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Improving high variable-low volume
operations: An exploration into the lean
product development
ARTICLE in INTERNATIONAL JOURNAL OF TECHNOLOGY MANAGEMENT · JANUARY 2012
Impact Factor: 0.63 · DOI: 10.1504/IJTM.2012.043951
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3 AUTHORS, INCLUDING:
Hassan Qudrat-Ullah
Baekseo Seong
York University
Konkuk University
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Retrieved on: 09 April 2016
Int. J. Technology Management, Vol. 57, Nos. 1/2/3, 2012
Improving high variable-low volume operations:
an exploration into the lean product development
Hassan Qudrat-Ullah*
School of Administrative Studies,
York University,
4700 Keele Street,
Toronto, ON M3J 1P3, Canada
E-mail: hassanq@yorku.ca
*Corresponding author
Baek Seo Seong
College of Business Administration,
Konkuk University,
1 Hwayang-dong, Gwangjin-gu,
Seoul 143-701, Korea
E-mail: bsseong@konkuk.ac.kr
Brian L. Mills
K&L Microwave,
2250 Northwood Dr.,
Salisbury, MD 21801, USA
E-mail: bmills@klmicrowave.com
Abstract: This paper draws on extensive theoretical research and literature
reviews, from two cases, and presents one case to illustrate practical
application. It seeks to define and understand how lean product development
integrates with current lean manufacturing strategies, and how the principles of
the lean product development process can successfully be applied to improve
the operations of a high variable-low volume product mix business.
This work aims at delivering a unique conceptual model that demonstrates
how businesses can improve their profitability through the utilisation of lean
product development concepts. Through our conceptual model, business firms
achieve the systemic integration of lean product development concepts with
their downstream operations. The case presented of a high variable-low volume
business organisation offers useful insights into how to implement this in
practice.
Keywords: lean product development; high variable operations; low volume
operations; process; people; information use; training; technology.
Reference to this paper should be made as follows: Qudrat-Ullah, H.,
Seong, B.S. and Mills, B.L. (2012) ‘Improving high variable-low volume
operations: an exploration into the lean product development’, Int. J.
Technology Management, Vol. 57, Nos. 1/2/3, pp.49–70.
Copyright © 2012 Inderscience Enterprises Ltd.
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Biographical notes: Hassan Qudrat-Ullah is an Associate Professor of
Management Science in the School of Administrative Studies at York
University, Toronto, Canada. He has over 15 years of teaching, research,
industry and consulting experience in the USA, Canada, Singapore, Norway,
Korea, China, Saudi Arabia and Pakistan. His research interests include
dynamic decision-making, system dynamics modelling, and sustainable energy
policies. His research has appeared in Energy Policy, Energy, Simulations &
Gaming, International Journal of Global Energy Issues, International Journal
of Management and Decision Making, International Journal of Energy Sector
Management, Journal of Decision Systems and International Journal of
Enterprise Network Management.
Baek Seo Seong received his PhD in Management Science (1985) and his Ms
in Industrial Engineering (1980) at Korea Advanced Institute of Science and
Technology and his Bachelors in Industrial Engineering (1978) from Seoul
National University, (Republic of) Korea. Since 1984, he has taught and
researched at College of Business Administration, Konkuk University, Korea.
From 1994 to 1995, he visited Management Science Division, Department of
Commerce, University of British Columbia, Canada, and from 2004 to
2005, Management Division, New Mexico State University, USA. His areas
of research interests include service management, TQM, environmental
management, and creativity issues in Korean companies.
Brian L. Mills is a Licensed Professional Engineer working in the product
design and manufacturing industry for the past 15 years. His experience
includes research and development, product design and product integration for
power generation equipment as well a manufacturing experience in both
consumer aluminium containers and telecommunication electronics. He has
been involved with continuous improvement application in the industry for the
past ten years and has been an active change agent to improve operations using
both lean product development and lean manufacturing concepts with a
team-based approach.
1
Introduction
Faced with intensive global competition, increasing operational costs, and the rapid pace
of technological innovations, many business organisations have made tremendous efforts
to understand and embrace lean product development concepts (Scherrer-Rathje et al.,
2009; Wu, 2003; Doolen and Hacker, 2005; Jorgensen and Emmitt, 2008). Henry Ford
and his organisation were the first to implement a notable comprehensive manufacturing
system that accounted for all facets of production including people, machines, tooling and
products in a synchronised and continuous process at the turn of the industrial revolution
in the early 1900s (Hines et al., 2004). As industry changed, Ford’s system for
manufacturing did not adjust to meet the advent of worker’s unions, and decreased
unemployment. This continued up to the Second World War as the Ford Motor Company
lost market share. As Ohno and Shingo began to uncover the shortcomings of US
industrial management, they observed that employees could contribute much more than
task completion for the benefit of the business and that most of Ford’s success revolved
around one product. With the inclusion of the just-in time and elimination of waste
philosophies from US industry combined with a high level of employee involvement
Improving high variable-low volume operations
51
through quality circles, cellular manufacturing, a process to handle quick changeovers,
and product changes in small batch sizes, Ohno and Shingo laid the foundation for the
Toyota Production System (Ohno, 1988; Shingo, 1988). In today’s industry, the Toyota
Production System has moved beyond the automotive industry and has become the
yardstick of comparison for most global manufacturers of all products (McCullen and
Towill, 2001; Womack et al., 1990; Hines et al., 2004).
While lean manufacturing and the Toyota Production System has been the showcase
of modern industrial management and production efficiency, exploration has moved from
the production and assembly aspect of Toyota’s operation, and into the design and
product development arena (Schrotter, 2000; Scherrer-Rathje et al., 2009). As a result of
this evolutionary development, there are several issues with lean product development
concepts that call for a systematic resolution, e.g., ‘what lean principles are relevant to
lean product development concepts’; ‘to what extent the concepts of lean product
development are applicable to non-manufacturing industry’; ‘what is the role of
management towards the implementation of lean product development concepts’, and
‘how to apply lean product development concepts to improve the operations of a high
variety, low volume business organisation’. The key objective of this paper therefore is to
provide a framework that helps us better understand how lean product development
operates and how it integrates with downstream operations aimed at improving business
performance. Further, this paper will explain some challenges to overcome in US
implementation and provides a practical theory to application in a highly variable, low
volume business setting.
To address the issues raised above, methodologically, this study draws on:
1
the review of ‘research literature’
2
two case analyses.
For the purpose of this paper, the term research literature includes articles in
peer-reviewed journals, doctoral theses and research reports. Frequently cited books on
lean philosophy and management are also included because of their influential role in the
development of the fields. A small number of papers published in conference proceedings
were also included in our review because, as justified below, they appeared to be
significant to the debate of the lean product development concepts. The classic case study
of the Toyota Motor Company was selected to provide the base analysis on the
implementation of lean principles and the other case study i.e., Microsoft, served as a
venue of analysis of the application of lean product development concepts in the context
of a non-manufacturing industry.
The following section will provide an overview of the most basic lean principles
along with some examples. Section 2 explores the application of these lean principles for
the product development business activities and leads to our proposed conceptual model
for lean product development. While the Toyota Motor Company is the benchmark of
comparison, Section 3 provides an example where the lean product development concepts
can be applied in other industries, specifically the software development cycle at
Microsoft. Section 4 details how management as an organisation supports the application
of these basic lean principles for product development. The next section outlines the
unification of lean manufacturing concepts with lean engineering concepts through a
similarity and contrast approach. Lastly, Section 6 demonstrates the application of our
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developed conceptual model of lean product development for a high variety, low volume
business organisation.
2
Literature review- towards a conceptual model of lean product
development
2.1 Background concepts and definitions
While most concepts of lean manufacturing are commonly known, most lean
manufacturing fundamentals maintain their Japanese origin with Japanese names,
however; many have been Americanised in order to better integrate them into the
management structure and culture of US business. Skaggs (2003) outlined the concept of
5S, a system of workplace organisation, the elements of which have Japanese names
(Seiri, Seiton, Seiso, Seiketsu and Shitsuke) but have been adopted as sort, set in order,
shine, standardise and sustain. Alternatively, some concepts such as muda, or the
elimination of waste, are US concepts that have been given Japanese names and the
foreign translation has been maintained with its reintroduction to US business (Womack
and Jones, 1996).
2.1.1 Value
Value is the most basic concept and critical for business success. Value is the
transformation of raw materials into a product that causes the exchange of funds by the
ultimate customer (Womack and Jones, 1996). Value only holds true meaning for a
specific product, which meets the customer’s price at a specific time. Womack and Jones
(1996, p.33) stated “Value includes much more than the physical aspects of the product,
but also involves the aesthetics, timeliness, ease of use, quality and functionality of the
product.” Value involves a concise understanding of the customer’s needs and
expectations. For example, through streamlining the ticketing and boarding process at a
reduced ticket price, Southwest Airlines has better aligned its operations with the
customer’s value expectation.
2.1.2 Value stream
The second basic pillar of the lean manufacturing philosophy is the value stream. The
value stream is the summary of all operations that are performed in order to develop a
product from raw materials (Doolen and Hacker, 2005; Womack and Jones, 1996).
Rother and Shook (2003) highlighted that all operations, whether they add value or not
that bring the product to the customer represent the value stream. The best tool to
visualise the order of operations and activities performed on a product or service is the
value stream map (VSM). The ultimate goal is to explore, identify and outline what
activities take place and recognise where wasteful actions occur (Neuhaus and Guarraia,
2007). Gregory (2006) fortified this by stating that the principle of VSM is to help
management identify non-value added operations. Typically, a VSM represents the
sequence of operations pictorially, similar to a flow chart.
Improving high variable-low volume operations
53
2.1.3 Flow
Even though expressed as independent concepts, the pillars of lean manufacturing are
actually a series of events that continuously repeat and refine a business operation.
Following this sequential approach, flow is only effective after value and value stream
have been ‘completed’. ‘Completed’ is a loose term, as by definition continuous
improvement is never finished. Flow describes the dynamic motion of products as they
move through the value stream operations to reach the customer (Womack and Jones,
1996). The best tool to visualise the dynamic motion of products, services, and
information, through to completion is VSM. Once the non-value activities have been
identified, the VSM serves to locate bottlenecks. Activities that have limited capacity or
require batch operations, bottlenecks can inhibit flow and are commonly identified by
large amounts of work-in-process (WIP).
VSM highlights capacity provides a common platform to foster a dialogue that
eliminates flow constraints (Neuhaus and Guarraia, 2007). In a mixed-model business
environment, flow and VSM become increasingly complex, since it is difficult to track a
single product through the entire process. The VSM exercise becomes extensive and may
require several teams to produce an accurate map. Without a common roadmap for
improvement, a downfall of change management is localised improvements that have not
addressed the underlying limitations (Gregory, 2006; Riitta, 1994).
2.1.4 Pull
Pull is the trigger that starts at the customer and generates demand for a product or
service. Pull acts as the agent that causes resources to fill a need (Schrotter, 2000). From
the next higher level, the signal reaches down to the lowest possible raw material
requirement and effectively ‘pulls’ the resources up from the lower levels to the driving
requirement. Many businesses boast the use of lean manufacturing and being ‘lean’, but
most businesses struggle beyond the first three concepts previously outlined. Womack
and Jones (1996) wrote that after the first three pillars of lean manufacturing have been
vigorously improved; the activities that cause demand and requirement fulfilment must
be explored. The overriding fundamental principle of pull is that no activity occurs until
there is a request (Womack and Jones, 1996). This implies that activities remain idle until
a trigger places a request for action in the form of information or product.
While individual organisations have successfully implemented pull as part of a lean
product development operation, most activities occur in a push fashion due to a lack of
organisation coordination. McManus (2007) wrote that there are three failures when
implementing flow: unknown key customers, weak communication, and limited value on
internal customers. Hopp and Spearman (2004) suggested several key benefits critical to
operations such as less material being put through the process, shorter cycle times, fewer
production variations and more efficient operations. With fewer parts in process, WIP is
easier to observe directly, reflects the available capacity of an operation, and is controlled
by an input rate in comparison to the capacity. A particularly helpful tool for pull systems
is the use of a kanban. As the Japanese word for ‘sign-card’, a kanban provides the
trigger to initiate some standard work in a finite amount when the customer has a
demand. This is commonly used in inventory control. For examples and details on the
implementation of a kanban system, Dossenbach (2007) is a useful reference.
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2.1.5 Perfection
Only after several rounds of activities that improve value, value streams, flow and pull,
does management begin to recognise the importance of continuous improvements
(Womack and Jones, 1996). This leads to changes in product flows, the order of
operations, changes in customer values, or how the customer shows product demand and
this generates an endless cycle of improvement (Womack and Jones, 1996). Concisely,
the purpose of perfection’s pillar is to continuously seek out and develop improvements
to better match the customer’s perspective of value to the business operation. This is
commonly known throughout the industry as kaizen (Liker and Morgan, 2006).
Wikipedia website development provides a good example of perfection. Wikipedia serves
as a central point of all existing electronic knowledge that can be continually improved
through the additions of its users. While there is scrutiny regarding the academic validity
of the provided information, the continuous improvement by its users will improve the
content.
2.2 Lean product development
Lean principles may not be a complete business strategy, but they can be a powerful
enabler (Baines et al., 2007; Lewis, 2000; Wu, 2003). Lean product development
describes a completely different set of underlying principles. These tenets which drive
product development are segregated into three major areas, process, people and tools.
However, they can all be related through examples back to the basic pillars of lean
manufacturing, and the basic philosophy of business operation (Bonavia and Marin,
2006).
2.2.1 Process
In a similar approach to lean manufacturing, lean product development implements the
basic five pillars of value, value stream, flow, pull and perfection on the product
development process. Toyota has been able to develop a standard process, refine it,
eliminate waste and continually reduce the lead time, speed to market and cost from
project to project. Toyota defines a good process as one that focuses on the set of process
principles whereby people create and improve the process according to these principles
(Liker and Morgan, 2006). This perception emphasises the interactive and dynamic
nature of the link between a process and its stakeholders.
2.2.1.1 Focus on value from the customer’s perspective
Just as all manufacturing processes start with value as defined by the ultimate customer,
lean product development uses the customer as the starting point for any process. The
consideration of the customer’s value is ingrained into the cultural foundation of its
employees (Liker and Morgan, 2006). Interestingly, value is commonly a point of
conflict in organisations since different departments define value from opposing aspects.
Conflict can also be a point of alignment between organisations. As two different
organisations provide contrary viewpoints of a design, they each serve to benefit the
ultimate customer. In the end, in order to best satisfy the end customer, opinions and
positions are resolved to produce the best overall product (Sobek et al., 1998).
Improving high variable-low volume operations
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2.2.1.2 Consider multiple solution possibilities
Fundamental to early design exploration is the stressed importance of ‘do it right the first
time’. Unlike the US posture to find and develop the most likely solution at the onset,
Toyota engineers develop a range of solutions based on standard design practices. Sobek
et al. (1999, p.68) highlighted that “the effort is to focus on multiple solutions as
engineers develop sets of solutions to design criteria that are then eliminated as other
aspects of the design are integrated in the entire product.” It is a common practice at
Toyota to investigate hundreds of design alternatives while the product is in the concept
stage, thereby eliminating many late engineering changes.
For instance, set-based concurrent engineering (SBCE) is a concept that presents
solutions to reduce the-time-to-market issue. Information-based teams can consider more
market dynamics by delaying critical decisions until absolutely necessary. As a result, the
design and development time may be longer, but engineers can quickly move towards a
known solution and ultimately shorten the time to production (Holman et al., 2003).
Concurrent engineering efforts seek to minimise the number of feedback loops and
iterations required to finalise a design solution by involving other engineering functions.
Toyota’s SBCE process is significantly different; design conditions that are not feasible
for all parties are documented and maintained in engineering checklists. SBCE suggests
the exploration of sets of alternatives, but within clearly defined sets of constraints (Ward
et al., 1995). As the designs converge at points of integration, the groups of feasible
solutions are reduced based on the additional external information. In general, the
concept is to provide enough upfront design guidance to consider most of the known
design criteria, yet compensate for incremental changes in design due to the design
considerations of all interacting design functions (Sobek et al., 1999). The evaluation of
solutions in a matrix format that consider strengths and weaknesses provide the basis for
design flexibility.
2.2.1.3 Product development flow
Holman et al. (2003) identified that a more flexible process that is agile for customers and
the marketplace can be developed by focusing on the quality and timing of processes and
information. Because of the repeatability in engineering efforts required, Toyota can
accurately predict future efforts to finish (Liker and Morgan, 2006). Engineers are
assigned design tasks in a levelled way so that as solution requirements narrow,
engineering efforts are not wasted early in the process, yet effective as needed during the
middle and late design development when critical.
2.2.1.4 Thorough standardisation of design
Standardisation in the design process is essential for a smooth and waste-free product
development flow. Standardisation can be identified in three categories:
1
design standardisation through common architecture, modularity, reusability and
shared components
2
process standardisation by designing products for standard processes and building
foot-printed manufacturing facilities based on standard lean practices
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standard skill sets for engineers that provide flexibility in staffing, programme
planning, and minimise task variation (Liker and Morgan, 2006).
Engineers rotate within their area of functional expertise to gain the experience that
encourages standard work, making the outputs of each functional group predictable to
other functions (Sobek et al., 1998). The use of standard checklists for each design point
allows each part to be designed consistently without stifling creativity. This leads to
reduce time in redesigning components from scratch or coordinating with counterparts,
and yields firm trust between functions and known output expectations (Sobek et al.,
1998).
2.2.2 People
One of the greatest lessons learned from US manufacturing industry was to value the
people within the organisation. Employee empowerment can perform a greater service to
the business beyond completing a task. On the one hand, in the context of the merger
between Daimler and Chrysler, Daimler stripped Chrysler of the culture that was built
when the leadership was removed (Liker, 2005). On the other hand, Toyota’s people
system is built around its employees who are completely supported through Toyota’s
unique culture that improves the process continuously.
2.2.2.1 Chief Engineer as the voice of the customer
Unlike the US project manager, the Chief Engineer is responsible for the ‘whole
product’, its delivery to market, and is proclaimed as ‘president of the vehicle’ (Sobek et
al., 1998). Liker and Morgan (2006) explained that the Chief Engineer in Toyota can
provide the intimate details of the project, its present status, and leadership to make
critical decisions as both a leader and project integrator. Chief Engineers have wide
experience, technical depth, system understanding, market exposure, and leadership
skills. The proof of expertise is the ability to convert this knowledge into innovative
designs. This was fortified by Sobek et al. (1998, p.42) that “only a good designer can
evaluate the quality of someone else’s design.” The Chief Engineer’s function is to
provide the concept, style, and direction for all others involved in the product
development process to follow while providing solutions to technical trade-offs. Sobek et
al. (1998) pointed out that the Chief Engineer operates from a high vantage point to see
all aspects of the design process. It is the Chief Engineer that serves as the technical voice
of the customer throughout the entire process from concept to market release.
2.2.2.2 Balance the matrix organisation
Toyota as an organisation has found great success using a matrix format for its product
development team. While Chief Engineers provide indirect authority relative to the
‘whole product’ development, functional managers provide the direct authority and
leadership for component and system development. Functional managers act as
mentoring supervisors and are an instrumental facet of the product development process.
Sobek et al. (1998) observed that management is closely involved with the engineering
design operations. This aspect is so strong that any ‘young engineer’, those with less than
ten years of experience, must usually get approval from their functional supervisors for
each step of the design process (Sobek et al., 1998). It is the primary function of
Improving high variable-low volume operations
57
supervisors to develop the deep functional expertise in each design engineer. Further,
functional leaders teach report writing, how to prepare for meetings and reinforce the
culture at Toyota. The on-going challenge is to develop strong horizontal relationships
with functional expertise, cross-functional teams, sometimes referred to module
development teams.
2.2.2.3 Deep technical competence
While most US automakers prefer their engineers to broaden rather than deepen their
experience (Liker and Morgan, 2006), Toyota stresses the importance of deep technical
expertise. Sobek et al. (1998) detailed that instead of focusing the engineering
organisation around the function, US firms have employed a variety of organisational
structures such as temporary teams or product-based focus. Cross-functional coordination
has improved, but at the cost of depth of knowledge within functions, since engineers
spend less time within their functions and more time in meetings and cross-functional
interaction (Sobek et al., 1998). Further, organisational learning across projects has
dropped as people rotate quickly through projects. Most critical, however; the
combination structure between functions and projects causes an internal struggle of
authority for engineers (Sobek et al., 1998).
Conversely, as part of the Toyota culture, technical excellence is revered (Sobek et
al., 1998). Morgan (2002) pointed that management places an intense effort on training
employees for a specific skill set that supports the product development process. As a
new hire, an engineer is given a career path that specifies and emphasises deep technical
skill acquisition within a specific discipline (Liker and Morgan, 2006). This is combined
with functional managers who are also technical experts. US companies emphasised the
use formal institutions to provide basic training and job skills; Toyota provides both
formal and on-the-job training from within the organisation. Morgan (2002) compared
that US automakers seek to develop engineers with a broad range of skills and a variety
of experience combined with formal classroom training. Engineers at Toyota receive
most of their training through mentoring and intensive interaction with direct supervision
and leadership (Sobek et al., 1998). Beyond developing excellent engineers, this close
relationship and direct leadership reinforces the company’s set of values and culture.
Lastly, design engineers are firmly grounded in functional areas. It is through this type of
organisational positioning that Toyota develops specialised technical knowledge.
2.2.2.4 Appropriate supplier involvement
As most of the components integrated into the manufacture of an automobile are
purchased, there is a significant need to integrate supplier activities as a fundamental part
of the product development process (Liker and Morgan, 2006; Wu, 2003). Suppliers are
organised based on technical expertise similar to engineers and a small subset of vendors
have an intimate working relationship in order to engage in the first stages of design.
Some suppliers provide guest engineers that work directly with Toyota design engineers
to provide direct and daily input to the design. Toyota maintains valuable commodity
knowledge internally and never relinquishes vehicle system responsibility (Kamath and
Liker, 1994). Toyota develops long-lasting relationships with suppliers. Kamath and
Liker (1994) resolved that an incorrect position with a supplier may lead to a relationship
that holds no market advantage.
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Part of the supplier integration process includes developing a mutual understanding of
the lean product development philosophy. With intense supplier management, it is
interesting that Japanese suppliers can describe in detail the product development cycles
on a single sheet of paper showing the high-level view of the process and milestones
(Kamath and Liker, 1994). Vendors understand the importance of the schedule and the
timing of events (Kamath and Liker, 1994). Though a highly structured supplier
management system, suppliers understand their role with the customer as well as the
appropriate time to suggest innovation without impact to the product development
process.
2.2.2.5 Relentless strides towards learning
Each engineer is supported by technical experts as managers provide the leadership
necessary to deepen his/her technical expertise. “Learning events, called hansei or
reflection, are built into each development program to create opportunities to learn from
every program for application on the next program,” explained Liker and Morgan (2006,
p.15). Hansei is performed at all levels of the organisation, from Chief Engineers through
component design engineers.
2.2.2.6 Support continuous improvement
Just as lean manufacturing follows the basic pillar of perfection, lean product
development embraces this philosophy as well; set in the core beliefs at all levels of the
organisation is a compelling desire to work together towards common goals. Career paths
are well defined at hire, with more emphasis placed on product advancement. Ultimately,
the career path seeks development to better meet the customer’s expectations (Liker and
Morgan, 2006).
2.2.3 Tools/technology
Tools and technology use for the lean product development process serve a strict role. It
is common to observe CAD systems, machine technology, digital manufacturing, testing
equipment as well as those tools for problem solving, standardising best practices or
learning programmes in daily operation. Tools serve to improve the process through
adding value, improving the value stream or allowing for a smoother flow of process
operations (Zylstra, 2007).
2.2.3.1 Tailor technology to the process
Toyota spends a lot of effort on the people and the process involved in product
development, adding a technology that is flawed or does not integrate well with the
existing process only hampers progress. Typically, technology offers the smallest market
advantage and can be easily copied (Liker and Morgan, 2006). It is more important to
tailor the technology such that it enhances and further optimises the disciplined process.
Most critical to the lean product development process is a sound people and process
system that can be leveraged through technical tools.
Improving high variable-low volume operations
59
2.2.3.2 Simple visual communication
As expansive report generation and presentation adds little value to the customer, Toyota
uses a single page development plan as a management tool for policy deployment, known
as hoshin kanri, or more commonly as a hoshin plan (Liker and Morgan, 2006). Each
page breaks down a corporate goal into meaningful objectives that an organisation can
accomplish. Beyond policy deployment and corporate goals, the same method is used for
product development, outlining product release goals as milestones for completion.
Another use of simplistic communication is the A3 report. A3 represents the European
paper size (approximately 11 × 17 inches) that provides communication for four different
subjects: proposals, problem solving, and competitive analysis (Liker and Morgan, 2006).
2.2.3.3 A3 report details
One type of the A3 report is a problem solving detail used in place of face-to-face
meetings. Instead of using a meeting to collaborate a solution, the engineer provides a
diagnosis of the problem, key information and possible recommendations (Sobek et al.,
1998). This document is then distributed to all stakeholders. Sobek et al. (1998) explained
that Toyota relies heavily on written communication and the receiver is expected to
provide feedback as necessary. Once all iterations of the report have been finalised, the
engineer is expected to write a final version of the report. The final report provides two
benefits:
1
it documents and summarises the analysis and decision-making into a concise report
for the remainder of the organisation
2
it forces engineers in every function to gather opinions and consider the impact of
changes to other functions.
2.2.3.4 Standard tools for learning and continuous improvement
Kaizen, or continuous improvement, is the foundation applied to both lean manufacturing
and lean product development. Imbedded at all levels and points in the organisation are
tools of kaizen that standardise the learning process. The most critical aspect is that these
tools are simple to use, involve technical experts pertinent to the task, and seek to
improve the knowledge of the individuals as well as improve the product. Just as
important, these tools are flexible in use, as well as owned and maintained by the people
who use them (Liker and Morgan, 2006).
2.2.3.5 Design standards improvement
As an example of the tools for standardisation, Toyota design standards are dynamic
documents. Unlike US automaker engineers who argue that design standards are largely
ignored, the lean product development process maintains books of engineering checklists
to guide design work (Sobek et al., 1998). Once in place, design standards add
predictability across vehicle subsystems. Sobek et al. (1998) concluded that in order to
best transfer knowledge from one project to the next, the final report drives updates to the
design checklists and standards. Driven in part by the use of ISO9000, US design
standards are typically composed by a central organisation; however, it is the design staff
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that maintains the functional knowledge for lean product development. Frequent updates
of the checklists provide effective application of current body of knowledge for each new
project. Since Toyota releases product designs more frequently than US automakers, the
design standards are updated on more consistent basis and are less likely to be outdated.
2.3 The conceptual model of lean product development
The synthesis of the literature reviewed in the previous sections (i.e., Sections 2.1 and
2.2) has lead us to the construction of the conceptual model, depicted in Figure 1 below,
of the lean product development aimed at improving the operations of the business
organisations.
Figure 1
Lean product development and high variable-low volume business
PROCESS
• Customer value
• Multiple solutions
• Development flow
• Standardised design
PEOPLE
• Leadership of Chief Engineer
• Matrix organisation
• Deep technical knowledge
• Supplier involvement
• Stride to learning
• Continuous improvement
LEAN
PRODUCT
DEVELOPMENT
Improved Business
Operation
TOOLS
• Tailored technology
• Visual communication
• Written reports
• Standard tools
• Design standard
improvements
This model embodies the three critical factors (i.e., process, people, and tools). The
interactive relationships among these factors describe the roles, activities, supporting
tools for the lean product development. The lean product development, by integrating the
downstream operations, is hypothesised to improve the business performance of the
organisation. Later, in Section 6 of this paper, we will demonstrate the applicability of
this model to improve the business operations of a high variety-low volume enterprise.
3
Implementation beyond Toyota: the case of Microsoft
Microsoft’s product development process for software generation uses a ‘synch-andstabilise’ approach (Cusumano, 1997), which is very similar in its fundamentals to the
SBCE approach implemented at Toyota. In this, functional teams working in parallel
publish their contribution on a routine basis, thereby synchronising the individual or team
efforts with the development of the overall product. This is analogous to the short and
numerous milestone decision points of SBCE. Further, as pieces of the team’s
Improving high variable-low volume operations
61
contribution become solid, the evolving product definition becomes stabilised as a basis
for other teams’ contributions (Cusumano, 1997). Again, similar to SBCE, as the
feasibility region is reduced, alternative solutions are eliminated. People within Microsoft
termed these milestones as ‘daily build’, or ‘nightly build’ (Cusumano, 1997). This
component of the product development process addresses the problem of how to deal
with the growing size of product development teams. Large teams that attempt to tackle
large problems struggle with components or features that must interrelate to other teams’
projects. Similar to the design checklists that update the design feasibility and evaluate
the trade-offs of design, the ‘synch-and-stabilise’ approach provided incremental
communication of product development and feasibility for software development.
Likewise, Toyota’s Chief Engineers and functional managers define the milestones for
decision-making, Microsoft structures and coordinates what individual engineers and
teams do while allowing people enough flexibility to be creative and evolve a product’s
details in stages (Cusumano, 1997).
According to Cusumano (1997), Microsoft provided an avenue for creativity by
allowing features to evolve over time while necessary resources are applied for stability.
In a high technology company, while it is important to have creative people, it is often
more important to direct their creativity. By limiting resources: either time, manpower or
funding, Microsoft’s managers can better focus on product features that the customer is
willing to pay for, very similar to the value fundamental pillar of lean manufacturing.
Cusumano (1997) warned that without a system of balance, the creativity of engineers
would never allow a product to reach the marketplace.
Microsoft begins a project with a vision statement that defines the goals, priorities,
and user activities that must be supported by product features. These are then converted
into functional specifications by functional managers. Project managers divide the
specifications into tangible objectives with a timeline and milestones. Similar to the use
of simple methods of communication (hoshin kanri), Microsoft’s documentation outlines
how to administratively manage without impacting the engineering aspect.
Just as Toyota defines feasibility commitment through the SBCE process, Microsoft’s
developers solidify and correct errors that have been detected at the end of milestone
subprojects. The error corrections further stabilise the product and highlight for the team
portions that need progress. In the same way that Toyota delays decisions to less critical
aspects of the product design, Microsoft prioritises features at each milestone, as to build
the most important features first (Cusumano, 1997). Lastly, Cusumano (1997) described
how Microsoft recognises the limited sight and vision of software design and therefore
project teams generate short vision statements, yet design standards though checklists are
strictly maintained.
A second key strategy used by Microsoft is to perform development tasks in parallel
with frequent synchronisations. Much like the controls placed on the product
development flow at Toyota, the Microsoft strategy provides a means for a stable and
predictable process flow without driving excessive detail into the product development
plan. With a few simple rules in hand, Microsoft allows for developer freedom while
ensuring that an overriding structure and mode of operation is in place (Cusumano,
1997). Some examples include: checking in pieces of code at the same time during a
given day, if the code ‘breaks the build’ by preventing it from completing the
recompilation, developers must fix the defect immediately. Additionally, developers
work at a single site; use a common development language, common coding styles, and
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H. Qudrat-Ullah et al.
standardised development tools (Cusumano, 1997). These key aspects of the lean product
development process resonate with the product development process used by Microsoft.
From the basic pillar of value, to using frequent and scheduled milestones, the Microsoft
product development process uses many of the guidelines used in the lean product
development process.
4
Management and organisational structure supporting lean principles
There are many similarities identified between the lean manufacturing and lean product
development principles and there are examples, such as Microsoft of its application
beyond the automotive industry. An organisational structure must support and blend each
of these concepts together into a harmonious and synchronous system to maintain
long-term success. Typically, US businesses direct lean activities while Japanese firms
focus on the underlying philosophy and culture (Baines et al., 2006). Management as an
organisational body can employ an approach that helps foster and facilitate lean
activities. For instance, management can use lean concepts as a springboard for strategic
planning. This has been helpful in true strategic improvement and identifying waste
through organisations (Shinkle, 2005). A successful method that provides a visual tool for
management to identify opportunities and the framework for problem solution is
management systems diagramming (MSD). Similar to VSM used in lean manufacturing,
MSD diagrams the ‘what, when and how’ of the current management system by
providing a list of responsibilities, major tasks, timeline of requirements,
meetings, milestones, control processes, communication methods and organisational
linkages (Shinkle, 2005). The end result of the MSD is a diorama that represents
the current state of the different levels of the management organisation and
provides a common platform for review and reflection. Just as lean manufacturing
uses the VSM to identify areas for improvement, such as bottlenecking, excessive
WIP, long process cycle-times, and wasteful activities, the MSD baseline can identify
issues in value, value stream, flow, pull and perfection relative to management. For
instance, a future-state MSD could describe the ideal management organisation
where decisions are only made at the time when needed, approvals are granted with
short cycle times, redundant communication is eliminated and error checking is not
required (Shinkle, 2005). With a fresh approach and consideration of the basic
lean concepts, management can describe in detail and seek to improve operations to
the most efficient and effective state possible. The value, value stream and flow
analysis can best be accomplished through a coordinated effort between workers
and supervisors. Adler (1999) suggested that both engineers and supervisors
should together provide the guiding documents for standard work processes. In lieu of
industrial engineers timing work operations covertly, workers should be empowered to
develop their own time based study, and conduct their own analysis of the work
process. Through incentives, based more around pride and success among peers
than material and monetary contributions, workers can identify and propose
improvements in methods of routine work processes (Adler, 1999). In an effort to
develop a philosophy of collaborative learning, continuous improvement, and world-class
quality, the created document describes the actual operation performed and becomes a
baseline standard for future improvements.
Improving high variable-low volume operations
63
Alternatively, in organisations where the primary function is non-routine innovation,
such as product development or research and design, the structured and codified
organisation typified by lean manufacturing principles can accommodate the mechanical,
routine portions, however; it is ill equipped to manage the creative aspects. In an enabling
environment, the organisation’s system of controls needs to create boundaries and define
the extent of feasibility, yet provide a usable construct for creativity and innovation
(Adler, 1999). Primarily, those performing the operations are highly involved in the
design process. By involving employees to ensure they support the real work tasks, the
organisation encourages individual buy-in from the employee and creates a sense of
personal alignment. Once this strength is transferred to other departments, the entire
company begins to prosper. Similarly, to ensure the enabling quality of organisational
systems, those performing design functions are invited to review their work with the
management staff (Adler, 1999). Through kaizen, the organisation as a system can
improve in a structured process. Policies and procedures that resemble a user’s manual
invite creativity and design exploration to develop more effective and innovative designs
(Adler, 1999). Some critical features of this type of organisational structure include a
focus on best practices methods, allowing customisation and improvisation of standards,
and a method to manage individual’s work individually. The engineering function must
improve the value to the customer, unlike manufacturing that drives out waste activities
(Haque an James-Moore, 2004). Overall, the organisation’s processes provide guidance
for flexibility and dealing with unforeseen contingencies rather than imposing limiting
constraints
5
Integration − lean manufacturing and lean product development
concepts
Fundamentally, many of the lean product development principles can be reduced to the
pillars of lean manufacturing. When inventory buffers decrease, there is a greater
dependence on work standardisation, which leads to a reduced employee discretion
(Mehta and Shah, 2005). This leads to consistent processes and supervision for an
equitable balance in production. Lean production encourages flexibility by rotating
personnel through a variety of production performances and continuous improvement
efforts (Mehta and Shah, 2005). However, it is common for Toyota’s design engineers to
spend enormous amounts of time developing skills to perform a single function. Lastly,
while the lean production feedback process provides prompt response to any deviation,
the lean product development describes varying design deviations and improvements
through the A3 reports (Mehta and Shah, 2005). This suggests that management
recognises the value of lean as a business tool.
5.1 Value
While lean manufacturing uses value to ensure that all operations perform some function
that increases the perceived worth to the end customer by eliminating wasteful actions,
lean product development value focuses on the customer’s requirements and expectations
by establishing customer value early in the product development process. Extensive time
64
H. Qudrat-Ullah et al.
is placed in marketing and strategic planning with a strong focus in the concept stage to
best understand the customer. Further, the Chief Engineer is the chief architect and
systems integrator and acts as the voice of the customer providing direction and decisions
of value. Similarly, lean manufacturing uses continuous improvement champions as the
voice of the customer. Lastly, the importance of value is extended to key suppliers,
through early integration in the development process.
5.2 Value stream
The value stream strives to place sequential operations in the correct order to ensure
that product moves to the customer. Processes are physically relocated next to each
other and operations tailored to provide continuity. Similarly, alternate solutions
provided through SBCE ensure a range of robust design results that minimise the
number of missteps and backtracking (Baines et al., 2006). Just as continuous
improvement efforts use cross-functional teams of those who perform the task,
lean product development strikes a balance between functional expertise and
cross-functional integration to ensure that the work performed is insightful and effective.
Lastly, while a system of workplace organisation provides visual cues to find materials
and equipment without micromanaging, lean product development uses simple tools such
as the hoshin kanri. Both systems ensure that the process is working on the right tasks at
the right time.
5.3 Flow
Lean manufacturing flow is the smooth transition from one task in the value stream to the
next sequential task. Flow moves the group of manufacturing operations from a static
process into a dynamic and reactive system. The management philosophy to ‘make each
decision in its own time’ is the lean product development equivalent. Engineering reacts
to the changes in design requirements as needed and adjusts the flow of the development
process accordingly. As design standards create predictability in the development
process, the flow timeline becomes more salient. Similarly, lean manufacturing uses
visual cues to identify flow deviations.
5.4 Pull
Pull is challenging to identify within the lean product development process,
however; there are two key principles of importance. First, the Chief Engineer
pulls completed designs from functional departments through the detailed hoshin kanri.
As the systems integrator, she/he determines when systems and components must
be prepared for final production and creates the demand for design engineers to begin
the design process. Just as a purchase triggers the supply chain to replenish a
purchased item in a lean manufacturing operation, the hoshin plan provides the schedule
when engineering milestones must be completed. Secondly, through deep technical
expertise and standard design criteria, functional managers can pull additional resources
in order to complete tasks or choose when to begin a task based on the development
time required.
Improving high variable-low volume operations
65
5.5 Perfection
Lastly, perfection is the motif most identifiable within Toyota’s management philosophy.
Lean product development emphasises continuous improvement of the deep technical
expertise. Through a close working relationship with technical supervisors, it is both a
message and the culture to seek out methods to improve. While lean manufacturing relies
on its production workers to improve their process with process engineers, lean product
development depends on design engineers to revise the design standards and checklists
through coordination of the A3 reports in pursuit of perfection. Finally, management of
both lean manufacturing and lean product development drive a culture to support
excellence through clearly defined career paths.
6
Application to a high variable-low volume business environment
Typically, a new product development process follows three basic tenets. First, provide
an improved product that matches the customer’s expectations. Secondly, minimise the
speed to market and last, maintain the budgetary confinements. The lean product
development process fulfils each of these objectives succinctly, as shown in Figure 2.
Coordinated by the Chief Engineer, Toyota deeply explores the customer’s requirements
to quantify the requirements. The SBCE practice provide a system that delays product
decisions until appropriate yet ensures robust designs through parallel engineering
efforts. Lastly, by focusing on the cost to develop products instead of targeting product
cost, Toyota can effectively control product development costs.
Figure 2
Lean product development and high variable-low volume business
PROCESS
• Customer value
• Multiple solutions
• Development flow
• Standardised design
PEOPLE
• Leadership of Chief Engineer
• Matrix organisation
• Deep technical knowledge
• Supplier involvement
• Stride to learning
• Continuous improvement
TOOLS
• Tailored technology
• Visual communication
• Written reports
• Standard tools
• Design standard
improvements
LEAN
PRODUCT
DEVELOPMENT
• Design in value
• Seamless value
stream
• Manufacturing
capability
innovations
Improved Business
Operation
• Customer intimacy
• Short delivery
lead-times
• Range of product
characteristics
capability
Because design standards are codified, shared across the engineering organisation at all
levels, and maintained to reflect current practices, each functional department clearly
understands. This fundamental trust is the common string that ensures success of SBCE
66
H. Qudrat-Ullah et al.
practices. The Chief Engineer is the project champion assigned to each new development.
As such, he/she is the source of information. As all suppliers receive a clear
understanding of expectations, Toyota manages the level of intimacy appropriately to
develop long-term relationships. Management provides a long-term career path for
engineers. With a strategy for deep technical expertise that must be learned through a
close mentorship relationship with supervisors, Toyota provides a culture for long-term
employment. The mentorship relationship also reduces the status difference between
levels within the organisation. Lastly, information is widely shared throughout the lean
product development organisation in a clear fashion in order to minimise the effort to
obtain information, yet provide an effective impact.
However, there is little information regarding business operations that produce a large
number of distinctly different part numbers in limited quantities. There are numerous
businesses that thrive as the industry niche and can further advance market share and
improve market position through the application of lean concepts. Unlike the automotive
or aerospace industries, where the engineering efforts are very intense and the
manufacturing processes are clearly defined, in a small volume, high variety business
there is little time allotted to engineering and the entire time to market becomes very
short. Also, there is a more intimate relationship between customer and supplier as the
customer expects to procure a custom product per their request. As each product must
complete an engineering design process, there is little time for delay. This business
dynamic presents difficulties when applying lean product development concepts.
In order to implement lean product development, the key element is engineering for
business-wide transformation (McManus et al., 2005). First, the definition of value must
be clearly defined. With a short time-to-market and delivery expectation, value from the
customer’s perspective must have enough definition at the order entry to provide the
necessary guidance for design engineering to begin the design process. Secondly, the
value stream between the order entry and engineering release to production must be very
succinct. While the optimum configuration would eliminate queues and waiting, since
there is a limited engineering capacity and a stringent prototyping process before
completion, it is common for each engineer to manage several customer orders
simultaneously that are in different stages of the process.
Since customer requirements vary so dramatically in a high mix-low volume business
to meet a range of applications, there may be a variety in the order of operations
employed. Management must provide with clarity the flow of information and materials.
Unlike the common US trend, where engineers are co-located in a cross-functional
team, a functional engineering organisation can provide some cohesive and
well-grounded engineering applications. Since there are numerous part numbers in stages
of engineering development, engineers with available time can help prepare and test
products for engineering release, thereby minimising risk and queue. Further, at each
stage of the lean product development process, from initial concept, design detailing
through to prototyping, the process must pull customer orders to fill capacity. Lastly, the
lean product development operation must seek opportunities to reflect and critique the
daily, fast-paced operation to seek out sources of waste, and decrease the timeline to
production release.
To accommodate the range of customer requirements that impact a custom design,
low volume-high mix business model, the lean product development process must follow
a single approach to accommodate a known range of product variations as defined by the
customer. Whether the customer requires a minor variation on a standard platform, or a
Improving high variable-low volume operations
67
product that is both unique and highly unusual in application, the engineering
development process must be prepared to decipher the customer’s expectations and
provide a unique definition of value.
Unlike the high-volume lean engineering development operations, the lean product
development process for a high mix-low volume operation must perform in reverse. As
described by mapping the design space, the range of engineering design characteristics
must be clearly described. The manufacturing processes must be able to process the range
of products required by the customers’ unique requirements. Since there is little time to
develop new fixtures, processes or capabilities in order to meet the delivery timetable,
engineering must design products within the limitations of manufacturing. In order for
engineering to include a broader range of characteristics, manufacturing must first
develop the capability to accommodate the customer’s requirements. Lastly, with a clear
definition of the manufacturing capabilities, deviations are easily identified and addressed
early in the customer order development and engineering design process. This concept
has clear resonance with establishing feasibility before commitment. By clearly defining
the map of the design space, the range of feasibility is known at the customer order point.
With deviations based on customer value, the ability to establish commitment can occur
as early as possible through discussion. Deep technical competence is best accomplished
through collaboration with the manufacturing community to best understand the
manufacturing operating procedures, range of process limitations and capabilities. The
variations are endless and engineers can continue to advance and expand the
combinations.
Next, to make relentless strides towards learning, engineering must collaborate with
manufacturing engineering to match the changing requirements and market conditions
with advanced manufacturing processes and capabilities. With each new process or
capability improvement, engineering is provided with a design space expansion and an
opportunity to deepen technical prowess.
Finally, the designated ‘president of the product’ applies well to a product
development process that requires considerable coordination and an extended time table
riddled with many milestones and subcomponent design stages. However, with a short
product delivery timeframe, assigning a Chief Engineer to each customer order would be
consuming and very cost-prohibitive. Alternatively, in the high mix-low volume
business, the product line manager must assume the project management role to ensure
each customer order receives the necessary attention.
7
Conclusions
In an effort to explore the basic foundation of the lean product development model, the
five most basic pillars of lean manufacturing have been identified and discussed.
Combined with an organisation that sets limitations and boundaries of feasibility, the
principles of lean product development work in harmony, support the process, and
provide a successful environment to couple innovation with a well defined structure. By
focusing on waste reduction in manufacturing and value creation in engineering,
magnitudes of improvement can be realised (Lewis, 2000; Mascitelli, 2005).
The primary contribution of this paper was to develop a systematic conceptual model
of lean product development and demonstrate its practical application. The resulting
68
H. Qudrat-Ullah et al.
conceptual model a manufacturing capability innovations and value-creating networks of
roles, activities, and processes aimed at improving the operations of the organisation.
When considering the highly variable business condition of a market where a range of
products are designed and tailored to the customer’s specific requirements, this research
suggest that the lean principles still apply, however; a different perspective and
methodology must be employed. With a more intimate relationship with its customers,
which provides a deeper understanding of the value concept, these businesses must
develop a robust process to clearly communicate the variety of requirements to the
downstream engineering organisation. Since these markets demand short delivery
lead-times, the value stream of design, development and prototyping must be smooth and
seamless. Lastly, the paradigm must move from batch operations to continuous flow.
This is possible as a multitude of customer orders are in process simultaneously in
different stages of development, yet all progressing through the value stream in an
efficient manner. Unlike the traditional engineering organisation that thrives on
groundbreaking innovation and product design advancement, the high mix-low volume
business must instead focus on manufacturing capability innovations and improvements
that are then incorporated into the known and constrained design space. Finally, while the
short lead-time and range of product characteristics justify the intense process vigour and
urgency, time must be allocated for time-bound planning, reflection, and improvement on
a periodic basis.
This study has also identified some important implications for managerial practice.
For example, by developing holistic solutions, designing standardised systems, combined
with highly efficient platform designs that consider modularity and scalability coupled
with a consideration to reduce indirect costs, management can set the stage for an
effective and long-term lean product development organisation (Mascitelli, 2005; Wu,
2003). Management must be willing to ‘invest’ in the improvement of its employees and
remain committed to continuous improvement through incremental change, as a system
of product development of this nature cannot be forged overnight. The basic foundation
of management used by Toyota and explored by other industry leaders can be effective
when guided appropriately to yield long-term industry innovation, strong core
competencies, and high employee engagements.
Although our paper draws on extensive theoretical research and literature reviews, it
presents only one example − high variety-low volume business setting, to illustrate the
practical application of our proposed conceptual model of lean product development.
Future empirical research will be required to gain a more solid understanding of how the
lean product development concepts can contribute and enhance a firm’s flexibility and
performance in innovation and operational capability. Only this future empirical research
can help to further generalise the findings of this research.
Acknowledgements
The corresponding author would like to acknowledge and thank King Fahd University
of Petroleum & Minerals, Dhahran, Saudi Arabia for the support provided to
complete this work.
Improving high variable-low volume operations
69
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