Communication key in product development
Change is constant in manufacturing, and purchasing has to keep suppliers informed of new product requirements. PLM helps.
By Paul E. Teague -- Purchasing, 8/17/2006 2:00:00 AM
If product development were a circus, purchasing departments, suppliers and engineers would be the acrobats, flipping through flaming hoops as they continually adjust to constantly changing product requirements.
Those changes, known as engineering change orders (ECOs), can come from customers, marketing or design engineers themselves. Whatever the source, when they hit, purchasing has to fly into action, quickly notifying key suppliers and contract manufacturers so that everyone works from the same bill of materials (BOM) and the correct product rolls out of manufacturing.
The key is in the notification, and increasingly companies are using product life cycle management (PLM) systems to document and track the change orders—as well as virtually all other aspects of the product-development process.
As the principal liaison with suppliers, purchasing can play a vital role in making sure everyone knows about the changes early. Last-minute surprises can result in the wrong product being produced and the company wasting time and money in re-dos.
Here are examples of how two high-tech companies deal with ECOs:
Time savings is the benefit
About four years ago, ViaSat, a developer of satellite communications and secure networking systems, had a team of configuration administrators who would check BOMs line by line to be sure they contained the latest information about the products and incorporated the most recent change orders. Result: lots of errors, the result of miscommunication or lack of communications, would show up late in the product-development cycle. Further result: delayed product shipments while the company corrected for the mistakes, and, sometimes, missed budget targets.
To solve the problem, ViaSat installed Agile PLM to document and control the product development process, including the handling of ECOs. “Now everyone works from the same sheet of music,” says Brandon Johnson, director of engineering services.
Purchasing is involved in the communication and approval of ECOs because of the impact the changes have on suppliers and contract manufacturers. Now, when an engineer makes a change, Johnson says, it goes into the Agile system where other parties, including purchasing, review it for approval. “The big benefit [of streamlined ECO communication and approval] is time savings,” says Johnson. “In one day, engineering can make a change, get approval, and the contract manufacturer gets the change that same day too.”
When ViaSat buys kits through distributors or finished product through contract manufacturers, it sets up the distributors and manufacturers to receive BOMs and BOM updates through the Agile PLM system. “Purchasing maintains the field in Agile that includes the suppliers,” says Johnson. The system automatically sends ECOs to the appropriate suppliers, and purchasing monitors supplier performance.
Poised for action
Next time you watch Wheel of Fortune, Let’s Make a Deal or the Oprah Winfrey Show, check out the high-tech lighting and signage. It’s the result of in-depth engineering that has some of its roots in the robotics field. Like much technology coming from U. S. manufacturing companies, it’s also the result of collaboration between American engineers and offshore suppliers and contract manufacturers. And, like practically every technical product made anywhere, it regularly evolves in concept and detail throughout its life cycle.
Especially early in the life cycle. “LEDs (light-emitting diodes) are among the technologies in our products that change rapidly,” says Fritz Morgan, vice president of operations for Color Kinetics, which develops the full-spectrum illumination systems. Incorporating the technology updates into its products quickly helps the company keep its products fresh and in demand. But only if the changes make their way to far-flung manufacturing operations in China. And that requires a system and process for documenting and communicating engineering change orders. Without such a system, manufacturers can be working on outdated bills of materials (BOMs).
Under Gordon Trawick, vice president for supply chain, purchasing at Color Kinetics is poised to get more deeply involved in the engineering change order (ECO) process to make sure that contract manufacturers are building to the correct design parameters and BOMs. It will be a natural extension of purchasing’s role in helping to find contract manufacturers, tracking their quoting and providing them with approved lists of vendors with whom purchasing has negotiated prices for various components. Purchasing also connects applications engineers from component suppliers to Color Kinetics’ own engineering staff to leverage suppliers’ expertise.
To streamline and document product development, Color Kinetics uses Arena PLM (product lifecycle management). “We use Arena for all communications,” says Morgan. Here is how the product-development and engineering change order process works at the company:
1. When the design models are complete, engineers load the BOM into Arena.
2. The BOM goes to the contract manufacturers in China, who quote on the project based on their own costs and the component prices negotiated with approved vendors by purchasing. The contractors buy the components from those vendors locally and are free to use alternate vendors if they can get lower prices. Meanwhile, purchasing buys critical components like LEDs.
3. Purchasing provides contract manufacturers forecasts of expected number of units required.
4. Color Kinetics releases the product for manufacturing.
5. The company does pilot testing of the products and, as a result, may revise the BOM.
6. Purchasing makes sure contract manufacturers continually check the Arena PLM system for product revisions.
Purchasing will get more involved in the engineering change order process in the future because of their role in communicating with the contract manufacturers, says Morgan.
what it means to buyers
• Purchasing must ensure that
suppliers are informed early about engineering change orders
• Product life cycle management (PLM) can help companies track engineering changes
The big benefit [of streamlined ECO communication and approval] is time savings, in one day, engineering can make a change, get approval, and the contract manufacturer gets the change that same day too. —BRANDON JOHNSON, DIRECTOR OF ENGINEERING SERVICES, VIASAT
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