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Organizing for Effective Platform Development. ME 546 - Designing Product Families - IE 546. Timothy W. Simpson Professor of Mechanical & Industrial Engineering and Engineering Design The Pennsylvania State University University Park, PA 16802 USA phone: (814) 863-7136

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  1. Organizing for EffectivePlatform Development ME 546 - Designing Product Families - IE 546 Timothy W. Simpson Professor of Mechanical & Industrial Engineering and Engineering Design The Pennsylvania State University University Park, PA 16802 USA phone: (814) 863-7136 email: tws8@psu.edu http://www.mne.psu.edu/simpson/courses/me546 PENNSTATE © T. W. SIMPSON

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

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

  4. Kodak’s Platform Strategy • From April 1989 and July 1990, Kodak redesigned its base model and introduced three additional models • Because of their platform strategy, Kodak was able to develop its products faster and more cheaply, delivering twice as many products as Fuji • By 1994, Kodak had captured more than 70% of the U.S. market

  5. Teaming for Concurrent Engineering at Kodak

  6. FunSaver I Project Timeline (Weeks 21-40)

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

  8. Fuji Single-Use Camera Family

  9. Fuji 35mm QuickSnap Camera Family

  10. Fuji 35mm QuickSnap Camera Family (cont.)

  11. Fuji’s QuickSnap Colors Family http://www.fujifilm.com/bridgepages/colors.html

  12. Overview of Today’s Lecture • Platform-Based Product Development • Chapter 3 • Development Drivers and Project Frameworks • Risks & Downsides of Platforming

  13. Platform-Driven Product Development (Chp. 3) Source: (Halman, et al., 2005)

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

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

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

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

  18. Top-Down Platform-Driven Development Source: (Alizon, et al., 2007)

  19. Top-Down Product-Driven Development Source: (Alizon, et al., 2007)

  20. Bottom-Up Platform-Driven Development Source: (Alizon, et al., 2007)

  21. Bottom-Up Product-Driven Development Source: (Alizon, et al., 2007)

  22. Examples of Drivers Source: (Alizon, et al., 2007)

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

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

  25. Recall: Kodak’s Platform Strategy • From April 1989 and July 1990, Kodak redesigned its base model and introduced three additional models • Because of their platform strategy, Kodak was able to develop its products faster and more cheaply, delivering twice as many products as Fuji • By 1994, Kodak had captured more than 70% of the U.S. market

  26. Kodak’s Project Plan Reference: Wheelwright, S.C. and Clark, K.B. Leading Product Development Free Press, New York, 1995.

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

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

  29. Aggregate Project Planning at PreQuip • PreQuip’s Development Projects (30) before the Aggregate Project Plan R&D Breakthrough projects Mass spectrometers Liquid chromatographs Gas chromatographs Data processing and handling products Platform projects Derivative projects R&D Allied and Partnership projects Breakthrough Platform Derivative Source: (Wheelwright and Clark, 1995)

  30. Aggregate Project Planning at PreQuip R&D • PreQuip’s Development Projects (11) after the Aggregate Project Plan Breakthrough projects Mass spectrometers Liquid chromatographs Gas chromatographs Data processing and handling products Platform projects R&D Allied and Partnership projects Derivative projects Breakthrough Platform Derivative Source: (Wheelwright and Clark, 1995)

  31. Management’s Involvement (Traditional) • Traditional Product Development Process • Management involved throughout entire process Source: (Sanchez and Collins, 2001)

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

  33. Management’s Involvement (Modular) • Modular Product Development Process • Management involved more at front-end and for integration Source: (Sanchez and Collins, 2001)

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

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

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

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