Embracing Change in a Customer-Driven World
Michael P. Richardson, Global Engineering Director, Delphi Steering
David A. Prawel, Longview Advisors Inc. (CAD consultant to Delphi)

Change is inevitable.

It is intrinsic to nearly every business process. Indeed, change is intrinsic to innovation itself. As designers and engineers try new ideas and test product improvements, success depends on their ability to make changes not only quickly, but flawlessly.

Some changes are proactive – we want to improve our products; we want to schedule vacation time. Many changes are reactive – a continuous string of "fire fights" caused by changing customer demands or operational problems. Either way, the decisions we make about changes will continue to shape future business success and competitive advantage. The Manufacturer magazine recently completed their World Class Manufacturing Report 2005, in which more than half of respondents said that continuous improvement and rapid response to the changing needs of their customers should be the top attributes of a world class manufacturer.

Customer demands aren’t the only type of change we have to cope with. Business is also changing. In recent years, the lean transformation of manufacturing operations has been well-documented. Global value streams are changing in profound ways as increasing numbers of local operations begin the journey of globalization.

Even with this transformation, studies continue to show that change really is tough business. Consider the topic of “lean.” According to the Lean Enterprise Institute’s (www.lean.org) recent annual State of Lean Report, more than 100 out of 700 senior production executives surveyed at a variety of U.S. manufacturing sites reported widespread implementation of lean initiatives. More than 80 percent say they are following Kaizen practices (continuous improvement), but a significant number have not made as much progress on their initiatives as they had hoped.

Part of the problem is that engineering also is changing. Forward thinking manufacturers recognize the need to transform their “islands of automation” into global “engineering factories.” Intense focus on making proactive changes in the product development process is driving new collaborative design techniques and technologies. Globally distributed, multi-national design teams labor to identify and implement best practices and standardized methodologies. So what can we do to improve our change management and make continuous improvement a reality?

We need to begin by viewing change in the context of ongoing business and product development. Accepting that change is inevitable, we must, in fact, embrace change and develop expertise in execution. How we embrace change will have profound effects on business. Our approach to processing change orders, implementing design tools and improving various design and engineering processes all have the potential to make or break our manufacturing business. The approach must focus on the customer value, standardized work, and continuous improvement.

One of the biggest challenges with embracing change lies in the way we assess our business. We build processes to manage proactive changes, such as evolving product configurations, but often find ourselves driven by corporate process, rather than by increasing customer value. We tend to manage change by monitoring, reviewing, assessing and reacting. We hold design reviews, business reviews and compounding checks and balances. It’s difficult to find the best balance between too many reviews (reduced efficiency) and too few (diminished effectiveness). A solution may be to base more decisions on your fundamental customer value proposition - those things that deliver the most value to your customer at the least cost. Make sure the critical elements, as measured by various metrics, are well-aligned with real core customer value propositions. After all, the fundamental goal of any change management process should be to improve customer value.

The Toyota Production System (TPS) is a cornerstone of Toyota’s approach to building world class quality into its products. By keeping lead times short and production lines flexible, manufacturers can increase productivity, reduce investment requirements, better utilize equipment and space, and improve quality. None of this would be possible without management’s commitment to promote a culture of continuous improvement - a belief that along with operational efficiency you need to constantly improve your processes and offer innovative products to quickly respond to ever-changing customer requirements and stay ahead of your competition.

It’s not easy. Implementing a change management process based on continuous improvement typically takes many years of training and hard work. One approach that has consistently proven to help is standardization. Some highly-respected industry leaders claim that it’s impossible to implement a change management process based on continuous improvement if product development processes themselves are not standardized. In his excellent book The Toyota Way, Jeff Liker describes Toyota’s drive to standardize every part of its business, including its white-collar work processes, such as engineering. According to Liker, “everyone in the company is aware of and practices standardization, but rather than enforcing rigid standards that can make jobs routine and degrading, standardized work is the basis for empowering workers and innovation in the work place.” One must standardize and stabilize a process before the process can be improved. Standardization, therefore, is a key element of building in quality through continuous improvement.

There are many standardized methodologies for different functions in manufacturing. For example, Six Sigma is well-known for improving decision making and quality. CM-II, from the Institute of Configuration Management, is also an excellent methodology, and there are many respected methods for lean manufacturing.

But these processes are extremely complex – where should standardization start? Many manufacturing organizations have realized that while only 5% of final product cost is associated with design, designers have an influence on 70% of total product cost because they work at the beginning of the value chain. One example is Delphi Steering, a division of Delphi Corp. (www.delphi.com), a large automotive component supplier. Managers decided to focus their attention on managing change in the critical design processes, and standardized their methodologies for product and process design. Their standardized methods, collectively called Delphi’s Design Methodologies or DDM, produce CAD/CAM data that is easily changeable, making it usable by the entire organization and enabling global collaboration.

While Six Sigma and lean manufacturing tend to focus on quality management, Delphi’s design methodologies streamline “upstream” product and manufacturing process design functions, by standardizing design methodologies. The result: designers are more productive - they can complete projects faster. They can easily share their work with colleagues on a global basis and understand each other’s design intent. Design/change cycles are accelerated, lead times are reduced, and quality is improved. Design re-use is increased, waste is reduced and the team enjoys a higher level of flexibility in their project staffing. Products get to market faster and zero-defect launches have become a reality. These benefits resulted from developing a standardized product delivery methodology.

Delphi trained and implemented these methods with a highly demanding audience – their own engineering team. DDM is now in production in 13 manufacturing plants worldwide and in 2005 was used to document more than 3,000 processes. DDM has been adopted across these production plants for streamlining the design change process and for simultaneously delivering product and manufacturing process designs.

Delphi’s Design Methodologies enable product design and manufacturing process design to be tightly integrated, thereby dramatically accelerating design cycle times by automating the controlled propagation of design changes downstream. The company has repeatedly measured and proven the business benefits of standardizing and implementing DDM in global production. For example, in one product design time study DDM enabled a 65% time savings. In another study, DDM yielded a 90% time savings for process designers. And in yet another, DDM reduced process sheet creation time by 75% over previous techniques. According to a design team supervisor, a recent design project at Delphi Steering would have required 50% more designers were it not for their use of DDM. And, in another key measure of designer productivity, a typical CAD designer at Delphi Steering now supports thirty percent more product and process designs. This means the same team can design more products, faster and with higher quality.

Manufacturers must strive for excellence in managing and adapting to customer-driven change. A culture of continuous improvement is the key to maintaining high levels of responsiveness to customer requirements. Continuous improvement is not possible until critical processes are standardized. Thus, standardized work processes, based on clearly defined customer value propositions, are the key to delivering high quality products, on time and as promised.