E. Efficient engineering
Engineering efficiency is one of the most difficult factors to measure, since engineering costs are highly sensitive to project portfolio outflow and content. Thus, management always perceives reducing engineering costs as fairly risky. Risks include too much business impact on delivery or lead time compared to gains, bad experiences in offshoring, insufficient resources in critical project phases, uncontrolled use of external service providers, etc.
However, it is becoming crucial to improve engineering efficiency, especially in order to help global markets cope with growing workloads due to diversity and global demand, and to manage scarcity of experienced resources.
In our experience, there are still huge inefficiencies in engineering, and numerous improvement levers to be activated. Among these are improving system engineering and synthesis capabilities with a stricter V approach, implementing an efficient resource management approach, improving planning and utilization of prototype and testing shops, making a step change using numerical tools, structuring project platform modes, globalizing competence centers, redefining core and non-core areas and partnership needs, reshaping supplier relationships into new collaborative models to reduce costs along the full value chain, implementing rigorous management systems, etc.
Roland Berger supports its clients in identifying the appropriate levers to improve engineering efficiency.
E.1 Core / non-core competency areas
What our expert says
Wolfgang Bernhart
"Serving both mature and emerging markets with proliferating customer demands and different legal requirements, keeping pace with a rapidly growing technology base to improve product functionality and costs, while delivering all of that at the same or lower cost levels – these are among the major challenges for product engineering.
A simple make-or-buy approach no longer works. Instead, companies must rethink where they focus their own resources, and perhaps even more importantly, where not to focus and where to partner with other companies.
Our approach rigorously accounts for companies' strategic positioning in the competitive environment and provides support in redefining the product creation value chain."
A simple make-or-buy approach no longer works. Instead, companies must rethink where they focus their own resources, and perhaps even more importantly, where not to focus and where to partner with other companies.
Our approach rigorously accounts for companies' strategic positioning in the competitive environment and provides support in redefining the product creation value chain."
Key questions
- Which product features contribute to market differentiation?
- Which innovations/functions or (sub-)systems contribute most to desired product features? What is the best way to attain a frontrunner position?
- What kind of in-house performance structure is needed to tackle these innovations?
- In what areas is exclusive control over product or process know-how needed? Where would leveraging economies of scale or scope improve the competitive position?
- What is the right level of internal resources, and where should the focus be?
- What is the best way to integrate and collaborate with the best partners in product creation? Are there potential partners for whom we can define a win-win situation in a collaboration scenario? What is the best way to approach them? How do we ensure a stable cooperation? How do we change the mindset in our own engineering department to overcome the "not-invented-here syndrome"?
Typical results
- Assessment of risks and opportunities of different options in the context of the overall company strategy and long-term business model (markets, products and technologies)
- Redefinition of core/non-core areas in product development and reallocation of engineering budgets and headcounts
- Clear partnering/cooperation strategy (with competitors, service providers and suppliers)
- Implementation roadmap and support
E.2 Footprint & Globalization
What our expert says
Ken Mori
"In the wake of the globalization of companies, engineering and competence centers need to follow this trend. They need to be the first to match local costs where products are sold, but also capture new needs arising from local markets. However, current legacy engineering footprint is extremely difficult to change because it deals with engineers and core competencies. Moreover, these topics have been very sensitive due to some R&D offshoring failures. Our approach aims at defining the most relevant engineering footprint for our clients. Globalizing the engineering footprint requires having the right activity segmentation (by discipline, along the V cycle, etc.). Based on this segmentation, the objective is to define the region and model (competence centers, application centers or service centers) in which activities are to be performed. Then a consistent globalized organization can be built up with gradual ramp-up in new areas."
Key questions
- How can the footprint be defined as the good trade-off between cost efficiency, quality (performance) of products and reactivity?
- How can the R&D footprint be aligned with the make/team/buy strategy?
- What is the best way to secure core knowledge and yet benefit from low-cost operations?
- What is the right way to ramp up implementation?
- How can the concrete benefits of a globalized footprint be measured?
- What is the best way to manage classic cultural pitfalls?
- Which processes and tools are required to support a global R&D footprint?
- What is the best way to safeguard intellectual property?
Typical results
- Target footprint definition
- Savings/benefits model and evaluation
- Risk assessment
- Implementation plan
E.3 Efficient & lean engineering
What our expert says
Jochen Gleisberg
"Engineering efficiency is one of the most difficult performance indicators to measure, and management always perceives reducing engineering costs as fairly risky. However, engineering efficiency is becoming crucial for addressing global markets competitively, managing scarcity of experienced resources, and coping with growing workloads due to concurrent development projects and global demand. Our approach is pragmatic and geared toward significantly increasing engineering efficiency without degrading competencies and output quality."
Key questions
- What is the best way to define and implement a lean engineering organization (target structure, direct vs. indirect, etc.)?
- What is the best way to speed up the development process (robust development, program planning, de-bottlenecking, etc.)?
- What is the best way to optimize validation means and costs (trials, prototyping, simulation, etc.)?
- How can a lean culture be defined and implemented within engineering teams?
- Which engineering tools will enhance designer productivity?
- How to better leverage suppliers? What are the outsourcing or low cost country opportunities?
Typical results
- Efficiency improvement plan (typical savings: 15%-25% higher productivity, 20%-30% faster time-to-market)
- Lean approach tools and processes (e.g: PDCA) embedded in engineering organizations
E.4 extended enterprise
What our expert says
Alexandre Prost
"Traditional relationship management for key suppliers is no longer enough. Suppliers are now stronger, mutual interdependencies are becoming unavoidable, internationalization requires joint investment in the medium-term and innovation sharing is crucial for creating value. Our approach aims at rethinking relationships with key strategic suppliers throughout the development cycle: earlier involvement in development, shared business commitments, joint risks, common governance, strong and mutual transparency, etc."
Key questions
- Who are the strategic suppliers? How can they be characterized and identified?
- What are the new collaborative ways of working with targeted strategic suppliers?
- To which dimensions of the supplier relationship should this approach be applied (innovation, development, production, economic models, etc.)?
- What is the best way to enhance trust and transparency with strategic suppliers?
- How can this cultural change be supported internally?
- What operational impact will this have on processes (collocated teams, shared drawings and tools, shared intellectual property, etc.)?
Typical results
- Supplier segmentation; strategic supplier list
- Mutual partnership agreements
- Implementation of collaborative models
