planning
& Testing X X X X
Early Prototype Testing X X
Design Verification & Testing X
Exhibit 5a: DSM Showing the Dependency Among the Activities – DSM after (To-Be)
Exhibit 5b. DSM Showing the Dependency Among the Activities – DSM after (To-Be)
Exhibit 5a: DSM Showing the Dependency Among the Activities – DSM after (To-Be)
Plan)Mktg Plan)
(QFD mapping)
Requirements
and Integration
(QFD mapping)
(Define
Business Requirements
and Testing
PlanMktg
(QFD mapping)
Product Specs.
Requirements
Plan
Integration
mapping)
Plan (Define
IdentifyRequirements
CustomerCustomer
and Testing
Advance production
Concept Generation
Program Execution
Design Verification
Concept Selection
Selection
Planning
Product Specs.
Plan
Detailed Design
Project(QFD
Supplier and
DetermineDetermine
DetermineDetermine
Advance production
Concept Generation
Program Execution
Design Verification
Concept Selection
Supplier Selection
Identify Business
Project Planning
Detailed Design
Determine Customer Requirements X X X

Identify Business Requirements X
Project Planning
Determine & Business
Customer Case(QFD mapping)
Requirements X X X X X
Concept
Identify Generation (QFD mapping)
Business Requirements X X X X X X
Concept Selection& Business Case(QFD mapping)
Project Planning XX XX X X X X
Supplier
ConceptSelection and
Generation Integration
(QFD mapping) X X XX X X X X X
Determine Product Specs.
Concept Selection XX X X X X X XX XX
Program
Supplier Selection Plan
Execution (Define Mktg Plan)
and Integration X XX X X X
Advance
Determineproduction Plan
Product Specs. X XX X X X X X
Detailed Design
Program Execution Plan (Define Mktg Plan) X X X X X
Design
AdvanceVerification
production and Testing
Plan X XX XX X
Detailed Design X X X
Design Verification and Testing X X X
Causes of Waste. Based on analysis of the various instances of standard procedures, and NPD capabilities. We used a cause and
waste and the relationship among the activities identified through effect matrix for identifying causes of longer NPD process lead
the DSM, the sources of waste were characterized as being due times and their effect on the overall PD cycle time. A cause and
to either waiting or rework. Waiting times were primarily due effect matrix is a Six Sigma process improvement tool that helps
to the need for resources and information, whereas the reworks identifying activities responsible for generating non-value added
were mainly caused by lack of appropriate business processes, activities. Causes for delay in the PD process were found to be poor

alignment of priorities, poor decision making with incomplete Formulation of Lean Strategies to Optimize the NPD Process. To
information, and lack of accountability (see Exhibit 6). eliminate the cycle time waste out of the NPD process, some basic
The causes of waste were then prioritized for the PD process concepts of lean philosophy were employed in the case study
improvement based on their importance to the customers. The presented here. These included minimizing stages, single piece
cause and effect matrix in Exhibit 6 prioritizes root causes at a flow, takt time-based scheduling, dedication, and continuous
higher level of the PD process; however, similar matrices can be flow driven by a customer pull system. The new optimized
developed at each stage of the PD process to prioritize the root process eliminated many intermediate non-value-added stages in
causes of the problem. the project definition and concept generation phase by creating
a business cell – the same concept as U-shaped cells in lean
Step III: Optimization of the New Product Development Process manufacturing – in which quality function deployment was
to Reduce the Cycle Time applied to capture the voice of customer (VOC) to generate a
The optimization phase deals with the creation of the future- new design concept along with the business case. The business
state value-stream map by eliminating waste as much as possible. cell consisted of dedicated associates with multiple skills. The
From the current state VSM, it was revealed that out of 166 weeks formulation of a standard business process for capturing the
between Month 1-Year 1 and Month 1- Year 3, only 27% of time VOC and generating design concepts resulted in reducing
was spent on value-added activities; the rest was spent on some iterations between design testing and concept design tasks of the
form of muda, a Japanese term for non-value added activities. The PD process to avoid rework.
remaining 73% (or 121 weeks) wasted time comprises 33% (55 Further, a design flow stream was created by employing the
weeks) for waiting, 28% (46 weeks) for rework, and the rest 12% concept of single-piece flow to eliminate waiting time (Sarkar,
(20 weeks) can be assigned to other non-value added activities as 2008). The single-piece flow results in reduction in lead times,
defined in the lean principles. While creating a future state NPD proper load distribution among process associates, and faster
process for the given project, the following five strategic areas detection of problems; however, FIFO due dates were assigned
were targeted for improvement: where the single-piece flow model was not achievable due to
1. product portfolio management: idea to project kick-off practical circumstances. The pace of the PD process was modified
(roadmaps, MRD, VOC, and business case) based on the takt time, and Heijunka (Liker and Morgan, 2006)
2. design and development hand-offs: project start to close-out boxes were used to visually display and level work schedules.
(design, test, source, process, and launch) While determining the number of associates for each task, the
3. supply chain management: idea to project close-out (sourcing complexity of the task was considered so that a balanced work
strategy, supplier selection, supplier development, tooling) flow could be created and maintained. The iteration requirement
4. resource and overall NPD process: idea to close-out (manage/ between coupled tasks (or teams), identified by activity mapping
maintain the overall process and resources management) in the DSM, was another critical consideration while assigning
5. NPD systems: tools to automate process and manage data the technical expert associates to tasks (or teams). Finally, at each
Exhibit 6. Cause and Effect Matrix at the Higher Level of the PD Process
Exhibit 6. Cause and Effect Matrix at the Higher Level of the PD Process
Rating of Importance to Customers 9 3 1
Effects Inadequate Inadequate Non Total

Direction Resourcing / Standard
Communication Process
Poor Alignment of Priorities in Business 9 1
NA 82
Concept Generated/Selected at Phase 0 9 3 NA
90
Engineering Picked Final Concept Prior to MRD or 9 1 3
Prod Spec Being Written 87
Started without Full team 1 9 3 39
Poor Collaboration between Functional Groups 1 9 1 37
Lack of Accountability 1 9 9
Causes
45
Resource Changes (People & Capacity) 1 9 1
37
Big Difference between “Assigned” Resources 1 9 1
and “Dedicated” Resources 37
Lack of / Level of Communication – 9
NA
NA
Stakeholders Not Engaged, Different Expectations 27
NVA Reviews after Fact 9 1
28
Poor Cost Model / Target 3 1 3
33
Started Without Approved Business Case or MRD 1 3
NA
12
No Process to Create a Business Case 3 1 3
33

stage, information (in this case the design of the product) was through an Heijunka box. Supplier selection is done early in
processed (or developed) based on the demand of its immediate the development stage so that suppliers are fully integrated
customer; in other words, to produce what is needed and when is into the system during the PD process itself. Similarly, concept
needed by the customer continuously without any interruption. specification generation and selection, detail design and test,
This phenomenon in lean thinking is known as a pull system. tooling and design verification and testing are all part of a bigger
Exhibit 7 depicts some key terms employed in formation of cell. The cellular workplaces are composed of cross-trained
lean strategies to optimize the NPD process. The output of the developers who can perform multi-functional tasks. Within
optimized DSM provided very useful information in planning each cell, the teamwork is balanced internally by considering
activity sequencing and scheduling. Moreover, the front-loading the task complexity levels. While project designs are processed
of the PD process and assigning technical experts to teams as packages, single project launch dates are determined using a
enabled changing attitudes and beliefs of employees towards the FIFO model. Each task is scheduled using takt time under a pull
previously considered necessity of rework closer to launch dates. system, thereby maintaining the continuous flow. The output of
This built confidence and encouraged the teams to meet necessary the revised DSM was used to determine the sequence of each
requirements as defined in the project plan. task within each cell, as well as at each stage of the PD process.
Similarly, the iteration requirements between tasks or teams
Lean Management Structure. The NPD organization was were managed by planning those tasks concurrently, adding
redesigned to match the lean management structure. The more tasks/resources, or sharing technical expertise (technical
objective of a lean structure is to ensure alignment, ownership, specialist) to reduce iteration requirement and development time.
teamwork, communications, and visibility across the PD process. For example, the development of standard business processes that
The key notable changes in the process management structure capture VOC and generate design concepts by adding few more
were: standardization of tasks, use of the Heijunka visual board tasks at the front-end (concept generation) stage demonstrates
for leveling the work flow, creation of cross-functional teams how the addition of few tasks can eliminate iterations and avoid
to improve the quality and productivity and enhance flow by necessity of rework.
resolving difficult technical issues (Lovelace et al., 2001; Liker,
2004), instilling a teamwork culture by teaching individuals how Step V: Process Implementation Strategies
to work together as teams towards common goals, and ensuring The process implementation strategies adopted in this case study
that the team leader understands the daily work in detail so can be divided into four strategies as described below.
he or she can be the best teacher of the company culture and
philosophy. The expertise and knowledge of leaders play a crucial First Strategy: Launch Lean Improvement Strategies in Two Phases.
role in mentoring and motivating other team members. The first strategy ABC Manufacturing’s process improvement
team took was to launch the lean improvement strategies in two
Step IV: Future State Value-Stream Map phases. The phase 1 goal was to stabilize and implement “quick
As mentioned earlier, the future-state VSM was developed by win” improvements – in other words, low-hanging fruits. In
employing lean principles. The future-state VSM for the NPD phase 2, the target was to complete 80% of NPD in less than 18
project under study (Exhibit 8) consists of a streamlined NPD months with an average cycle time of 12 months. The primary
process with cellular functional departments. For instance, the improvement strategy was to redesign process and organization by
business case cell is tasked to develop a business case and create applying lean principles. Exhibit 9 provides a comparative analysis
a project plan. The project pipeline plan is visually displayed of current and target performance levels upon the implementation
Exhibit 7. Key Lean Concepts Used in Creation of the Future State VSM
Exhibit 7. Key Lean Concepts Used in Creation of the Future State VSM
Cycle Time - Time from Business Case started to Launch

- Will track projects through closure for seamless transition and quickly free resources
Continuous-Flow - No waiting between tasks

FIFO - First in Fastest Out
Pull & Sequencing - Next project is pulled when resources for the entire project are available
- The order for starting projects is defined by Product Roadmaps
- Active projects are not prioritized, rarely need to expedite, the pipeline is right-sized
- If an urgent “disruptive” project is pushed, other projects are stopped
Core Teams (committed) -Follow each project from start to close, for accountability and minimize handoffs
- Can work on multiple project if they have capacity and projects are sequenced
Cells - Work elements with cycle-time entitlements, a group of resources, tasks & deliverables
- Can be very cross functional and cross trained teams (break down organizational barriers)
- Can be dedicated to a cell (for example: expert cells for financial modeling, rapid prototyping)
Scalable - Most process steps, cells and resource will apply to most project
- Project effort and cycle-time will be adjusted based on scaling criteria
Cycle Time - (Launch date) – (BC start date), complexity normalized

- (Finish) – (Start date), for each cell (work element)
NPD Capacity -Sum of projects completed for a given time period (complexity normalized)
NPD Efficiency -(Projects completed) / (Resources consumed)

Exhibit 8. Future State VSM for a Large and Complex PD Project (Product 1)
Exhibit 8. Future State VSM for a Large and Complex PD Project (Product 1)
of lean strategies. It shows a 32% reduction in cycle time in the first multiple skills and the use a new process equipped with lean tools
phase. Further, it was expected that improvement in the cycle time and techniques. Furthermore, it was assumed that the project
reduction could be gained as much as by 68% by the end of the could be killed at any time if it did not seem to be feasible.
second phase, surpassing the original improvement target of 50%.
Several improvement projects were identified, and their Third Strategy: Focus on Project Management. The third strategy
relative impacts on cycle-time reduction were assessed. Of nine for ABC Manufacturing was to focus on the project management
improvement projects identified, five were planned in phase 1 aspect of the NPD process, especially related to human resources.
and four in phase 2 (see Exhibit 10). Phase 1 activities planned for The lean strategy formulation team suggested assigning more
the first year include: 1) developing and implementing a cross- full-time project managers, to be overseen by a senior project
functional NPD capacity-management system, 2) creating a manager. The NPD project organization had resembled a matrix
robust front-end process, 3) supplier integration and development, structure and followed a program management process. Another
4) improving process design hand-offs, and 5) improving the recommendation was to make the project manager assignment
project management skills set. Other improvement projects were at least a two-year commitment to minimize or eliminate delay-
targeted for phase 2 or within two years. In Exhibit 10, the names causing hand-offs. The current and proposed resource allocations
of the project lead have been removed to protect the identity of for the program management organization (PMO) and functional
the people and the company. organizations are shown in Exhibit 11.
Second Strategy: Improve the Front-End Process Through Early Fourth Strategy: Improve the Front-End Process with Improved
Stakeholder Involvement. The idea here is to front-load the tasks Pipeline Management. This process was jointly managed by R&D
by initially involving all the stakeholders as much as possible to and market research teams which were both part of NPD and
minimize waiting and rework due to lack of information. Two Marketing; however, in the new lean process the headcount was
examples of front loading are worth mentioning here. First, NPD reduced compared to the current process. What is important to
idea screening and a road map for new product development note here is the significant reduction in “new idea-to-product
projects were created in less than two weeks even before the map” time as a result of an improved front end process. The cross-
actual NPD project clock started ticking. Early accomplishment functional team charged with responsibility considers several
of these projects was possible due to maintenance of a product- factors such as technology, competitive activities, customer
improvement pipeline through R&D efforts outside the NPD inputs, current product performance, and market trend to
organization. This effort required re-invigorating the R&D evaluate the new ideas. This pipeline based strategy allows the
function, which had been sidelined over the course of several cross-functional team managed by R&D and marketing to kill
reorganizations. Second, the NPD business case with marketing or re-prioritize pipeline projects at any time based on potential
requirements was approved in less than 1 to 3 months (depending economic value of new ideas entering the pipeline.
upon the project size) after the NPD project was started but prior
to the start of the actual PD process. It is also important to note Key Improvement Areas and Lessons Learned
the assumptions behind this front-end process improvement Based on the findings of the analysis of the current PD process,
plan, which include the creation of a cross-functional team with ABC Corporation decided to focus on five key improvement areas

Exhibit 9. Current Versus Future Target Performance Levels
Exhibit 10. Phase Wise Plan of Process Improvements Projects

Exhibit 10. Phase Wise Plan of Process Improvements Projects
Relative 2006 2006 2007 2007 2007 Improvement

Project Impact Q3 Q4 Q1 Q2 Q3 Area
Develop and Implement a Cross-functional NPD
High Wait, Rework
Capacity Management System
Develop and implement a robust front-end
High Wait, Rework
process
Improve Supplier NPD development system,
including Supplier qualification, relationships and Medium Wait
joint accountability.
Improve implementation process (Design hands
Medium Wait, Rework
off to Production)
Wait, Rework,
Improve Program/Project Management Skill Set Meduim
NVA
Integrate a common product lifecycle Wait, Rework,
High
management system NVA
Develop Standardized NPD methodologies High Rework
Create a system for continuously generating Wait, Rework,

Medium
information for design development execution NVA
Improve test and simulation capability Medium NVA
20% 50% 58% 61% 68%

Speed Impact %
Phase 1 Projects Phase 2 Projects

Exhibit 11. Recommended Change in HR Allocations to Improve the NPD Process
Exhibit 11. Recommended Change in HR Allocations to Improve the NPD Process
Current State Proposed

PMO Functional PMO Functional Benefit
FTE 4 8 5 8 No significant resource growth
Full Time 4 2 6* 6 Competency development

Part Time 2 18 2 10 Less conflict in assignments
total 6 20 8 16 Long-term reduction of resources
* Includes 1 PM to lead the NPD process improvement program
in order to eliminate the cycle-time waste. The current and future has improved as a result of shorter lead time, higher quality,
improvement efforts in those target areas are clearly prioritized and lower costs. It is important to note here that to achieve 50%
and presented in Exhibit 12. reduction after the quick wins of 32% reduction, additional time
The five improvement areas included product portfolio and resources are required to:
management, design process, supply chain management, • implement a robust front-end process for idea generation
resource management, and NPD systems. As shown in Exhibit (three R&D full-time personnel for 12 months)
12, the portfolio management target for phase one has already • improve the supplier NPD development system, including
been achieved, while other improvements have been identified supplier qualification, relationships and joint accountability
as top priority. As mentioned earlier, the phase one target was (two supplier development engineers for 12 months), and
to reduce cycle time by 35%, and that of phase 2, by over 50%. • achieve world-class managed NPD organization
Overall, because of the new lean NPD process, information transformation by using the PD lean transformation road
flow has improved significantly and the customer satisfaction map (Exhibit 13).
Exhibit 12. Prioritized Improvements for Cycle Time Reduction
Exhibit 12. Prioritized Improvements for Cycle Time Reduction
Current and Phase-1 (35% faster) Future (>50% faster)

• Global Front-End process deployed (Idea to • Full-lean front-end process, fast voice of customer,
Business Case) Business Case
– Voice of customer, business case, market • Product roadmaps clearly defines start sequences
Portfolio
requirements document – Early/accurate view resource demands/capacity

• Roadmaps and quality function deployment initiated • Stop prioritizing active project pipeline is fast/right-
• Std financial models, less approval iterations sized
• Manual inventory of all NPD projects • Complete/current NPD portfolio (Schedule, budget,
Results)
• Sector wide design standards, eliminate rework • Advanced design simulation, reduced design -test
Design/Dev.
• Advanced test and plans, learn early, less re-testing iterations

• Eliminate waiting, automate information routing • Greatly accelerated test methods
• Earlier supplier collaboration, less re-design • Fully populated design data
• Develop an NPD capable supply base • Develop highly-accelerated tooling methods/suppliers

Supply Chain
• Identify suppliers/processes for much faster tooling • Transition to a pull partnership with suppliers
– Challenge us on speed
– Active collaboration (concept, design, value)
– Provide new process/technology/cost ideas
• Initial resource mgmt. estimating and control • Fully-lean scalable global NPD process, with regular
Resource, NPD
processes improvements deployed in weeks not months

• Over-arching NPD process-team coordinates speed • Expanded skill (depth, breadth and capacity) across
improvements, metrics, training & communication all NPD core-team functions
• Complete/accurate resource plans and tracking
• Manual process automated where possible • Product Data Management system, single source of
product data for all teams and mgmt.
Systems
• Global project/portfolio management system, all

project types, total resources/financials, information
technology system interfaced

Exhibit
Exhibit 13.
13. Prioritized
NPD LeanImprovements
TransformationforRoadmap
Cycle Time Reduction
Behaviors Metrics
World  NPD is resetting its expectations of the benchmark performance  75% or greater VA activity in NPD process
Class  A proven, robust NPD process is stable and performing at  Achieved 68% shift in NPD project cycle time mean
benchmark levels, including project identification and technology  Average NPD project cycle time is ≤12 months
LEADING
research  ≥80% of NPD projects complete in ≤ 18 months
World Class
 Performance is validated by continuous real-time flow of customer  New cross functional business scorecard evaluates NPD performance
Performance
and supply-chain feedback and metrics against world-class product development performance
 NPD process control plan performance is consistently on target or
improving toward new targets
Phase 3  NPD improvements are leveraged to improve performance in other  62%–67% Value added activity in NPD Process
functional groups  Monthly tally of % improvement in functional or sector processes
SUCCEEDING  NPD processes and practices are adopted by other NPD groups leveraged from NPD process best practices
Extend the  Best practices from other sectors' NPD groups are leveraged and  Monthly tally of % improvement to NPD process leveraged from other
Value Stream adopted sector or functional best practices
 Suppliers are actively engaged in improving the value stream that  Supplier balanced scorecard targets benchmark performance, 80% in
is NPD range or better
Phase 2  NPD scorecard is compared to world-class benchmarks  48%–53% Value added activity in NPD process
 Standard operating procedures used globally  Achieved 50% improvement in NPD project cycle time
 Design for Six Sigma culture is rooted and growing  Cross functional Balanced Scorecard goals are based on benchmark
IMPROVING
 Engineers identify and propose improvement projects/initiatives performance, not %improvement goals; For example, 75% Value added
Continuous
 Stable ratio of proposed improvement projects to active process
Improvement
improvement projects  % utilization of procedures on projects globally
 Number of improvement projects proposed per engineer

 Control chart of projects in execution over projects proposed
Phase 1  Engineering has identified and recognizes waste in the NPD  35%–40% value added activity in NPD process
process  Estimated % value added in process, updated and reported as
 A business cross functional scorecard and metrics for NPD is improvements are implemented; target 75% value added activity
established and progress is communicated monthly in staff  Cross functional Balanced Scorecard updated and reported monthly
BEGINNING
meetings  Target 68% improvement in mean and 122% improvement in
Achieve
 Performance improvement targets are set and communicated consistency (average cycle time = 12 months, 80% complete in less
Stability
 A project road map to improve performance and eliminate waste is than 18)
established and communicated  % complete and on schedule for training and execution
 Training for engineers to engage them in improvement efforts  Balanced Scorecard is 80% in range and process performance is on
 Performance improvement targets achieved target
Current  Sector global design centers do not use common NPD procedures  Average Project Cycle time is 18 months
State and do not share common systems  Best performance is 6–7 months ; Worst performance is 27.5 months
Ground  Best practices are a checklist driven NPD process  Estimated waste in projects is 72%-78%;  22%-28% is value-added
Zero  Phase gate governed process activity
 Cross functional NPD project teams, though alignment of  Perception/expectation of world class is 75% value- added activity
priorities and commitment is variable
Furthermore, from a management point of view, a few Conclusions and Implications for Engineering Managers
other things can be noted. Rework and delays were the leading This article has presented a reflective case study of a real world,
contributors of NVA activities for this case study, which reinforces lean PD transformation process for moderately complex products
the findings of the existing literature (Womack and Jones, 2003; used in office buildings. In this project, the classical lean framework
Reinertsen, 2009). On the other hand, the root cause for rework (Womack and Jones, 2003) was modified by integrating Six Sigma
and delays was the poor information quality that was due to a lack and project management tools such as the cause and effect matrix
of appropriate business processes, standard procedures, and NPD and the DSM. The DSM allowed us to understand the underlying
capabilities. The DSM and the cause and effect matrix allowed us complexity of the PD process by identifying the dependency
to identify and prioritize these root causes of rework and delays among the design activities. By doing so, it was possible to identify
and prioritize them. Furthermore, sometimes it was hard to wasteful iterations, determine their root causes, and subsequently
implement “one piece flow” as suggested in the above-mentioned optimize scheduling of design activities. Similarly, a cause and
lean PD literature because of practical circumstances. In that effect matrix has been used to prioritize the causes of rework and
case, FIFO due dates were assigned to manage the sequence of delays. This would not have been possible with a traditional VSM
the activities. Finally, the proposed LPD framework was also only. Among the two NPD projects in which the proposed LPD
applied successfully to a second relatively small and simple NPD transformation framework was implemented, the first case study
project: incremental development of a product used in homes. was on a moderately large and complex NPD project whereas the
Six instances caused “waste” in the NPD process of this project: second case example was from a relatively small project. To meet
delays in the business case development (13 weeks), business the objective of reducing the PD cycle time by 50% for the larger
case approval (6 weeks), first article process (26 weeks), lack of project, the improvement targets were planned in two phases. For
standard (4 weeks), and unavailability of exploded BOM data (3 the larger project, a 32% reduction in cycle time was achieved in
weeks). The main objective of this exercise was to demonstrate the the first phase itself, which indicated that there could potentially
scalability of the proposed framework. It should be noted though, be a 68% reduction in NPD cycle time upon completion of the
that some of the proposed tools like DSM and CE matrix may not second phase.
be cost effective in relatively simpler projects which involve fewer Some additional managerial implications can be drawn
activities and/or more obvious iterations. from the case study. Although the PD situation is different from

that of manufacturing, it is possible to use lean manufacturing Eppinger, Stephen D., “Innovation at the Speed of Information,”
tools and techniques in the PD environment. In particular, Harvard Business Review 79:1 (2001), pp. 149-158.
value stream mapping, level loading, visual Heijunka boxes, Ford, David N., and Durward K. Sobek, “Adapting Real Options to
simple and specified pathways, coordination and effective team New Product Development By Modeling the Second Toyota
work, and early involvement of suppliers are also important to Paradox,” IEEE Transactions on Engineering Management,
the PD process. The findings of this study suggested that the 52: 2 (2005), pp. 175-185.
largest contributor to non-value-added activities was waiting Forker, L.B., “Factors Affecting Supplier Quality Performance,”
(delays) for information. The second biggest factor to NVA was Journal of Operations Management, 15:4 (1997),
rework, which was in most part contributed by poor quality of pp. 243-269.
information. Unlike in manufacturing, PD activities are generally Gautam, Naveen, Ratna B. Chinnam, and Nanua Singh, “Design
not identical among different products; therefore, single unit Reuse Framework: a Perspective for Lean Development,”
flow is not an issue. However, a tendency to wait until obtaining International Journal of Product Development, 4:5 (2007),
information on multiple activities before passing it on to the next pp. 485-507.
level can create a “batching” situation and therefore increase Griffin, Abbie, and John R. Hauser, “Integrating R&D and
delays (Reinertsen, 2009). Like findings of many other studies in Marketing: A Review and Analysis of the Literature,” Journal
the past (Morgan, 2002), our study also suggested that frequent of Product Innovation Management, 13:3 (1996), pp. 191-215.
hands-off and simultaneously working on multiple projects could Handfield, Robert B., and Benn Lawson, “Integrating Suppliers
cause the delay; however, it should be noted that working on into New Product Development,” Research-Technology
multiple projects is not necessarily a cause of waste. On the other Management, Sept.-Oct. (2007), pp. 44-50.
hand, frequent hands-offs were undoubtedly a cause for rework Hobday, Michael, Andrew Davies, and Andrea Prencipe, “System
and delay. Integration: A Core Capability of the Modern Corporation,”

While this article has presented an integrated framework Industrial and Corporate Change, 14:6 (2005), pp. 1109-1143.
for enhancing the capability of product development process Holmes, Maurice F., and Campbell, R.B., “Product Development
in terms of identifying and eliminating waste by combining Process: Three Vectors of Improvement,” Research Technology
LPD tools with the DSM and the C&E matrices, we believe that Management, July-August (2004).
the proposed LPD transformation framework can be further Kamath, Rajan R., and Jeffery K., Liker, “A Second Look at
enhanced. Some directions for future work include formulating Japanese Product Development,” Harvard Business Review,
strategies and standard operating procedures to incorporate the Nov-Dec. (1994), pp. 154-170.
design reuse (Gautam et al., 2007) for developing a lean and agile Karlsson, Christer, and Par Ahlstrom, “Assessing Changes Towards
PD framework. Lean Production,” International Journal of Operations &
Production Management, 16:2 (1996), pp. 24-41.
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Improvements, ASQ Publication (2008). Dr. Bimal P. Nepal is an assistant professor of industrial
Shingo, Shigeo, A Study of the Toyota Production System from an distribution in the Dwight Look College of Engineering at
Industrial Engineering Viewpoint, Productivity Press (1989). Texas A & M University. His research areas include reliability,
Summers, Gary J., and Christopher M. Scherpereel, “Decision supply chain management, and new product development.
Making in Product Development: Are You Outside- He has authored over fifty research articles in these areas.
in or Inside-out?” Management Decision, 46:9 (2008), Bimal has worked on several R&D projects with a number of
pp. 1299-1322. automotive companies in the US.
Smith, Preston G., “Book Reviews: Lean Product and Process Dr. Om Prakash Yadav is an associate professor in the
Development,” The Journal of Product Innovation industrial and manufacturing engineering department at
Management, 25 (2008), pp. 404-411. North Dakota State University. He has over 25 years of
Sobek, Durward K., Jeffery K Liker, and Allen C. Ward, “Another teaching, research, industry, and consulting experience in
Look at How Toyota Integrates Product Development,” India and the US. He has published over 30 research papers
Harvard Business Review, (July-August, 1998). in the area of quality, reliability, product development,
Sobek, Durward K., Allen C. Ward, and Jeffery K. Liker, “Toyota’s and operations management. His research interests are
Principles of Set-Based Concurrent Engineering,” Sloan focused around product development, reliability and quality
Management Review, Winter (1999). engineering, concurrent engineering, and manufacturing
Spear, Steven, and Kent Bowen, “Decoding the DNA of the Toyota systems engineering.
Production System,” Harvard Business Review, (Sept.-Oct. Rajesh Solanki is Corporate Director for Continuous
1999), pp. 99-106. Improvement with RTI International Metals at their corporate
Teresko, John, “Toyota’s Real Sec,” Industry Week, February headquarters in Pittsburgh. He received his BS in Mechanical
(2007), pp. 36-42. Engineering from MS University of Baroda, and completed his
Thomke, Stefan H., Managing Product and Service Development: MS in computer integrated mechanical systems from Temple
Text and Cases, McGraw-Hill/Irwin (2007). University. He has over 30 years of teaching, research, industry,
Thomke, Stefan H., “Capturing the Real Value of Innovation and consulting experience. His professional interests center
Tools,” MIT Sloan Management Review, 47:2 (2006), around operational excellence, lean six sigma deployment,
pp. 24-32. lean product development processes, and manufacturing
Thomke, Stefan H., and Takahiro Fujimoto, “The Effect of systems innovation.
‘Front-Loading’ Problem Solving on Product Development Contact: Dr. Bimal Nepal, College of Engineering,
Performance,” Journal of Product Innovation Management, Texas A&M University, College Station, TX 77843; phone:
17:2 (2000), pp. 128-42. 979-845-2230; nepal@tamu.edu

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Engineering Management Journal

ISSN: 1042-9247 (Print) 2377-0643 (Online) Journal homepage: http://www.tandfonline.com/loi/uemj20

Improving the NPD Process by Applying Lean

Bimal P. Nepal, Om Prakash Yadav & Rajesh Solanki

To link to this article: http://dx.doi.org/10.1080/10429247.2011.11431910

Published online: 20 Apr 2015.

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Engineering Management Journal Vol. 23 No. 3 September 2011 65

Need Design Concept Detail Testing and

Gate 1 Gate 2 Gate 3 Gate 4 Gate 5 Gate 6

Exhibit 2. Proposed Lean Product Development Transformation Framework

Engineering Management Journal Vol. 23 No. 3 September 2011 67

68 Engineering Management Journal Vol. 23 No. 3 September 2011

Implementation and Analysis of the current state

Creation of the future state Formulation of lean process

Engineering Management Journal Vol. 23 No. 3 September 2011 69

70 Engineering Management Journal Vol. 23 No. 3 September 2011

Engineering Management Journal Vol. 23 No. 3 September 2011 71

72 Engineering Management Journal Vol. 23 No. 3 September 2011

Determine Customer Requirements X X X

Engineering Management Journal Vol. 23 No. 3 September 2011 73

Effects Inadequate Inadequate Non Total

74 Engineering Management Journal Vol. 23 No. 3 September 2011

Cycle Time - Time from Business Case started to Launch

Continuous-Flow - No waiting between tasks

Cycle Time - (Launch date) – (BC start date), complexity normalized

Engineering Management Journal Vol. 23 No. 3 September 2011 75

76 Engineering Management Journal Vol. 23 No. 3 September 2011

Exhibit 10. Phase Wise Plan of Process Improvements Projects

Relative 2006 2006 2007 2007 2007 Improvement

Develop Standardized NPD methodologies High Rework

Create a system for continuously generating Wait, Rework,

Improve test and simulation capability Medium NVA

20% 50% 58% 61% 68%

Phase 1 Projects Phase 2 Projects

Engineering Management Journal Vol. 23 No. 3 September 2011 77

Current State Proposed

Full Time 4 2 6* 6 Competency development

* Includes 1 PM to lead the NPD process improvement program

Current and Phase-1 (35% faster) Future (>50% faster)

requirements document – Early/accurate view resource demands/capacity

• Advanced test and plans, learn early, less re-testing iterations

• Develop an NPD capable supply base • Develop highly-accelerated tooling methods/suppliers

processes improvements deployed in weeks not months

• Global project/portfolio management system, all

78 Engineering Management Journal Vol. 23 No. 3 September 2011

 Number of improvement projects proposed per engineer

Engineering Management Journal Vol. 23 No. 3 September 2011 79

and delay. Integration: A Core Capability of the Modern Corporation,”

80 Engineering Management Journal Vol. 23 No. 3 September 2011

42:3 (2006), pp. 30-39. Development Process Complexity: A State-of-the Art

Engineering Management Journal Vol. 23 No. 3 September 2011 81

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