Product Development Efficiency Gets More Attention

TRAVERSE CITY, MI – Product development and sales and distribution efficiency will become increasingly important for auto makers and suppliers over the next five years, based on research by the Oliver Wyman Group, a unit of Marsh & McLennan.

Michelle Hill, vice president of Oliver Wyman’s Troy, MI, division, reveals details of the global survey at the Center for Automotive Research’s Management Briefing Seminars here.

Hill manages The Harbour Report, a study of automotive-manufacturing efficiency. Harbour was acquired by Oliver Wyman in 2007.

The Harbor research focuses on quality, long-term durability and warranty costs based on assembly operations.

Hill says the recent survey covers a diverse group of individuals and companies. Although manufacturing efficiency will remain important, the study shows it will become less prominent between now and 2017, measuring a minus-18 in terms of benchmarking importance. Overhead and administrative costs finish with a minus-17 score.

Two areas stand out as gaining importance in the study: Product-development efficiency, with a plus-25 result, and sales and distribution efficiency, which finish with a plus-18 score.

Hill says product development heads the list of priorities because of competitive pressures to reduce vehicle-development time and minimize engineering changes. While there are more models in production, there are often fewer of each, adding to the challenges.

“Benchmarking is shifting from traditional areas, but it’s still relevant to reducing engineering time,” she says.

The Harbour Report results no longer are publicly available, but Hill is asked whether she can at least comment on how the Detroit Three are doing relative to their foreign competitors.

“They are making improvements,” she says, but adds that may be because during the recent lean production years they took time to bolster their product-development efficiency.