Concurrent Engineering with Early Supplier Involvement: A CrossFunctional Challenge

The business and academic press has been active in presenting indictments and mandates relating to corporate America over the past decade. An early volley was launched by Hayes and Abernathy in 1980 as they described how we were "managing our way to economic decline."|1~ The massive study of the MIT Commission, summarized in Made in America: Regaining the Productive Edge published in 1989, reemphasized the dilemma. It pointed out the complexity of the problem leading to American industry's declining competitiveness in the international marketplace. The report went on to enumerate interrelated patterns of behavior believed to be significant contributors to the problem. The first of the factors cited by the MIT study team was "outdated strategies." It found that American industrial firms, in searching for ways to reverse the decline in competitiveness, were turning to the methods they had used successfully in the "golden years of growth and innovation" -- the post World War II era. It emphasized that the results have been like those of a person who keeps striking the same match because it worked fine the first time.|2~ Simply working harder, using the practices that were successful in the past, is not the solution. Many organizations can attest to this. It is evident as they examine their sales revenue, market position, and profit-performance trends. Taking a lead from the MIT study, this article centers on the first of five strategic imperatives recommended by the study team: "Focus on the new fundamentals of manufacturing." The article uses the broader definition of manufacturing, embraced by the MIT study team, which includes "designing and developing products, as well as planning, selling, and servicing them."|3~ This study does not claim to provide all the answers. It does propose to provide a meaningful approach to tackling some of the basic forces that influence the productivity, and hence, the competitiveness, of the industrial organization. The research focuses on processes which can substantially influence the three interrelated factors that have the greatest impact on corporate performance--quality, cost, and time. The basic process examined is concurrent engineering (CE), using a cross-functional team approach. The complementary process is early supplier involvement (ESI), with key suppliers serving as CE team members. The strategic role of purchasing as a team member--initiator, coordinator, facilitator--is examined. THE OUTDATED TECHNOLOGY The traditional method of taking ideas from the research laboratory into product design, through production, and on to the customer is shown in Figure 1. This process has been referred to as the pipeline method of technology development.|4~ The number of steps varies by company, but normally requires five to ten major steps with a "handoff" from one division to another inside the company. One researcher compares the traditional process to a relay race, with research or marketing coming up with a product idea and handing it off to design. Design engineers develop a blueprint, and a hand-built prototype, and throw the design "over the wall" to manufacturing, where production engineers try to bring the blueprint to life. It frequently must be sent back for revision, starting the race over again--and again. Once everything is set, the purchasing department calls for bids on the materials, parts, and equipment needed, with lead times sometimes extending many months. A design problem that surfaces after the process is under way--perhaps with products in the field--requires expensive engineering changes.|5~ Research by Dataquest, Inc., has shown that the typical cost of a design change made during design, of $1000, grows to $10,000 during testing, $100,000 during process planning, $1,000,000 during test production, and $10,000,000 during final production.|6~ This traditional process is extremely time consuming because the individual functions work independently with the product, or idea, after the preceding unit has completed its phase of the process. …