Three-Dimensional Concurrent Engineering:
Clockspeed-based Principles for Product,
Process, and Supply Chain Development
Professor Charles Fine
Massachusetts Institute of Technology
Sloan School of Management
Cambridge, Massachusetts 02142
March 1998
charley@mit.edu
www.clockspeed.com
Tel: 1-617-253-3632, Fax: 1-617-258-7579
1
c MIT, 1998
clockspeed.com
Three-Dimensional Concurrent Engineering: 2c MIT, 1998
Clockspeed-based Principles for Product,
Process, and Supply Chain Development
clockspeed.com
I. Introduction & Motivation
II. Fruit Flies & Clockspeed
III. Supply Chain Design/Development matters
IV. 3-D Concurrency--an architectural approach
V. 3-D Concurrency--two at a time
VI. Conclusions
Three-Dimensional Concurrent Engineering:
Product/Process Development on a Supply Web
3
c MIT, 1998
clockspeed.com
A PRODUCT DESIGN
STARTS OUT FROM
ONE POINT
ASSEMBLER/
DESIGNER
DES
PARTS
SUPPLIER
HU
ND R
ED S O
R
NS
ASSEMBLY
SUPPLIER
PARTS
SUPPLIER
D
E
S
IG
N
S
TS
IO
AT
IC
IGN
S
TOOLING
SUPPLIER
ASSEMBLY
SUPPLIER
TOOLS
Y
L
B
M
ASSE
NS
DESIG
R
C
DE ASSE
MB
SI
LIE
GN
S
S
IF
E
IC
T
S
PARTS
TOOLING
SUPPLIER
S
P
IF
A
N
EC
I
I
TO
IO
SP
F
R
AB
T
CA
ON
OL
IT GETS DISPERSED
OVER THE SUPPLY WEB
PA
FINAL ASSEMBLY IS THE
"MOMENT OF TRUTH" FOR
THE ENTIRE PROCESS
S
PARTS
SUPPLIER
EARS
THO USA NDS
OF M I LES AND THREE TO TEN Y
4
Supply Chain Design in a Fast-Clockspeed World:c MIT, 1998
clockspeed.com
Study the Industry Fruitflies
Evolution in
the natural world:
FRUITFLIES
evolve faster than
MAMMALS
evolve faster than
REPTILES
THE KEY TOOL:
Evolution in
the industrial world:
INFOTAINMENT evolves faster than
MICROCHIPS evolve faster than
AUTOS evolve faster than
SPACECRAFT evolve faster than
AIRCRAFT evolve faster than
SHIPS evolve faster than
MINERAL EXTRACTION
THE KEY TOOL:
Cross-SPECIES
Benchmarking
of Dynamic Forces
Cross-INDUSTRY
Benchmarking
of Dynamic Forces
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c MIT, 1998
AIRCRAFT CLOCKSPEED IS A COMPOSITE OF
AIRFRAMES, ENGINES, & AVIONICS
clockspeed.com
AIRPLANE
AIRFRAME
ENGINES
ELECTRONICS
slow clockspeed
medium clockspeed
fast clockspeed
HYPOTHESIS: MOST AIRCRAFT FIRMS
OPERATE AT AIRFRAME CLOCKSPEEDS;
IN THE FUTURE THEY WILL NEED TO RUN
AT ELECTRONICS CLOCKSPEED.
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The Strategic Leverage of Supply Chain Design:c MIT, 1998
clockspeed.com
Who let Intel Inside?
1980: IBM designs a product, a process, & a supply chain
Customers
Intel
IBM
Intel Inside
Microsoft
The Outcome:
A phenomenonally successful product design
A disastrous supply chain design (for IBM)
Vertical Industry Structure
with Integral Product Architecture
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c MIT, 1998
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Computer Industry Example, 1975-85
IBM
DEC
BUNCH
All Products
All Products
All Products
Microprocessors
Operating Systems
Peripherals
Applications Software
Network Services
Assembled Hardware
(A. Grove, Intel; and Farrell, Hunter & Saloner, Stanford)
Horizontal Industry Structure
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with Modular Product Architecture
Computer Industry Example, 1985-95
Intel
Intel
Microprocessors
Operating Systems
Mac
Moto
Microsoft
TI
etc
etc
AMD
Mac Unix
Peripherals
HP IntelEpson
Applications Software
Microsoft
Lotus Novell
Network Services
AOL
Netscape EDS etc
etc
Assembled Hardware
HP Compaq
IBM
Mac
Seagate
Dell
(A. Grove, Intel; and Farrell, Hunter & Saloner, Stanford)
TIetc etcetc
etc
etc
etc
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THE DYNAMICS OF PRODUCT ARCHITECTURE
c MIT, 1998
AND INDUSTRY STRUCTURE:
clockspeed.com
THE DOUBLE HELIX
NICHE
COMPETITORS
INTEGRAL PRODUCT
VERTICAL INDUSTRY
MODULAR PRODUCT
HORIZONTAL INDUSTRY
TECHNICAL
ADVANCES
HIGHDIMENSIONAL
COMPLEXITY
ORGANIZATIONAL
RIGIDITIES
SUPPLIER
MARKET
POWER
PRESSURE TO
DIS-INTEGRATE
PRESSURE TO
INTEGRATE
PROPRIETARY
SYSTEM
PROFITABILITY
Fine & Whitney, “Is the Make/Buy Decision Process a Core Competence?”
In/Outsourcing: Sowing the Seeds of
Competence Development & Location
1. In/Outsourcing
generates dependence
for knowledge or
dependence for
capacity
2. In/Outsourcing
determines the location
of superior capabilities
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c MIT, 1998
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Independence/Dependence
Amount of Work
Done In-house
+
+
Internal
Capability
Amount of
Learning
+
Dynamics between New Projects
and Core Capability Development
CORE
CAPABILITIES
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c MIT, 1998
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NEW PROJECTS
(New products,
new processes,
new suppliers)
Leonard-Barton, Wellsprings of Knowledge
Technology Dynamics in Aircraft:
Boeing, Japan Inc, and DoD
+
Japanese
appeal as
subcontractors
to Japan
(Mitsubishi Inside?)
+
Japanese
industry
size &
capability
+
c MIT, 1998
clockspeed.com
U.S. firms’
appeal as
subcontractors
+
+
Boeing outsources
Japanese
Industry
Autonomy
12
-
U.S.
industry
size &
capability
13
SUPPLY CHAIN DESIGN IS
THE META-CORE COMPETENCY
c MIT, 1998
clockspeed.com
Since all advantages are temporary,
the only lasting competency is to continuously
build and assemble capabilities chains.
DOUBLE
HELIX
KEY SUB-COMPETENCIES:
BOEING
1. Forecasting the dynamic evolution
of market power and market opportunities
2. Anticipating Windows of Opportunity
3. 3-D Concurrent Engineering:
Product, Process, Supply Chain
CAPABILITIES
Fortune Favors the Prepared Firm
PROJECTS
14
3-D CONCURRENT ENGINEERING
PRODUCT
Performance
Specifications
Product Architecture,
Make/Buy components
c MIT, 1998
clockspeed.com
Recipe, Unit Process
PROCESS
Technology, &
Process Planning
Details,
Strategy
Time, Space, Availability
SUPPLY CHAIN
Manufacturing System,
Make/Buy processes
THE CHALLENGE:
TAKING PURCHASING OUT OF THE GHETTO
15
KEY CONCEPT FOR 3-D CE
PRODUCT, PROCESS, AND SUPPLY CHAIN
ARCHITECTURES
c MIT, 1998
clockspeed.com
Integral architectures feature close coupling
among the elements
- Elements perform many functions
- Elements are in close proximity
(close spacial relationship)
- Elements tightly synchronized
Modular architectures feature separation
among the elements
- Elements are interchangeable
- Elements are individually upgradable
- Element interfaces are standardized
- System failures can be localized
PRODUCT ARCHITECTURE
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c MIT, 1998
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Integral product architecture:
principal components have multiple functions
- Example: claw hammer head
(drives and removes nails)
- Example: airplane wing
(provides air lift and holds fuel)
- Example: motorcycle frame
(body structure, engine, gas tank)
Modular product architecture:
interchangeable components have single functions
- Example: stereo systems
- Example: desktop personal computers
- Example: bicycles
17
SUPPLY CHAIN ARCHITECTURE
c MIT, 1998
clockspeed.com
Integral supply-chain architecture
features close proximity among its elements
- Proximity metrics: Geographic, Organizational
Cultural, Electronic
- Example: Toyota city
- Example: AT&T and Lucent
- Example: IBM mainframes & Hudson River Valley
Modular supply-chain architecture features multiple,
interchangeable supplier and standard interfaces
- Example: Garment industry
- Example: PC industry
- Example: General Motors’ global sourcing
- Example: Telephones and telephone service
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CONCURRENT ARCHITECTURE DESIGNc MIT, 1998
FOR PRODUCT AND SUPPLY CHAIN
clockspeed.com
(Hypothesis: On Diagonal is statically optimal)
SUPPLY CHAIN (Geog., Organ., Cultural, Elec.)
ARCHITECTURE
INTEGRAL
PRODUCT
ARCHITECTURE Toyota city
INTEGRAL
MODULAR
“Ma Bell”
Semiconductors
MODULAR
Apparel
PC’s
GM global sourcing
Phones & service
STRATEGY IN 3-D:
CASE EXAMPLES
Boeing: Static 3-D in Plane Projects
Dynamic, Strategic Supply Chain,
unintegrated w/ Product & Process
Intel: Modular Product vs. Process
Integral Process and Supply Chain
Chrysler: Modular Product & Supply Chain
(weak on process?)
Toyota: Integral 3-D in Nagoya
(weak on global 3-D?)
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c MIT, 1998
clockspeed.com
Product
Design
Detailed
Perform.
Specs
& Funct.
Architect.
Modular
vs.
Integral
- Focus
- Architecture
- Technology
Process
Unit
Processes
Tech.
& Equip.
Mfg.Syst
Functnl
Cellular.
20
Supply Chain
c MIT, 1998
clockspeed.com
S.C.
Architect.
Orgs Set
& Alloc.
of Tasks
Logistics
& Coord
System
Auton vs.
Integrated
A 3-D CE decision model
illustrating the imperative
of concurrency
21
IMPLICATIONS
c MIT, 1998
clockspeed.com
l Firms
Supply Chain Design
IS A STRATEGIC ACTIVITY, and
SOME TOOLS ARE AVAILABLE:
- CLOCKSPEED-BASED BENCHMARKING
- 3-D CONCURRENT ENGINEERING
l Sustainment
The slower the clockspeed, the longer the
sustainment cycle, the higher the cost impact of
(Three-Dimensional) Design for Sustainment
22
IMPLICATIONS
c MIT, 1998
clockspeed.com
lLabor
There are significant returns to understanding
the dynamics of capabilities & projects
lGovernment
Supply Chain Design
IS A STRATEGIC ACTIVITY, and
SOME TOOLS ARE AVAILABLE:
- CLOCKSPEED-BASED BENCHMARKING
- 3-D CONCURRENT ENGINEERING