Global Product Development Services – An Economic Boon for Clients

There are massive economic and political pressures for manufacturing companies (such as in the G8 countries) to which they are forced to respond. The combined pressures and responses are radically transforming the industry. The pressures include high-cost labor pools, and costly raw materials (e.g. steel and petroleum). The responses include internal consolidation, outsourcing to global product development, and assembly flexibility. The companies must change their operations to suit these.

To understand these trends, studies have been conducted on manufacturing product development that provide a snapshot of the current state of the industry and a 5-year forecast. The studies review such varied areas as business philosophy, product design tools, communication methods and engineering efficiency. One clear trend identified in this study is an increase in outsourcing to global suppliers, broadly classified as Global Product Development (GPD).

GPD may be defined as the maximizing 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. A portion 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.

Several OEM’s have taken up this GPD model leading to restructured global design and operations for optimal utilization of trans-world resources, speed up product development thereby reducing expenses. Proceeding with the implementation of a GPD strategy requires the analysis of product development activities. A company must look at segregation of the high value-addition and the low value-addition activities and then determine the degree of portability of these activities.

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