The Boston Consulting Group and the Laboratory for Machine Tools and Production Engineering RWTH Aachen University recently published The Lean Advantage in Engineering study of Lean Engineering methods and cost/cycle time/quality benefits achieved by adopters.  The study confirmed the value of fail-fast and short iterative cycles in lean engineering in reducing the product target costs.

The BCG have compiled a best practices model of lean engineering that entails 16 practices in four dimensions organized for effectiveness (doing the right things) and efficiency (doing things right):

1. Product – For effectiveness use strategic positioning, holistic and detailed roadmap, and transparent product requirements. For efficiency use a modularized product design and optimized product range.
2. Processes – For effectiveness use solutions-oriented design sets and an agile/fast cycle process. For efficiency use flexible workload leveling and sequencing to reduce bottlenecks.
3. Leadership & Behaviour – For effectiveness use proactive uncertainty management and fact-based/fast-cycle steering. For efficiency use cross-functional collaboration and empowered project management.
4. Enablement and Tools – For effectiveness use experience and expertise driven development. For efficiency use speed-supporting tools and single source truth.

Lean Champions – What Does Good Look Like

19% of the study participants were judged to be Lean Engineering Champions based on the following distinguishing characteristics:

• Routinely apply lean engineering methods in most projects.
• Established lean engineering as the new standard in engineering.
• Succeed in decreasing development time significantly (as much as 25% faster and up to 6 months faster).
• On average complete 71% projects within scheduled time,
• On average complete 74% projects within budget.
• Two thirds have full transparency into capacity utilization and specify flexible mitigation actions to avoid project disruptions in the medium to long-term.
• 70% employ a cross-functional knowledge management system to maximize reuse in some cases on a global scale.
• Leaders in modularization were better at shortening the duration of a development process by 15-20%.
• Leaders use modularization with standardized interfaces across the full range of product lines and families and differentiate modular product design on the basis of customer requirements.
• Practitioners of agile development complete 59% projects on time with 35% lower deviation from product target costs where product cost decreased as the number of gate reviews (ie. iterations) increased.

Other Interesting Conclusions

• Most participants at least considered implementing lean engineering;
• Participant performance was above the mean in strategic positioning, transparent product requirements, cross-functional collaboration, speed-supporting tools, and single source of truth.
• Participant performance were below the mean in modularization, optimized product range, solution-oriented design sets, agile/fast-cycle process, sequencing to reduce bottlenecks, fact-based/fast-cycle steering, and experience/expertise-driven development.
• High levels of maturity in diligently translating customer requirements into a full set of product specifications and early involvement of other functions in the development teams.
• Low use of product modularization with limited reutilization of existing modules.
• Engineering processes were typically broken up into five or fewer long phases lasting 6 months or more with feedback provided at intermediate stages as opposed to more frequent feedback iterations.
• Engineering KPIs were usually available but were not clear or meaningful enough for steering.
• Design reviews occurred too late to allow for effective steering.
• Most companies do not have a design library like cross-functional knowledge management system.
• Know-how is managed locally and lessons learned shared almost exclusively within a function.

What Is The Key Take-Away

Firms that compete in engineered product markets need to take a closer look at how they stack up against emerging lean engineering champions who are achieving  significant competitive advantages in terms of cost, speed, and quality then put in place a medium to long-term improvement program. Alopex Management Consulting can assist firms achieve this very critical strategic objective.