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Global Product Development Services for the Manufacturing Industry

Oct 19, 2009 Business Management

There are massive economic and political pressures for manufacturing companies (such as in the G8 countries) to which they are forced to respond. The combined pressures and responses are radically transforming the industry. The pressures include high-cost labor pools, and costly raw materials (e.g. steel and petroleum). The responses include internal consolidation, outsourcing to global product development, and assembly flexibility. The companies must change their operations to suit these.

To understand these trends, studies have been conducted on manufacturing product development that provide 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).

GPD can be defined as the maximization of financial and operational productivity of the product development process by distributing product development tasks across different regions of the globe to efficiently match value-addition and cost. Part of product development includes marketing activities to recognize and record the needs of the customer.

A key part of product development is engineering activities to conceptualize, design, analyze and refine new product ideas; tasks that plan and document manufacturing, operations and maintenance processes; and sustenance activities for the making of ongoing product updates, changes and refinements.

The studies done clearly demonstrate that companies deploying GPD strategies gain considerable financial and operational benefits. Direct financial savings near 0.5% of company revenue and 10% of the product development budget can be achieved. Indirect savings are achieved by ther operational enhancements featuring 24×7 engineering and the formation of additional specialized skill capacity by reinvesting cost savings.

Many OEM’s now utilize the GPD model leading to restructure of global design and operations for optimal utilization of global resources, increasing the pace of product development thus leading to expense reduction. The implementation of a GPD strategy needs the analysis of product development activities. A company needs investigation of the partition between high value-addition and the low value-addition activities and then requires to find the extent of portability of these activities.

The global product development service model is increasingly used in the modern manufacturing world to maximize efficiencies and minimize costs.

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