Michigan, USA. New Jersey, USA. Chennai .... engineering colleges produce over. 80,000 engineering ... Automotive, Johns
CCE White Paper Leverage Chores To Accelerate Core
A proven strategy to outsource engineering work by delegating chore work to talented professionals, offshore, relieving your staff to focus on innovation and new product development.
Michigan, USA New Jersey, USA Chennai, India
Leverage Chores To Accelerate Core White Paper
CCE White Paper Leverage Chores To Accelerate Core
Which offshoring problems can you relate to?
A Start Point - Outsourcing Chores
Outsourcing Engineering Is A Strategic Business Decision
Global competition has forced Western companies to rethink their priorities. They have realized that innovation is the key to survival and growth. Rapid innovation requires product development resources, which can be in short supply in the West or can be too expensive when trying to create cost-competitive products to meet market needs. Many companies have tried using lower cost offshore engineers by partnering with engineering providers in countries like India and China. Unfortunately, the results from these initiatives have often failed to meet expectations. Lack of product and process knowledge by the offshore engineers, difficulties in communications, no visibility or control of the offshore resources, and resistance to change by the company's own staff are some reasons why these initiatives have not realized their full potential. The greatest difficulty has been in building a path, to scale the initiatives, to provide meaningful ROI and new product development output.
It is estimated that 90% of the engineering content of new products is based on re-use of existing designs. Yet, in most cases, there is a lot of non-creative engineering work involved in reusing designs, such as making minor changes needed to mate the old parts with the new design. The time and resources spent on these types of tasks distract companies from focusing on their core competencies-creating product features that set products apart from competition, as well as grabbing the attention of customers.
Outsourcing of engineering design is, in most cases, a strategic decision often initiated by, and almost always approved by, the highest-level managers in the organization. The driving force is the need to rapidly innovate, while keeping a tight control on costs. This work could initially involve the re-use of existing components, maintenance of static or declining products, re-designing products for new applications, etc. Staffing reductions have made it difficult to provide enough manpower to complete these jobs, leading to declining productivity, shoddy performance and quality, and worse, product launch delays. Recognizing that a quality provider in a developing country can often do these tasks competently, and at a lower cost, typically drives the decision to outsource.
A Survey by Booz Allen and Duke University’s Center for International Business Education and research (CIBER) found that: 36% of companies sent some of their engineering to offshore companies. 31% of companies sent some research and development to offshore companies. 16% of companies shipped out a portion of their product design to offshore companies.
Outsourcing work to talented engineers, in cost-competitive locations, is a great starting point to an offshore initiative. Benefits include: exceptional results at a substantially lower hourly rate, reduction in time spent to complete projects, and elimination of the capital investment that is required to support internal employees. One key to success in the global outsourcing of engineering design is to manage risk by starting small and then, steadily increasing the responsibilities of your chosen partner as their understanding of your products and culture grows. Visibility and control can be increased with a new generation of web-based project management tools, which maintain continual communications with the project team and provide visibility on project status.
You should approach 50% cost reduction within the first year of outsourcing, provided there is sufficient volume of work outsourced. A well-designed growth and knowledge transfer plan should enable you to scale up the team to manage at least 80% of your product development tasks for a new product line, within 18 months from the beginning of the engagement. You should approach 50% cost reduction within the first year of outsourcing. The offshore team should be able to do at least 80% of your new product development tasks within 18 months from the beginning of the engagement.
CCE White Paper Leverage Chores To Accelerate Core
Cost is Not the Only Factor
Scaling The Initiative
It is true that fully-loaded costs of design engineers are substantially lower in developing countries, which is why companies view cost savings as the primary benefit of outsourcing. However, cost alone is not the determining factor in the decision to outsource. First, there must be careful consideration regarding the impact of outsourcing on product performance and quality. Without a doubt, your own engineering staff is by far the most qualified to develop the core of your design; but, keep in mind that the same emphasis on the “core,” that gives you a competitive advantage, may detract from the attention that needs to be paid to “chores.” Sufficiently ignored, these tasks blossom into troublesome hot spots. Outsourcing addresses this issue by delegating ”chore” work to talented professionals, offshore, relieving your staff to focus on improving your products. The right outsourcing provider will match their best people to your requirements and will have often developed sophisticated processes to deliver on their commitments.
While outsourcing chores is a logical start point, meaningful ROI and new product development output can be more fully realized by scaling the initiative. Scale includes increasing the offshore team size, as well as capacity to do more complex tasks, including new product development from concept to delivery. Scaling is not easy and does not automatically develop over time. Most offshore initiatives have stalled with offshore engineers only able to deliver chore work many years into the engagement. A wellthought-out and disciplined approach is required to increase the offshore competencies. This planning must start well before the initiative is launched, including the discussions between the technical leadership of your company and their counterparts at the offshore provider. Due to the organizational issues involved, active executive sponsorship from your company is required throughout the engagement.
Another important consideration is to leverage the offshore engineers, to accelerate product development, by outsourcing more complexity over time. Once trust is built and offshore engineers develop competency in your products and processes, they are capable of handling more complex tasks.
Additions
Once trust is built and offshore engineers develop competency in your products and processes, they are capable of handling more complex tasks.
New-to-Firm
Improvements
Repositioning
India Is The Ideal Outsourcing Location India, by the way, is the most popular location for outsourcing for a number of reasons. India has a huge supply of talented engineers. Its 226 universities and 428 engineering colleges produce over 80,000 engineering graduates and over 40,000 math and science graduates every year. Standards at most of these schools are high. For example, in a World University Ranking list, one of India’s engineering colleges was among the top 50 engineering colleges in the world! Although India currently is famous for being the preferred destination for general IT& BPO services, the country also has enormous potential to provide design-engineering outsourcing. India is the fifth largest commercial vehicle manufacturer. Ford, Fiat, Daewoo, and Hyundai manufacture many world-class vehicles in India, with over 70% local content. Ford, Fiat, Mercedes-Benz, and Toyota manufacture vehicle components in India for export. India is also the home of successful joint ventures, or subsidiaries, of major auto suppliers, including Delphi Automotive, Johnson Controls, and TRW. Significantly, the three largest computer aided design system vendors - Dassault, Parametric Technology, and Unigraphics develop large portions of their application software in India.
Optimization
Start Up
Product Development Maturity
A recent NASSCOM study reports, “ER&D exports cross USD 10 Billion, a growth of about 14% over FY2011, driven by competitive markets and decline of skilled workforce in Western countries.”
CCE White Paper Leverage Chores To Accelerate Core
Selecting The Right Partner
Once the decision to outsource is made, the next issue is usually selecting a partner. There are a number of Indian companies offering outsourcing services in the U.S. and Europe. Most of these companies have their roots in I.T., having established their presence in the West during the Y2K heyday. However, managing engineering work offshore is significantly different than I.T. It is important to select a partner who is experienced in engineering. This includes deep knowledge of CAD/CAE systems, established processes and infrastructure for collaborating with data-rich engineering information, and domain knowledge in various engineering disciplines. It is also important that the partner has a local presence with experienced engineering managers, who act as a bridge between the client’s project managers and the offshore engineers. Managing engineering work offshore is significantly different than I.T.
Maintaining Visibility And Control Maintaining visibility and control over outsourced projects is a key requirement. This requirement is being met by the development of tools that facilitate communication between the internal and outsourcing teams. One example is a web-based work order management system that enables your authorized staff members to create work orders to assign tasks to the offshore team. The system features the ability to set job priorities, manage multiple tasks, and securely upload/download data files to, and from, the offshore team.
Synergistically Combining Engineering Design And Manufacturing A new vision for outsourcing is provided by companies that synergistically combine engineering design and manufacturing. Companies are increasingly looking beyond China for an alternative source of low-cost manufacturing and are quickly beating a path to India.
Production
Pilot Production
Project Initiation
Pre-production
Preliminary Design
Prototype Construction
PowerLink
Files can be transferred over the web, without the need for complicated FTP logins and commands. Another useful tool provides integrated real-time communications between your staff, the outsourcer’s local project managers, and the offshore team; it provides a secure instant messaging system and dynamic CAD file sharing, which is routed through private lines in order to avoid the possibility of the messages or data being intercepted. Maintaining visibility and control over outsourced projects is a key requirement.
Concept
Prototype Design
Engineering Design and Manufacturing Stages
China's saturation from global manufacturing, and lack of an enforceable IP protection regime, has made India's case even more compelling. Combining engineering design and manufacturing, with a trusted supplier that has resources in India, significantly reduces communication and collaboration costs, while mitigating risks of costly manufacturing errors. China's saturation from global manufacturing, and lack of an enforceable IP protection regime, has made India's case even more compelling.
CCE White Paper Leverage Chores To Accelerate Core
Summary
About CCE
In summary, the decision to outsource engineering design is a critical element of a business's operating model and, as such, usually requires top management involvement.
CCE (www.cadcam-e.com) is a leader in providing strategic global engineering, manufacturing, and software development services to engineering organizations, worldwide.
The benefits of outsourcing always include engineering cost reduction, improvement in a company's ability to focus on critical, strategic engineering issues, and reduction of time-to-market. Taking advantage of outsourcing is much easier when working with a U.S.-based partner, easily overcoming the cultural and legal barriers involved in outsourcing to a purely offshore company.
CCE was founded over 24 years ago to deliver innovative CAD/CAM products and quality services to engineering organizations. Our mission is to enable our customers to focus on improving their product design, manufacturing, and engineering processes, throughout the extended enterprise. CCE's indepth experience in engineering services, manufacturing, software engineering, Q.A., and project management makes it a partner of choice to help meet our clients' business goals.
A phased approach, with a gradually increasing level of collaboration, can increase the positive impact of outsourcing, while keeping risks levels low. Finally, tools to maintain visibility and control of outsourcing projects can help you easily stay on top of projects as your work is completed, while you sleep 6,000 miles away. So, if your are struggling to make outsourcing work and frustrated with your partner’s ability, look no further! CCE has tools, processes, and an experienced team to help you develop & execute a plan to reduce costs and accelerate innovation, with risk mitigation.
“We were struggling with our outsourcing initiative until we came across CCE’s Core Chore strategy. This gave us a framework to properly sequence projects and tasks to maximize the benefits of outsourcing with least risk. This strategy in combination with CCE’s PowerLink collaboration technology has turned what was a frustrating experience with our previous provider, to a satisfying and productive partnership.” V.P of Engineering, Engine OEM
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