DESIGN FOR EXCELLENCE

A key part of any product realization process is the robustness of the design. In the United States, many "Design for" initiatives such as Design for Assembly, Design for Cost, Design for Manufacturing, Design for Test, Design for Logistics, Design for Performance, and so on are now being referred to as Design for Excellence (DFX). The JTEC panel found that Japanese design emphasizes two key areas: the overall development process and concurrent engineering. As shown in Figure 7.1, there is a strong customer focus at the product planning phase and in the product evaluation phase of the product development process. The overall product development process is rooted in what Japanese firms call the "market-in." Market-in refers to having a clear set of customer-driven requirements as the basis for product development. This is a fundamental requirement for DFX. Concurrent engineering of product design and development activities provides the second main step in achieving DFX.


Figure 7.1. Japan's product development activities (Toyoda Machine Tool Co.).

In order to effectively deploy a timely design, thorough testing of the design and process training are considered a must. The JTEC panel members toured a number of training facilities affiliated with process development laboratories. Company employees, often including foreign nationals, receive months of training on specific manufacturing processes before equipment is installed overseas.

A successful DFX process requires carefully managed design of new products. As shown in Figure 7.2, there are numerous activities that must be coordinated in order to develop and implement a successful product realization effort. Information must be gathered and analyzed from regions of the globe in which products will be introduced, and products must be market-tested in those specific regions. An engine controller for use in an American version of a Japanese automobile, would, by necessity, receive its reliability testing in the United States. Products that are targeted globally, however, also get tested in Japan in order to carefully control the products' globalization. Technology development activities must operate in parallel with product technology planning and market development planning to assure timely development and introduction of new products.


Figure 7.2. Concurrent development requirements (Sony Corp.).

In Japan, product development and market testing is widespread. A visit to the Akibahara, Tokyo's electronics district, introduces the visitor to many consumer products that will never leave the shores of Japan. The strategy of testing products at home differs from the strategy of some U.S. companies that test new products in whatever region of the world is most likely to provide the initial product order. Experience has shown that Japanese consumers are more demanding and also more willing to buy new products than consumers in many overseas markets. As a result, the latest versions are typically found in Japan first. The best-received new products sold in Japan are then exported with expectations of high acceptance in overseas markets.

Concurrent Development Activities

Focus on concurrent engineering is prevalent in all the organizations the panel visited. The primary objective is to get the overall design right at the lowest cost. This requires making critical decisions as to product features/functions, manufacturability, and most importantly, cost. JTEC panelists saw numerous examples of this focus on concurrent engineering in order to lower product cost. Our hosts at Sony described in detail an effort to develop the adhesives used in the assembly of the CD pickup head in order to achieve cost goals of the product line. Similar stories from other companies abound. Functional boundaries are disregarded once product or cost objectives are specified.

Evidence of Japan's concurrent engineering culture was overwhelming to the JTEC panel. As shown in the following figures, firms use a variety of concurrent engineering schematics to depict product, process, and equipment development efforts. For a firm with a core material competence, the product is often a new material, and its schematic would show concurrent development of materials, process, and equipment. Concurrent engineering is a culture in Japan. New products and materials are developed simultaneously with the processes and equipment needed to produce them.

Japanese firms first attempted to break down functional barriers as part of the TQM (total quality management) activities initiated to incorporate quality into product design activities. This was the beginning of what is today referred to as concurrent engineering. The strategic objectives typical of Japanese firms in the mid-1980s were summed up in the quality, cost and delivery (QCD) motto (see Chapter 2). Functional compartmentalization was totally inadequate to effectively meet the cross-functional requirements of these strategic objectives.

MITI described the first functional integration model based on teams, as shown in Figure 7.3. This approach is a minimum requirement for competitive success in product development and for facilitating rapid product introductions. MITI points out that close coordination between functions dramatically cuts time to market. The problem with this model is that any one of the functions can still become a bottleneck to development activities because of shared resources. Sharp utilized this model until 1990, when it moved to what is known today as concurrent engineering. A similar problem now faces producers of electronic products that lack manufacturing capabilities in electronic packaging. Without the capabilities to produce and assemble miniaturized components in-house, firms will be unable to get next-generation products into the market as quickly as their competitors.


Figure 7.3. Functional integration required for technological innovations (MITI).

Going beyond team developments, the concept of concurrent engineering is being practiced in Japan under TQM systems. (Sharp changed the name of its practice from TQM to concurrent engineering after U.S. visitors in 1990 described what it was doing as concurrent engineering.) To shorten time to market for new technologies, firms are working simultaneously to develop component and insertion technologies to be introduced at the time the product is prototyped. As shown in Figure 7.4, concurrent engineering requires parallel implementation of all functional activities.


Figure 7.4. Concurrent engineering for product innovation (MITI).

In advanced electronics, U.S. product development is going to be limited by the lack of basic technologies required for successful production of advanced electronic products. Thorndyke (1993) was not very encouraging to small supercomputer firms in the United States. He noted that the lack of high-performance packaging technology and assembly capability was putting them in jeopardy:

The U.S. companies are in danger of being driven out of the market because of the high costs of a broad product line and the multi-billion-dollar revenues required to fund the R&D and tooling. The only U.S. companies that can compete in such a broad market [are] IBM, and possibly Cray Research.

The MCC/Sandia report (1993) came to a similar conclusion:

The low cost, high technology manufacturing base of Japan qualifies it to gain significant market share in the area of industrial electronics and high performance systems. To defend existing opportunities and to create new avenues for economic growth, North America must develop a similar low cost, high technology manufacturing infrastructure. This can only be accomplished through a commitment to manufacturing consumer products, and in particular, consumer electronics, which can provide the high volume demand necessary to rationalize the cost of investment.

Innovation and Improvement

In the area of innovation and improvement, the Japanese focus is on core competencies and on technology. Companies with core competencies in manufacturing and materials include the following:

Miniaturization and Automation
Sony
Matsushita
Nippondenso

Materials
Ibiden
Nitto Denko
TDK
Murata

The JTEC panel found that the concept of core competencies is well understood by these companies. For example, an excerpt from a Murata annual report reads, "Superior electronic materials lead to superior electronic components, which lead to superior electronic equipment." The micromachining core competency of Nippondenso is so integral a part of the company's strategy that one recent annual report features a 4.8 mm long micromachined automobile, complete with rolling wheels and license numbers. A photograph of the car is printed on a page of a dictionary, positioned on top of the word "creative."

Corporate core competencies enable efficient use of technology; furthermore, process technologies enable more rapid product introductions. For example, Ibiden coupled its competency in inorganic materials and in electronic laminates (two separate divisions of Ibiden) to develop Ceracom. Ceracom is a low-cost ceramic-cored printed wiring board for direct chip attach applications that require a substrate thermal coefficient of expansion similar to that of silicon. Another example is the surface mount component mounting density roadmap that Sony uses to drive its HandyCam development. Sony's TR1 palm-sized HandyCam required the development of a 20 components per square centimeter process, nearly double the density of previous models. Sony presents this story as one in which the process technology enables the company to achieve its product size objectives for next-generation products.

The JTEC panel found that most companies visited have a base technology strategy that is relentlessly pursued. One panel member had also visited two of the companies in 1990. He said, "In comparing the 1990 and 1993 meetings, I was impressed with the degree of their consistency in their technology development activities. I describe this as 'techno-perseverance' as opposed to 'techno-thrashing.' If you visited U.S. firms on 3-year intervals, they would most likely be pursuing entirely different technologies in their search for 'silver bullet' solutions. These Japanese companies covered the identical strategies for fine-pitch SMT development that I had seen in 1990, often using the same identical overheads showing progress along the technology timeline. [Chapter 4 covers many of these developments.] The point to emphasize here is the tireless pursuit of the technology strategy and the accompanying resistance to distraction."

Increasing Value Added Through Component Development

Successful product realization efforts demand both product and production strategies that ensure adequate gross margins and successful product or product line deployment. To ensure adequate gross margins, companies focus attention on value addition and product phasing. Companies that JTEC visited showed a clear understanding of present costs and value added for their products, components, or materials. Consumer electronics product firms such as Matsushita increase value added opportunities through vertical integration to supply the value chain for their products. For example, Matsushita provides the substrates and many of the components used in Panasonic VCRs.

For compact disk players' optical pickup heads, Sony developed the design, processes, and equipment necessary to produce them in-house. Today Sony provides 60% of the worldwide market for optical pickup heads for compact disk units. For the 8 mm video camera, Sony developed the magnetic pickup head and drum and the CCD (charge-coupled device) components as key parts of the overall program. The value added from key components is about 65%, compared to only about 12% for final assembly. Since Sony makes about half of its key components, it is able to derive 35% value added from in-house production of key components, compared to only 12% for the assembly of 8 mm camcorder products. The value added contribution of other products like CD players is similar.

Product phasing into next-generation products is clearly understood in Japan. While U.S. companies seek to extend product life cycles and shorten development cycles, Japanese companies seem to more clearly differentiate between product improvements and new product introductions. Product improvements occur annually or even semiannually for the most competitive consumer electronic products. New or next-generation products typically require 1-5 years for development. The Sony Walkman, with 160 model releases since its introduction in 1979, has an average model life of less than 18 months. Typically, annual product improvements are released in response to competition, and the central labs, in conjunction with factory teams, engage in developing 3rd- and 4th-generation products.

Requirements of Production Skills

The final phase of the product realization process focuses on execution and competition. Keeping product cost low is critical to remaining competitive in the consumer electronics industry. The cost objective can be lost for a myriad of reasons. The Japanese concentrate on a set of requirements that include the following: developing what the customer wants; ensuring that the product is manufacturable; targeting and obtaining the desired value addition; tuning production processes and equipment for maximum yield (automating to reduce defect rates, to produce miniaturized products, to facilitate rapid offshore start-up, and to free up skilled labor); and utilizing global markets to achieve economies of scale.

The panel found that Japanese firms invest heavily to tune production processes for next- generation products. Each new product generation is designed for the most efficient production techniques and equipment. This includes the reduction of the number of parts and the use of standard parts whenever possible. Industrial engineering techniques are used to optimize velocity and minimize waste in a manual production line. Automation is then applied to maximize efficiency and minimize production cost.

Automation has become an essential element of the product realization process at the electronic packaging level, for several reasons. Increased quality and miniaturization are two reasons cited, but Sony automated its Walkman assembly process in order to rapidly deploy Walkman production to offshore sites. Developing new markets and overcoming currency exchange rate barriers are two of Japan's most pressing challenges. Firms are being forced to move operations out of Japan to less developed countries in order to stay competitive. Sony found that its fully automated production line could be deployed and brought on line in a period of one to three weeks compared to three to six months for a manual assembly line.

Man-machine harmony was also mentioned in most discussions on automation held during the JTEC visits. A stated advantage of and reason to automate is to free up human value for more complex and creative tasks. Some of this discussion is, in reality, a rationalization for the replacement of manpower with automation.

Japanese companies visited by the panel study their competition continuously. They respect and attempt to fully understand their competition at all times, and they appear to relish the "fight." For example, Konosuke Matsushita wrote in My Management Philosophy, "My proverb about management says that if we fight a hundred wars, we should win a hundred victories," and also, "You pray for the survival of your rival because you want another chance to demonstrate your superiority."


Published: February 1995; WTEC Hyper-Librarian