issue: June 2006 APPLIANCE Magazine
The Open Door
Outsourcing Product Design
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by Anupam Asthana, head of Engineering Services, think3, Inc.
It’s no secret that manufacturers—both big and small—are looking at all options to increase cost efficiency. And as the industry becomes increasingly global, outsourcing is now hitting all aspects of an appliance company’s operations, including design and engineering.
What to Outsource
While the key focus for the engineering department is to focus on more complex areas like electronics and product aesthetics, many manufacturers are finding that the standard activities of engineering are better completed outside the company. Some of the typical outsourced design and engineering activities include the following:
• The bulk of work on 2-D and 3-D modeling and detailing for manufacturing once the product layout is decided. Design modifications and engineering changes can also be outsourced (based on the appliance engineer’s requirements).
• Specialized skills like styling and simulation, which are expensive, especially for small manufacturers. However, often styling is a confidential aspect of product development. In these cases, the objective of outsourcing would be to gain knowledge by working with experienced engineers and then build the expertise in-house.
• In the areas of product analysis, the functions of pre-processing, problem solving and post-processing can be outsourced. However, quality checklists must be identified and carefully checked in-house.
• The tooling and fixture design used in manufacturing can be outsourced. These areas aren’t typically core competencies of an appliance company unless they are integrated downstream into company operations.
• Some of the very standard activities like technical publications and services manuals can easily be outsourced. The IT infrastructure maintenance can also be outsourced.
Suppliers of these services are often different for each area and are hired based on the programs and requirements of the appliance company’s engineering department. Managing the design supply chain requires integration between the appliance engineers and service bureaus.
Because the main objective of outsourcing is to lower the fixed cost of product engineering and development, it is important to track the costs of coordination and time spent on quality checks. Regardless of whether a company is outsourcing to gain additional resources or specialized skills, the project plan must be clearly outlined and well documented from the start.
To obtain the maximum from outsourcing, project plans should be clearly assigned and all the standards and quality checklist well documented at the start of the project. The appliance company’s project leader should ensure that the outsourcing partner’s skills and experience are in line with project expectations. The confidentiality of product data must also be ensured. Wherever possible, integrating product data with the appliance company’s product data management (PDM) system avoids confusion during design iteration cycles.
Where to Outsource
Outsourcing to offshore locations like India provides an attractive opportunity for appliance manufacturers. Engineering department managers can build technical centers to house multiple requirements and manage them as a single center. This would include sending activities like modeling and detailing, design modification and analysis to India in a phased manner. Coordination costs can be reduced and cost efficiency significantly improved. The goal, of course, is not to add any fixed costs in the process.
One of the key considerations of outsourcing at an offshore location is that there is bound to be a learning curve. Also, change management will be required within the company initiating the outsourcing.
It goes without saying the selecting the right offshore partner is critical and needs to be done carefully. Key considerations of the offshore partner include stability, whether they have local offices in the manufacturer’s home country, strong project management skills, a skilled engineer base, good IT infrastructure, and security to safeguard product data. Also, for small- and medium-sized companies, it makes sense to work with partners that understand your needs and have flexible operational models to meet your requirements. In some cases, it may be helpful to utilize the services of a consulting firm, which can offer expertise and provide contacts to help initiate offshore outsourcing.
Whether your need is to cut costs or gain design insight, outsourcing is an attractive option for any manufacturer looking to stay competitive. However, jumping on the outsourcing bandwagon is not enough. Appliance manufacturers must know the right steps to take to ensure a successful outsourcing partnership.
About the Author
With a masters in Engineering from IIT Mumbai (Mumbai, India), Anupam Asthana has more than 13 years of engineering services experience, including research and development work and outsourcing management. He was recently named the head of Engineering Services at think3, Inc., an industrial design and product development firm based in Cincinnati, Ohio, U.S. If you would like to contact Asthana, e-mail email@example.com