Finance Marketing Business

Very large economic and political pressures for manufacturing companies (such as in the G8 countries) exist to which they must respond. The aggregated pressures and responses are making a sea-change across the industry. The pressures include high-cost labor pools, and costly raw materials (e.g. steel and petroleum). Responses also cover internal consolidation, outsourcing towards global product development, and assembly flexibility. The companies must alter their operations to fit these pressures and responses.

Studies on manufacturing product development have been done that give a picture of the present situation in the industry along with a 5-year forecast. The studies include key areas such as business philosophy, product design tools, communication types and engineering efficiency. A definitive response flagged in the study is a climb in Global Product Development (GPD), or outsourcing to global suppliers.

GPD can be defined as the maximization of financial and operational productivity of the product development process by distributing product development tasks across different regions of the globe to efficiently match value-addition and cost. Part of product development includes marketing activities to recognize and record the needs of the customer.

Within product development, a critical part covers activities in engineering for the conceptualization, design, analysis and refinement of new product concepts and ideas; activities for the planning and documentation of manufacturing, operations and maintenance processes; to sustenance activities for the making of ongoing product updates, changes and refinements.

The studies done show that companies which implement GPD strategies gain substantial financial and operational benefits. Savings around 0.5% of company revenue and 10% of the product development budget can accrue. Other operational enhancements including 24×7 engineering and the generation of specialized skill capacity by reinvesting cost savings are feasible.

Many OEM’s now utilize the GPD model leading to restructure of global design and operations for optimal utilization of global resources, increasing the pace of product development thus leading to expense reduction. The implementation of a GPD strategy needs the analysis of product development activities. A company needs investigation of the partition between high value-addition and the low value-addition activities and then requires to find the extent of portability of these activities.

The global product development service example is increasingly utilized in the current manufacturing world to maximize efficiencies and minimize costs.

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