Groupthink Gets Smart
Online design collaboration is delivering the innovation and quick payback that manufacturers have been looking for from the Internet. It's cutting the time it takes to design and engineer products and letting manufacturers give more responsibility to their suppliers
When auto supplier Johnson Controls Inc. took on the job of building the dashboard controls, overhead computer console, interior lights, and seats for the 2002 Jeep Liberty, it needed ideas from its own designers and from a worldwide network of 35 major suppliers and dozens of smaller ones. "The philosophy is that we need the best input we can get on the design, as early in the process as possible, from every one of our design partners," says John Waraniak, Johnson Controls' executive director of E-business speed.
The 2002 Liberty was a step up for Johnson Controls. The Milwaukee, Wis., company had been a top-tier DaimlerChrysler supplier but was now in the elite role of acting as a components integrator responsible for engineering and manufacturing a complete section of a vehicle based on the automaker's design. Johnson Controls would build the vehicle's cockpit controls, for example, as one unit that would be delivered to the automaker just in time to be bolted on a new car as it rolls down the assembly line. To make it happen, managers at Johnson Controls applied online design collaboration and product-development software to work with DaimlerChrysler as they designed part of the vehicle and with its own supplier network to engineer and build it.
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There's a revolution in product innovation under way, because companies are increasingly replacing face-to-face meetings with more frequent and detailed online collaboration efforts, Johnson Controls' Waraniak says.
Online collaborative development has begun to give manufacturers the kind of efficiencies and creative benefits that the Internet has long promised. And it's providing faster payback than complicated efforts to automate supply-chain transactions, which is one reason it's moving beyond early adopters in the aerospace and automotive industries. The technology is wiping away barriers of geography and time by letting engineers around the globe use the Internet to exchange files so they can work together on a project in real time. Or, often better, letting an engineer at an Asian supplier work during the day there and leave a marked-up document for a U.S. client when the day dawns here.
"This is a unique time in the history of technology," says George Ashley, who's using the tools as Ingersoll-Rand Co.'s manager of engineering business services. "There has always been some technology limitation to real-time design collaboration, but now there is not. Design collaboration really works, and the challenge now is letting people learn how many ways they can think collaboratively."
Gartner research director Marc Halpern estimates that design-collaboration and product development-management software, a $720 million market in 2000, grew as much as 40% to more than $1 billion last year, and will climb this year to as much as $1.6 billion. Throw in services that help companies deploy and use these tools and the Aberdeen Group puts the overall market at $18 billion in 2001. Aberdeen predicts the market will reach $22 billion this year and keep growing at 16% to 20% annually for five years. System integrator EDS believes so strongly in the growing demand for collaborative design and manufacturing software that it's launching a new Product Lifecycle Management Solutions services business it expects will generate more than $1 billion a year for the company (see story, "Consulting Firms Promote Online Design Collaboration").
There's a compelling reason for that optimism. Design-collaboration tools help companies cut the time it takes to finish a design, typically by about 30%, Halpern says. "That's very significant in a marketplace where getting a new product to market before the competition is a key competitive advantage," he says. The benefits are driving adoption beyond traditional aerospace and automotive markets into medical equipment, high-tech and electronics, and even consumer packaged goods, say MatrixOne Inc. and Parametric Technology Corp., two leading design collaboration software vendors.
Johnson Controls used both its own and DaimlerChrysler's Web-based design collaboration systems to create much of the interior of the Liberty that's closest to the driver--the steering wheel, pedals, instrument panels, heating and air conditioning, air bags, trim, and related interior wiring. Using a combination of Catia CAD/CAM software, i2 Technologies' supply-chain management software, and Dassault Systemes' Enovia product life-cycle management system, DaimlerChrysler worked closely with Johnson Controls as the carmaker developed the look, feel, and behavior of the driver's controls. Creating a design that provides a particular experience is what Jeep designers think they do best, leaving the engineering to Johnson Controls and other suppliers. Johnson Controls then takes over management of engineering all components, working with its suppliers using Web-based MatrixOne design collaboration and product-development software tools, some of which it co-developed with Johnson Controls, to help them build the actual parts. DaimlerChrysler doesn't evaluate or sign off on individual parts, which lets Johnson Controls complete its design work much more quickly. "When we agree with customers that we'll be responsible for a total assembly, we don't need their engineers looking over our shoulder or need to be co-located with them," Waraniak says. "We eliminate shadow engineering."
Compared with the old means of couriers, faxes, and face-to-face design meetings, DaimlerChrysler has cut 60% to 90% of the time it takes to communicate design changes to a supplier and get required changes back by using the Catia, Enovia, and i2 tools, says Karenann Terrell, director of its E-business operation, E-connect. "Any change to a design is immediately communicated to everyone, and the impact on their piece of the design is known right away," she says. The software has been so successful that DaimlerChrysler is using its collaborative system as it designs all its vehicles for the 2004 model year.
Global manufacturer Ingersoll-Rand is trying to create an approach to design and manufacturing that it terms "design anywhere, build anywhere." The idea is to use Parametric's Web-based Windchill software to connect the $8 billion-a-year company so that designers and factories anywhere in the world can work together on new products. Already, Ingersoll-Rand designers in China, Europe, India, and the United States are collaborating on new refrigeration units, air compressors, paving equipment, and rock drills. The company is increasingly looking to its design-collaboration efforts to make engineering more a part of the supply chain by doing away with design as a business-process silo and getting the company's engineers and its suppliers working together, Ashley says. The company expects the result to be lower design and engineering costs and an easier way to leverage its buying power globally. "We can have an amazing impact on the cost of direct material purchases by using collaborative tools effectively," he says.
Yet, while the long-term prospects are bright for collaborative product-development software, the manufacturing recession is slowing its adoption. Parametric recently said its revenue in the quarter ended in December won't be more than $200 million, slightly below the low range of its forecast and well below the previous year's $234.9 million. Likewise, MatrixOne's growth--though doubling for its most-recent fiscal year--slowed in the third quarter, down 16% from a year ago. The vendors have attempted to overcome that slowdown with new products and services. For instance, Parametric is marketing to smaller companies with a rapid deployment service that lets a company with a single Parametric license invite its design partners to a virtual project workspace. During the past year, the vendors have worked to expand Internet capabilities so that design partners can view and mark up design drawings in real time. But some potential customers only started showing interest after the Sept. 11 terrorist attacks. "The 9-11 disaster caused companies to recognize they couldn't just jump on an airplane and have a meeting like they used to," says Paul Gilmartin, VP of product management at MatrixOne.
Reaching a critical mass of adoption is especially important for design-collaboration software for one major reason: If your partners don't use it, it's a lot less useful to you. That's the problem facing a Northeast manufacturer of scientific instruments and components. The $1 billion-a-year company uses Open Text Corp.'s Livelink, a Web-based collaborative product-development application, in its telecommunications unit, but few of its telecom customers use the application. The company's CIO blames the slow adoption of collaboration technology on the slump in the telecommunications industry and predicts the software will catch on more quickly among its biotechnology and pharmaceuticals clients. "We want to improve our new-product introduction cycles by getting closer to the customer, and you can't get much closer than co-designing products," he says.
Whirlpool Corp. took a more conservative route to getting its primary design partners and suppliers to collaborate by using its clout as the world's largest maker of kitchen appliances to require those companies to use the same software and platform. Though Whirlpool's suppliers generally aren't included in the initial design process, the company uses the Internet to share designs ready for manufacturing. It has standardized on design software--Macromedia's FreeHand; Robert McNeel & Associates' Rhino modeling tool; Ashlar-Vellum's design tools; and Parametric Technology's Pro/Engineer--and there's no room for variation, says Charles Jones, Whirlpool's VP of consumer product design. "You have to make sure that you will shoot at sunrise the design center that doesn't have the correct software release," he says.
Whether its Whirlpool's cautious approach or DaimlerChrysler's aggressive outsourcing, manufacturers are using the Internet to share design information with suppliers. With customers' constantly demanding new, innovative products, more frequently and at lower prices, the pressure is on companies to marshal resources all along their supply chains. As Ashley at Ingersoll-Rand puts it: "Collaboration is the No. 1 driver of business for us in the future, and we'll do all we can to leverage the technology available to help us."
--With Larry Greenemeier and Antone Gonsalves
Illustration by Brian Stauffer
Photo of Waraniak by Bridget Barrett