Study Supports Value of Lean Engineering

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.

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