Expert Opinion

Design for Six Sigma

New product/service design methodologies are processes which stimulate the creation of new products and seek to ensure the ongoing success of organisations, improved customer satisfaction, and increased market share. Design for Six Sigma (DFSS) is a rigorous process which is associated with the design of new products and services. Treichler and colleagues, DFSS Practitioners and experts at Raytheon Company [20], explain that it is a highly disciplined process that helps organisations to focus on developing and delivering near-perfect products and services. The term "Sigma" is a statistical term that indicates how far a given process deviates from perfection. The central idea behind Six Sigma is that if it is possible to measure how many ‘defects’ exist in a process, then it is possible to systematically eliminate these whilst seeking to get as close to ‘zero defects’ as possible. The essence of DFSS involves predicting design quality before manufacture and then driving quality measurement and predictability improvements throughout the early design stages of development in particular. This is believed to be a much more effective, and less expensive, way of achieving Six Sigma levels of quality than by attempting to fix problems after the event even though the concept of the Six Sigma approach has been made far more popular by its application in the latter.

A survey of several organisations revealed that DFSS was used for the following purposes [21]:

• As a growth strategy: where DFSS was regarded as part of doing business, it represented an investment back into the organisation to produce even more profits in the long term. A rule of thumb was that some 75 to 80% of cost is locked in at design. DFSS was seen as the driving force of the organisation to help ensure adequate money, time, and resources needed were included in the annual budget to ensure the organisation's success.

• As a way to serve customers: where continual customer feedback and ideas were believed to be essential to achieve a partnership with the customer. Customers were seen as needing to be inside, not outside, of world-class organisations. These organisations believed that they needed to establish unbreakable bonds and long-linked partnerships with their customers. Within this category of organisation DFSS was seen as needing to be embedded into the fabric of the entire company.

• For product-process fusion: where there was an attempt to drive product and process compatibility across the entire value chain and product life cycle. Here the value chain of the customer was seen as including everything that was incorporated into the final product. Because substantial elements often originate from suppliers and subcontractors these need to be integrated into DFSS activities otherwise the final product will be sub-optimised. DFSS is intended to reduce the introduction of new variability and achieve process stability and uniform quality faster. Hence metrics are used to tell the story of the organisation's performance and this should be discussed regularly among staff.

• To create a DFSS based engineering organisation: by enlarging the responsibility of design engineering groups so that they can follow products from conception to completion. This methodology creates ownership which changes the approach taken in regard to product design and accelerates the incorporation of lessons learned by including those found outside the design department.

Those at Raytheon believe that the four essential areas upon which to focus design work are:

• Design for production (design for manufacturing and assembly);

• Design for reliability;

• Design for performance (technical requirements);

• Design for maintainability.

DFSS has a strong focus on listening to the "voice of the customer", and a wide variety of tools and techniques may be employed. The acronym DMADV describes a commonly used five phase DFSS process i.e.:

• Define the project goals and internal and external customer requirements;

• Measure and determine customer needs and specifications and benchmark competitors/ industry;

• Analyse the process options to meet the customer needs;

• Design in detail the process to meet the customers needs;

• Verify the design performance and ability to meet customer needs.

Douglas Mader [15] Founder and President of the US consulting firm SigmaPro Inc., writes that DFSS is in reality an enhanced new product development (NPD) process that provides a structured way to manage deliverables, resources, and trade-offs. He notes that new product development processes may be divided into a number of distinct high-level development stages. His stages include:

• Needs assessment;

• Concept design;

• Preliminary design;

• Detail design;

• Process design/construction;

• Manufacturing; and

• End of life.

Management review points, or checkpoints, are often included within these steps to enable organisations to monitor progress, assess risks, and to facilitate decision-making concerning the progress of products through to the next stages. Risk management is a strong focus during the early phases of new product development in particular. Generally each phase involves the commitment of greater expenditure than the preceding one and investments are made with greater confidence as the uncertainties also decrease. Mader describes a four step DFSS methodology which is associated with the more detailed project phases of new product development as depicted in Figure 1 below:

Figure 1: Diagram adapted from Mader, [15].

The four steps Mader uses are described using the acronym ICOV:

• Identify

• A clear understanding of customer requirements, including both internal and external customers along with stakeholders.

• The resources needed to meet customer requirements i.e. technology, manpower, suppliers, process and business constraints.

Using this information, plans can be prepared including feasibility studies customer profiles, needs-analysis, financial/cost analysis, system operational requirements, functional requirements and advance product planning.

• Validate. In this stage the optimised design is tested and validated by confirming the performance, capability and reliability of the product, process or service. Control and action plans are then developed to take conceptual design into the production environment.

Stage - Gate Process

The Stage-Gate process for product development is used to divide projects into defined stages separated by management decision gates. It is common to use multifunctional teams to complete prescribed sets of tasks throughout the process. Approval must be obtained at each gate before proceeding to the next stage of product development. Michael Bigwood , founder of Orlando based International Technology Information ([2], describes six phases of the stage-gate model for new product development. At each stage crucial information is gathered with the intention of reducing the technical, market, financial, and operational risks associated with new products. In general, as a new product progresses through each stage, then greater expenditures tend to be required; hence the stage gate process is usually based upon incremental commitments.

• Discovery, or idea screening;

• Scoping, or second screen;

• Business case building;

• Development;

• Testing and validation;

• Launch and post launch review.

David Walwyn and colleagues ([21], write that research, by its very nature, is a speculative activity having an uncertain outcome. The authors report that fewer than 50 percent of companies in the chemical industry realise an acceptable return on their R&D portfolios. For this reason methodologies such as the stage-gate process are used to minimise the rates of failure. The stage-gate process is a quality assurance system which may be imposed on development projects to ask key questions at relevant project stages. These may include questions about the market size, technical risks, and internal rate of return (IRR). Acceptable rates of return derived from IRR calculations can be struck according to the perceived risks involved i.e. a high risk area would need give a high value IRR gain approval and pass the stage gate

Target Costing in new product development

Target costing is a methodology used to produce products or services at acceptable market prices. The Target costing process seeks to mesh a proposed new product’s features and benefits with a viable market price, whilst also achieving an organisation's profitability goals. The methodology emphasises cost reduction during the design phases where it is estimated that some 80% of the final costs occur. Traditional costing methods, by way of comparison, add a mark-up to production costs and use this to set the market price. The following steps outline the Target Costing methodology:

• Determine an acceptable market price point for the new product.

• Subtract the required company profits from the estimated market price to determine the maximum bearable company production costs i.e. Target Cost = market price - desired profit

• Recheck and repeat the product design to eliminate unnecessary attributes and make production improvements until the target cost is achieved.

• Revalidate the market price for the redesigned product.

Tom Albright (Professor of Accounting), and Aleecia Hibbets (Doctoral Student), both from the University of Alabama, along with Wilfried Funk (Professor of Business Management at the University of Applied Science Albstadt-sigmaringen (2003), write that the concept of target costing originated in Japan at Toyota Motor Corporation in the 1960s. It has since been recognised as a comprehensive system for cost reduction and strategic profit planning. Target costing is aimed at reducing the life-cycle costs of new products, while ensuring customer requirements of quality and reliability are met. Kato (1993) is cited by the authors as stating that target costing, when used for the control of cost in new products, takes place at the design stages and encompasses a wide range of ideas for cost reduction during the product planning and research and development processes.

New Product Development and Teams

The quality of new products i.e. superiority in terms of size, appearance, performance, and life/durability greatly influences their success in the marketplace. Product quality therefore plays a crucial role in relation to an organisations' competitiveness. Rajesh Sethi, Assistant Professor of Marketing at Clarkson University [17] writes that integrated product teams play a significant part in the development of successful new products. The quality of new products is influenced by the team's characteristics and the environment in which the team works. Product quality is enhanced through:

• The integration of information within teams;

• The diversity of team members;

• The influence of customers on the product development process; and

• The quality orientation in the organisation as depicted in the Figure 2 below:

 Figure 2: adapted from Sethi, [17].

The following points provide further information from sethi concerning the various team level factors that influence new product development.

Team Factors Influencing New Product Quality:

• Integration of information: team members having high information integration are likely to share information more effectively, be acutely aware of the other member's perspectives, freely question and challenge underlying assumptions, and thereby achieve common understanding and consistency regarding the various decisions made by the team.

• Cross functional diversity: i.e. the number of functional areas represented in new product development teams. The benefits of functional diversity include, improved decision making, superior idea generation, and the development of superior products through knowledgeable use of the organisation's processes and technology. Keller & Staelin, [13] and Weick [22] were cited regarding the observation that beyond a certain point the diversity of ideas and perspectives can create problems through added complexity. Hence as functional diversity increases from a low to a moderate level, the quality of new products may be expected to increase. However, as functional diversity goes beyond the moderate level quality is likely to decline.

Contextual Influences on New Product Quality:

• Time Pressure: citing Karau & Kelly [10] Sethi states that whilst some restraint on time may be beneficial in helping teams to focus on outcomes if time pressure is too high, team members may be forced into considering only a narrow range of options, and may not be able to think deeply about the development of superior products.

• Product innovativeness: the development of new or novel products can have a negative effect on quality outcomes for two main reasons:
• Operationally innovative products can require major re-tooling and technology changes and this can upset the balance of manufacturing processes,[6]. Hence the introduction of significant new innovations may lead to a higher variation in production or lower product quality.
• Learning competencies can also have a bearing on product quality when developing innovative new products. Higher order learning, or generative learning, occurs when organisations question basic assumptions and challenge familiar frameworks [7]. This contrasts with the lower order adaptive learning associated with incremental quality improvement activities. Hence individuals involved in the development of highly innovative products might find it difficult to hold to the disciplines required for continuous improvement work.

_________________________________________________________

You are reading a Management Brief Report in html-format. Become a member of the BPIR to receive a new report in PDF-format every month (see examples: Benchmarking & Business Excellence). PDF-format can be saved on your hard drive, emailed to work colleagues, and are much easier to read and print out!.. For BPIR updates and best practices sign up to our FREE newsletter.