Application of production management principles to engineering processes: An explorative study

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1 Application of production management principles to engineering processes: An explorative study Johannes Hinckeldeyn 1, Rob Dekkers 2, Jochen Kreutzfeldt 1 1 Department of Mechanical Engineering and Production, University of Applied Science, Hamburg, Germany 2 Business School, University of the West of Scotland, Paisley, United Kingdom Corresponding author: Johannes.Hinckeldeyn@haw-hamburg.de Abstract The capability to develop high quality products and processes constitutes the competitive advantage of many engineering companies. In production management, numerous tools exist for improving both effectiveness and efficiency. This study explores the applicability of these production management principles to engineering management. An academic focus group and engineering managers in seven German companies were interviewed and the application of several methods was identified. The outcomes confirm that the application of production management principles to engineering processes is related to the degree of novelty that is inherent to engineering projects in companies. Furthermore, the application of production-based methods needs to be embedded in a structured engineering process to be useful in a company. However, most engineering management approaches focus on effectiveness rather than efficiency. Keywords Engineering Management, Production Management, Product Development, Process Development I. INTRODUCTION The engineering process plays an important role in technology-based companies. Their engineering and manufacturing processes must be flexible in order to fulfil individual customer requirements and to contribute to the company s competitive advantage [1]. Furthermore, for engineering processes, lead-time and productivity are important factors to achieve customer satisfaction [2]. In addition, the respective engineering activities have to be efficient [3] [4]; this efficiency requirement has become even more important during the recent economic crisis [5]. Overall, it is, therefore, implied that engineering resources have to be both effectively and efficiently deployed during development and engineering activities. The need to utilise engineering resources effectively and efficiently is bolstered when there is a scarcity of engineers, as is the case in Germany. The German economy, currently ranked fourth in the world [6], is dominated by Hidden Champions [7], which are mostly small or enterprises (SMEs) and family-owned businesses. These companies are often leaders in their specific niche market. They have achieved success through flexible, specialised and speedy fulfilment of customer requirements and delivering high quality products [8]. Despite the current economic situation, these companies are still suffering from a shortage of 44,000 academically skilled engineers. This shortage created an estimated economic loss of 6.6 billion in 2009 [9]. The required engineers are usually responsible for development and engineering activities [10]. Increasing the engineering capacity is difficult and impractical, since other German-speaking countries, like Switzerland, are experiencing a similar scarcity of engineers [11]. Another possible solution, however, could be the application of production management principles to engineering processes in order to increase the efficiency and effectiveness of the engineering resources that are available. Production management has developed an extensive body of knowledge in how to increase effectiveness and efficiency. Several authors have suggested the application of production management principles to engineering management [12], e.g. Just in Time [13] or the adoption of lean principles [14] [15]. The objective of this paper is to investigate whether German SMEs have already adopted principles from production management to their engineering processes. Furthermore, this study explores what the conditions for applying these principles are and how they might be applied. The results were achieved during a twostep research process. First, a focus group meeting with several academics with a background in engineering or production management was organised. Interviews with managers in seven German engineering companies were then conducted. Although explorative, this study represents the first systematic approach to investigate the application of production management principles to engineering management. This paper describes the findings of this qualitative study. The next section describes briefly the different engineering processes and their similarities to manufacturing processes. The research methodology is then described in section three, which is followed by the outcomes in section four. The findings of the study are discussed in the section after that, and the final section provides conclusions and issues for further research. II. MANAGEMENT OF ENGINEERING PROCESSES A thorough understanding of the development and engineering processes is necessary to assess the applicability of production management principles; hence, a generic reference model has been developed for products based on systems theories [16] [19], see Fig. 1. The primary engineering process can be divided into different stages, which transform market demand and customer requirements into instructions and specifications for products, processes or systems [17]. The higher process and evaluation level layers, i.e. R&D management, correspond with a higher degree of novelty [18], which implies potentially more iterations and requires more creativity.

2 2 of 5 As a result, these layers will not be considered any further in this paper, and the generic reference model of the primary engineering process and the information flow to manufacturing will only serve as the basis for this study. In addition to the information flow from engineering to supply, manufacturing and deployment, a feedback loop connects these processes. The creation of a product or service starts with the supply of s and progresses to the product lifecycle, including service, and finally ends with disposal. During all these stages, observations may be made that result in feedback to the processes and may ultimately initiate engineering activities. The feedback loops consist of four tiered layers and follow the evaluation mechanisms of the steady-state model in [19]. Hence, engineering processes not only transform customer requirements into information for the primary production and development process, but they also cover the incorporation of internal feedback into existing products and processes. Based on the generic reference model, it is now possible to compare engineering and manufacturing processes (Table I). Engineering processes are more comparable to job shops than flow shops according to [20]. Due to the specialisation of engineers, engineering departments are often functionally organised [21]. This type of organisation fosters the flexibility necessary for the fulfilment of individual customer requirements [22]. However, job shops are known to have a complex planning process [23] but limited productivity [24], which contradicts the efficiency and productivity objectives of production [25] and engineering [26]. Hence, it might be expected that the traditional organisation encourages the flexibility necessary for dealing with a wide range of customer requirements but at the same time does not offer the productivity necessary to deal with a scarcity of engineering resources. Fig. 1. Generic reference model of the engineering process. To improve productivity and control of engineering activities, solutions have been put forward in industry. An initial condition for productivity and control seems to be the existence of a structured engineering process. Several authors and organisations have developed ideal types of engineering processes. Examples are the Stage-Gate- Process [27] and the VDI-guideline 2221 [28]. Second, the use of Order Entry Points [12] [29], modular designs and product platforms [30] [31], [12] has been advocated to counter the impact of customisation for the engineering and manufacturing processes. This might be considered a known approach in industry, even though its impact has not been fully exploited for engineering management [12]. A third approach could be multi-project management [32] [33], since projects are the preferred form of organisation in engineering [34]. However, multi-project management in engineering has not applied specific modes of control and no structured solutions for efficiency increase has been developed to date [35]. These facts imply that these three solutions address mostly effectiveness as opposed to efficiency. This inference also implies that efficiency might only be achieved through adequate control and planning. Planning within the production process can be differentiated into three levels: operational, tactical and short-term planning, similar to engineering [36]. The control of the production process focuses usually on the timely fulfilment of customer requirements. To meet these, throughput time and process speed are important factors [37]. Assuming the similarity between both production and engineering processes (both viewed as a job shop), it must be investigated, whether production management principles can be adopted for engineering management problems, while accounting for differences (iteration, creativity and novelty).

3 3 of 5 TABLE I COMPARISON OF ENGINEERING AND PRODUCTION PROCESSES Parameter Input Output Recurrence of Activities Recurrence of Parts Buffer Management Scheduling Reasons for Bottlenecks Sequence of Operations Degree of Automation Engineering Process expertise, personal capacity Information Engineering outcomes are services, not storable precision capacity, expertise and information Iterative and non-directional Low Job Shop personal and machine capacity, Products and spare parts Buffers are possible in all stages of the process Medium precision in scheduling information, capacity or Iterative and non-directional Usually III. METHODOLOGY Flow Shop personal and machine capac ty, Products and spare parts Medium to high Medium to high Buffers are possible in all stages of the process High precision in scheduling information, capacity or Sequential Usually high This explorative study seeks to find answers to three research questions: i. What is the validity of the generic reference model (including novelty, iterations and feedback loops)? ii. To what extent can engineering and manufacturing processes be compared for the purpose of control and planning? iii. Which methods taken from production management could be and are applied in engineering management? For this study, two explorative research methods, focus group meetings and problem-centred interviews, were used to explore the application of tools and principles from production management to engineering management. A focus group 1 meeting [38] [39], two hours long, was held with German academics. In addition, engineering managers from seven small and -sized companies in Germany were interviewed. The companies in the convenience sample were chosen in such a way that all stages of Fig. 1 were covered. Table II displays the companies size and in which engineering process steps each is involved. Problem-centred interviews [40] were introduced. The average duration of an interview was one hour. The accumulated data of both methods was evaluated by a qualitative content analysis [41], and the results are presented in the next section. IV. RESULTS During the focus group meeting, the generic reference model was confirmed as well as the assumed differences between engineering and production. Since all participants had experience with the management of engineering processes, it was also asserted that the skill level of individual engineers constitutes a limiting factor. Furthermore, the focus group meeting confirmed the possibility for applying production management approaches to engineering management albeit that the participants emphasised the impact of novelty and creativity on the capability for planning and control. All seven interviewees were requested to report methods from production management, which they have adopted for engineering management problems. The findings are shown in Table III. The columns show the applied production management approaches that were deemed useful by the interviewees. The results can be classified into four areas: (i) quality management, (ii) standardisation of processes, (iii) planning and (iv) control. All the interviewees from industry identified quality management as an important approach to their engineering processes. Thus, they try to learn from production management. In addition, some engineering managers reported the existence of a quality assurance department for engineering processes; these departments are responsible for correcting and proofreading engineering information. To assure the quality in engineering, some interviewees have introduced a structured engineering process. Together with quality management and standardisation, both taken from production management, mainly address effectiveness. For planning, a structured engineering process appears to be the foundation; additionally planning is some- TABLE II INVESTIGATED ENGINEERING COMPANIES No Branch Staff Engineering Process Step 1 Tooling for Plastics Industry 5 2 Tooling for Metal 6 Bending 3 Plant Engineering Engineering, Process Engineering 10 for Refrigeration 4 Automated Tooling Machines Automotive Supplier 100, Production Process Support 6 Food Industry A Consulting Academic Focus Group Process Design, Process Engineering, Production Process Support, Production Process Support, Product Process Support 1 The Academic Focus Group is labeled in tables by the letter A.

4 4 of 5 TABLE III OUTCOMES OF INTERVIEWS AND FOCUS GROUPS Production Management Approaches Continuous Improvement Process Cost Planning Decentralised Planning Different Levels of Planning Functional Planning KANBAN / Heijunka Lean Management Parameterisation Prioritisation Quality Management Segmentation Standardised Processes Value Stream Mapping N o 1 x x x 2 x x 3 x x 4 x x x x 5 x x x 6 x x x x x 7 x x x x A x x x x x x x times based upon production management principles. One interviewee mentioned the necessity of a segmented engineering process for planning and control dependent on the customer of the engineering order. Furthermore, engineering projects often benefit from lessons learnt from earlier projects (sometimes by parameterisation). These experiences can also be used for continuous improvement of the engineering processes. Another solution is to plan based on specialisation, as found in job shops. An additional way is to differentiate between several levels of planning accuracy, akin to planning levels in production. An application of decentralised planning solutions, similar to autonomous work groups, could also be found. However, the overview of applied approaches might be incomplete, due to the limited number of interviews. Control approaches were less common than planning approaches. This might be due to the lack of a structured engineering process in some companies, which is necessary for control modes. However, cases of lean management, KANBAN principles, and value stream mapping were documented. An interesting perspective came about from the food and automotive interviewees whose areas are highly regulated. Participants from these branches argued that they need to structure and standardise their engineering processes to meet regulations and the requirements to document their internal processes. The regulatory pressure upon these companies might even call for the application of production management principles to engineering; however, this specific area needs further investigation. V. DISCUSSION The possibility to apply production management principles to engineering management was positively evaluated by all participants. This finding agrees with existing literature, e.g. [12] [14]. However, approaching engineering exactly like production was accepted by no one. The reason for this is the degree of novelty that is inherent to engineering projects; an increasing degree of novelty usually limits the possibility to apply previous experience associated with recurrence. This finding implies that principles from production management are only applicable to engineering if they can account for the novelty required. An initial condition for the application of production management principles is the existence of a structured engineering process, as also proposed by [16] [17]. The engineering process should be structured in a similar manner to the production process. This requirement is important, since even production management principles can only be applied to production if processes are structured and specified. Additionally, the prevalence for methods related to quality management indicates that most companies are seeking to increase effectiveness of engineering management. In this way, they aim to contribute to overall productivity of both engineering and manufacturing. However, this emphasis might indicate the potential contribution of efficiency measures to increase productivity. Other known solutions, like Order Entry Points and multiproject management, aim to increase effectiveness over efficiency. Hence, this leads to the inference that the impact of efficiency measures through planning and control is under-researched. VI. CONCLUDING REMARKS The objective of this study was to explore the application and applicability of production management principles to engineering management. According to the findings, it is possible to draw parallels between production and engineering management. By using production management methods, effectiveness and efficiency in engineering can be increased and therefore support companies, allowing them to enhance their overall productivity. A structured engineering process is critical for the application of production management measures, although the degree of novelty is a limiting factor; and that structuring should facilitate planning and control. However, the outcomes of the focus group indicate that measures for effectiveness prevail above those for efficiency, consistent with the limited literature available on this topic. Yet, this study is limited by its qualitative nature and by the low number of participants. The next steps are to develop a holistic framework of applicable production management methods to engineering based on a larger number of interviews and to explore the potential impact of efficiency measures. The proposed framework will be tested and verified using quantitative and qualitative research methods.

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