Market Driven Enterprise: Product Development, Supply Chains, and Manufacturing / Edition 1

Chapter 1: Domain and Process Views of an Enterprise

The activities that appear to have most impact across the interface between marketing and manufacturing are product design, quality assurance, demand and capacity management, inventory holding, supply chain, production scheduling, and costing.

Product Design

Because of the increasing importance of two factors-decreasing product life cycles and shortening time to market-product design is assuming strategic importance. It is a given that marketing people would want products to mean all things to all people (Shapiro 1977). However, since customer preferences and customer ability to pay vary widely, and since customers appreciate variety, with emphasis on new products, it may not be cost-effective to try to satisfy all customers in all market segments at all times. Increasing product variety requires a larger number of unique components to be designed and manufactured, increasing cost. Modular product design increases component sharing, but it may also reduce product variety to a less-than-desirable level for customers. Flexible manufacturing equipment can produce a wide range of components on the same machine, but the cost of designing and implementing a flexible manufacturing system (including personnel training) may be very high. Similarly, to reduce the time to market, product development time must be reduced. One way of doing that is to overlap (in parallel) development activities such as prototyping and testing, which would otherwise be done sequentially. Overlapping such activities can be very risky, however, as a design error found in one test may require all other tests, done in parallel, to be repeated.

An application of product design to reduce time to market of singleuse 35 mm cameras is reported by Kodak, who used a well-structured database and a computer-aided procedure to frequently exchange design drawings among different functions (Davenport 1993). This transformed a sequential design process into one where components could be designed in parallel.

Quality Assurance

There are several dimensions of product quality (Garvin 1984), but the two major dimensions are conformance quality and performance quality. Market share can be increased (albeit in different segments) by improving conformance quality (practiced by Japanese companies) or by strengthening performance quality (practiced by German companies such as BMW). To enhance performance, it is crucial that emphasis be placed on technology innovation and its incorporation in product design. This requires product designs to be modified as and when new technology appears. In the case of BMW (Pisano 1996) this has meant that product designs could not be frozen even at advanced prototyping stages, and so expensive modifications in manufacturing processes were required even during production ramp-up. This ensures the latest technology in products, but the time to market may become long and uncertain, and the cost of product development could be high. Japanese companies, on the other hand, aim at conformance quality. They meticulously practice freezing designs at a certain point, so any new technology innovations beyond those time fences are left to be incorporated in a future modification. During prototyping they lay emphasis on process simplification, appropriate material use...