Global Product Development Services for the Manufacturing Industry

                                                                                         

Companies in the manufacturing industry are responding to enormous economic and political pressures in a variety of ways. The combination of these pressures and responses is transforming the industry. From economic pressures such as high-cost labour pools and increasingly expensive raw materials prices, e.g., steel and petroleum, to responses such as outsourcing, global product development service consolidation within the industry, and assembly flexibility, companies cannot afford to remain static in any of their operations.

To understand these trends, studies have been conducted on manufacturing product development that provides a snapshot of the current state of the industry and a 5-year forecast. The studies review such varied areas as business philosophy, product design tools, communication methods and engineering efficiency. One clear trend identified in this study is an increase in outsourcing to global suppliers, broadly classified as Global Product Development (GPD).

Global Product Development is defined as maximizing the financial and operational productivity of the product development process by spreading product development activities across multiple regions of the world in order to better match value-add to cost. In this context, the definition of "product development" covers marketing activities that identify and document customer needs.

Along with this it includes engineering activities that conceptualize, design, analyze and refine new product ideas; to activities that plan and document manufacturing, operation, and maintenance processes; to sustaining activities that make ongoing product changes and refinements.

Studies show that companies who deploy Global Product Development strategies stand to gain significant financial and operational benefits. Significant "hard dollar" savings typically in the range of 0.5% of company revenue and 10% of the product development budget may be achieved. Additional "soft dollar" operational improvements such as 24x7 engineering and reinvestment of cost savings to provide specialized skill capacity are also possible.

Leading OEM's have embraced this model, and have restructured their global design and engineering operations to better leverage worldwide resources, accelerate product development and, ultimately, reduce expenses. In order to proceed with the implementation of a GPD Strategy, it is necessary to analyze product development activities. To do this, a company must first segregate higher value-add activities from lower value-add activities and identify the degree to which these activities are portable.

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