Pdma Product Development Metrics May 2000
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Metrics for New Product Development:
Leveraging the Works of Others
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Background• A billion $ company
•The World Leader in Electronic Security•Over 5700 employees worldwide
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Growth•Founded in 1966•1976 - 10 million in revenue•1986 - 100 million•1996 - 1 billion
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Outgrew Systems & Processes
•Product Development slowed down
•Quality issues rose
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•Teams were established •Investments were made in systems
•Positive impact
System & Program Initiatives
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But It Wasn’t Enough!
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Sensormatic’s Journey To New
Product DevelopmentSuccess!
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Roadmap•Borrowing approaches
•Assessment, project selection, implementation
•Key Metrics
•A metrics toolkit
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Inspirations & New Goals
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TTM Process (structured team-based problem solving)
Motorola’s Six-Sigma Program
Design for Manufacturability Program
Xerox-based Baldridge Award criteria
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Assessment[Where are we?]
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Self-Assessment of Development Processes
Mechanical CAD Industrial Design
Rapid Prototyping
Electrical Analysis
Technical Communications
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Needed Improvement•Integrating advanced manufacturing & procurement into design
•Use metrics to drive everyday activities
•Create a problem management system
•Include more quality metrics
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Product Quality Baseline•4% Out-of-box failures•1 in 4 failed final factory tests•8% monthly warranty call rate
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Development Cycle Data Gathering
•Development programs overran schedules because they were under-resourced, poorly defined and not schedule-managed.
•A team was formed
•We were not learning from our mistakes
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Selection Criteria[What Do We Tackle First?]
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ChampionsProduct Delivery Council (PDC)
Continuous Improvement Advisory Council (CIAC)
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Few Programs Selected
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•Self-Assessment score
Criteria Included:
•Cycle time reduction
•Product quality•Cost of implementation•Resources/skills available•Ease of implementation•Timeframe
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Implementation
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Organizational Changes
•Product Delivery Teams were created
•Combined core team members
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Temporary Teams Formed
•Rapid Action Teams (RAT’s)•Continuous Improvement Teams (CIT)
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Requirements for both RAT’s & CIT’s
•Charters (including ROI)
•Executive Sponsor
•Trained, independent facilitator
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Recognition & Reward of team efforts
•Badge pins and promotional items
•Quest competition
•Trips and more!
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Our New Toolkit•Product Quality Data & Benchmarking
•New Product DFM•Development Process Self-Assessment
•TTM 7-step Continuous Improvement Process
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Product Quality Data & Benchmarking
We needed measurable and justifiable
targets for new product quality
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TDPU
.027
95%
90%
97.3%**
Industry AverageTarget Range -Old Products
100%
PLANT FPY*
Source: Industry Week 1998 World Class Performance Metrics
Best in ClassTarget Range - New Products
Below Industry Average
0
.05
.1
Plant Benchmark
*First pass yield**True BIC=99.7% Median BIC= 97.3%
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2.6K
14.9K
1K
Industry Average
PPM
Out of Box Benchmarks
Source: Industry Week 1997 Benchmark Electronic Equipment companies over 1000 employees
Best in Class
Target Old Products
Target New Products
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15K
4.2K
Industry Average
Target - New Products
MTBF = 5 Years(18% Annual failure rate)
MTBF = 20 Years(5% Annual failure rate)
Warranty Benchmarks
Monthly PPM
Best in Class
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95%
90%
97.3%
100%
PLANT FPY*
Best in ClassTarget Range - New Products
TDPU
0
.027
.05
.1
1 YEAR
Plant Benchmark — New Product Introductions
*First pass yield
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2600
1K
Best In Class
PPM
Out of Box Targets — New Product Introductions*
Target New Products3939 34% Reduction
6 Months *NPI curve developed by Dell
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4.2K
1K
PPM
Target New Products5.6K 25% Reduction
Warranty Targets — New Product Introductions
6 Months
Best In Class
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New Product DFM…(Preferred fastener set)
Number of total fasteners in the system 4000Number of fasteners active in the system 1200
Number of fasteners in original Preferred Set 74
Date Preferred Set was implemented July 1, 1998Number of additions to the Set 2
Number of one-time exemptions to the Set 14
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Development Process Self-Assessment
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Rating Results Approach Pervasiveness
1 Anecdotal or generalizationor guess
Anecdotal, no system evidentor documented
Anecdotal, isolated, may notbe true at all levels
2 Sporadic trends Sloppy or over bureaucratic Theory not practice
3 Some positive trends insome of the areas deployed
Beginnings of systematicprevention basis (or process)
Some core areas of business management or employees
work the problem Process is being used where
it’s supposed to be
4 Positive trends in mostmajor areas
Evidence that some resultsare caused by approach(achieving desired results)
Measuring (metrics)Success criteria established(measurements can includesurveys)
Sound, systematic preventionthat includes evaluation /improvement cycles
Some evidence of integrationinto management process
Core areas of business Management or employees
work the problem Closed loop process is
universally used. Some evidence that results
are linked to rewards
5 Good in major areas Positive trends from some to
many areas Evidence that most results
are caused by approach
Sound, systematic preventionbasis with some evidence ofrefinement through evaluationor improvement cycles(Process not stagnate,continuos improvement)
Sound evidence of integrationinto management process
Core areas of business, plussome support areas
6 Good to excellent in majorareas
Clear evidence that mostresults are caused byapproach
Good integration (withsuppliers, customers, stakeholders).
Evidence of benchmarkingworld class processes at othercompanies
From some to many supportareas
7 Excellent (world class)results in major areas
Good to excellent in supportareas
Sustained result (2-5 years)
Sound, systematic preventionbasis refined throughevaluation/improvement cycles
Excellent integration Use of lessons learned Continuous benchmarking
world class processes
Core areas and support areas Full deployment (fully
integrated into SRMbusiness processes)
Management, employees andcustomers work the problem
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TTM 7-Step Continuous Improvement Process
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Our Metrics Roadmap
•Existing Product Quality•New Product DFM•Development Process Self-Assessment•Development Cycle Time•New Products Released•Financial (% of revenue from new products)
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Existing Product QualityJune 1997 actual
June 1999 goal
Targeted % reduction
June 1999 actual
January 2000 actual
January 2000 % reduction
Warranty 83 dpm 37 dpm 58 28.8 dpm 11.2 dpm 87%Out-of-Box 41 dpm 4 dpm 90% 25.3 dpm 6.8 dpm 83%Factory .242 dpu .037 dpu 90% .070 dpm .048 dpm 80%
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New Product DFM
Design for Manufacturability
SpeedDome SpeedDomeUltra
Mechanical parts 59 20Cables 9 5Fasteners 63 9Adjustments 5 1
Standalone UltraPostMechanical parts 69 18Cables 28 5Fasteners 214 24Miscellaneous 83 27
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Development Process Self-Assessment
•November 1998: 53 development tools and processes resulted in a score of .42 [The average US company score is .40]
•July 1999: our assessment improved 10% to .46 [US BIC is .60]
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Development Cycle Time
Average cycle time(calendar days)
FY97 FY98 FY99 FY2000Concept phase 166 146 103 64Development 448 264 244 205
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New Products Released
Number of new products released
FY97 FY98 FY99 FY2000 FY2001Concept phase 8 17 20 35 TBDDevelopment 5 10 28 31 34
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Financial Results
Percent of Revenue fromNew Products
30%
40%
50%
60%
FY98
FY99
FY00
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Financial Results
Percent of Revenuefrom New Platforms
0%
5%
10%
15%
20%
25%
30%
FY99
FY00
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Stock Price
Financial Results Stock Price By Quarter
0
5
10
15
20
25
Price
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Financial Results
Earnings Per Share
Earnings Per Share By Quarter
-0.1-0.05
00.05
0.1
0.150.2
0.250.3
EPS
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What did we learn…What do we still have to do?
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Lessons Learned•The easy targets are easy to fix, yet minimal impact
•Make teams accountable, reward them
•Impossible to get accurate date
•Take advantage of a crisis and/or senior management advocates in other areas•Establish & stick to justifiable selection criteria
•Select your quality, proactive people, reward them
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To go to the next level
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Product Launch Process Must Improve
•Requires confidence in our ability to meet development schedule
•Requires confidence in our ability to deliver first-out product quality
•Need a next-gen metric - first year audit performance to plan
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Eliminate NVA Time (sign-offs, logistics)
•Shipping & logistics constitute 10-25% of total development cycle time•Total supplier cost management•Web-enabled processes•Alignment of non-core team members
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Better, Smarter, Faster Testing
•Field testing constitutes 45% of the total development cycle time•Fund, involve, develop customers
•Accelerate testing in-house
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Expanded DFM•Eliminate of non-preferred fasteners in older designs•Design for Build-to-Install
•Expansion of Preferred Set to electrical components
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Our Goal
Double Our Revenue In The Next 3 Years!