1

Introduction

It is now widely believed that U.S. industry's extended period of world dominance in product design, manufacturing innovation, process engineering, productivity, and market share has ended.1 The once globally dominant U.S. automobile and steel industries have lost market share at home and abroad, and U.S. products have all but disappeared from the consumer electronics market. There is consensus that U.S. industry as a whole is not as productive as it might be, and that its rate of productivity increase is lower than that of industries in many other nations.2 This loss of competitiveness with foreign firms has been keenly felt in some areas in job losses and plant closings. Profitability continues to decrease in many key industries, threatening further loss of market share and jobs. U.S. citizens, from the individual consumer to the senior corporate executive, daily observe evidence of the decline of the nation's “industrial might.”3 Figures 1 and 2 illustrate the declining performance of some important U.S. industries.

The decline of U.S. international competitiveness has been ascribed to many factors, among them national fiscal and trade policies, exchange rates, national “culture,” deficiencies in manufacturing, industrial management and accounting practices, unfair foreign trade practices, and methods of providing capital. A crucial factor that is not often recognized is the quality of engineering design in U.S. industry. Engineering design is the key technical ingredient in the product realization process (PRP),4 the means by which new products are conceived, developed, and brought to market. (Various other names, including concurrent engineering, are in use for the product realization process or for major parts of it.) The ability to develop new products of high quality and low cost that meet customer needs is essential to increasing profitability and national competitiveness. The link between quality and profitability has been convincingly demonstrated by studies using the PIMS5



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IMPROVING ENGINEERING DESIGN: Designing for Competitive Advantage 1 Introduction It is now widely believed that U.S. industry's extended period of world dominance in product design, manufacturing innovation, process engineering, productivity, and market share has ended.1 The once globally dominant U.S. automobile and steel industries have lost market share at home and abroad, and U.S. products have all but disappeared from the consumer electronics market. There is consensus that U.S. industry as a whole is not as productive as it might be, and that its rate of productivity increase is lower than that of industries in many other nations.2 This loss of competitiveness with foreign firms has been keenly felt in some areas in job losses and plant closings. Profitability continues to decrease in many key industries, threatening further loss of market share and jobs. U.S. citizens, from the individual consumer to the senior corporate executive, daily observe evidence of the decline of the nation's “industrial might.”3 Figures 1 and 2 illustrate the declining performance of some important U.S. industries. The decline of U.S. international competitiveness has been ascribed to many factors, among them national fiscal and trade policies, exchange rates, national “culture,” deficiencies in manufacturing, industrial management and accounting practices, unfair foreign trade practices, and methods of providing capital. A crucial factor that is not often recognized is the quality of engineering design in U.S. industry. Engineering design is the key technical ingredient in the product realization process (PRP),4 the means by which new products are conceived, developed, and brought to market. (Various other names, including concurrent engineering, are in use for the product realization process or for major parts of it.) The ability to develop new products of high quality and low cost that meet customer needs is essential to increasing profitability and national competitiveness. The link between quality and profitability has been convincingly demonstrated by studies using the PIMS5

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IMPROVING ENGINEERING DESIGN: Designing for Competitive Advantage Figure 1: U.S. Trade Deficit in Three Key Industries Figure 2: U.S. Trade Deficit in the Auto Industry data base. Figure 3 summarizes the results of a study done using the PIMS data base that shows the effects of quality and market share on profitability for a large group of U.S. industries, predominantly manufacturers.6 THE CENTRAL ROLE OF ENGINEERING DESIGN High-quality products satisfy customer needs for reliability, serviceability, and acceptable life cycle cost, as well as for functionality and aesthetics. Competitiveness demands high-quality products, which require high quality

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IMPROVING ENGINEERING DESIGN: Designing for Competitive Advantage Figure 3: Return on Investment as a Function of Quality and Market Share in their components and in the systems and processes used in their production. Effective design and manufacturing, both necessary to produce high-quality products, are closely interrelated, but effective design is a prerequisite for effective manufacturing; quality cannot be manufactured or tested into a product, it must be designed into it.7 Figure 4 , derived from studies done at Westinghouse and General Motors, suggests that a major fraction of the total life cycle cost for a product is committed in the early stages of design. 8 As products become more complex, containing more and more parts, manufacturing yield falls dramatically unless design efforts can create parts and manufacturing operations of extremely high quality. This sensitivity of final product quality to component quality as complexity increases may be readily demonstrated. Assume that a final product requires n components and operations, each with a probability of being acceptable, Pj. Then the probability of the final product being acceptable, P, is If Pj=p is the same for all n components and operations, then equation 1 simplifies to p = (p)n (2) Figure 5 is a parametric plot of equation 2 which shows that very high quality in all components and assembly operations is required to get accept

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IMPROVING ENGINEERING DESIGN: Designing for Competitive Advantage Figure 4: Life Cycle Cost Commitment Figure 5: Effect of Component and Assembly Quality on Yield

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IMPROVING ENGINEERING DESIGN: Designing for Competitive Advantage able yields for products with even a few hundred parts or assembly operations. Note that a component quality of 10 ppm (defective parts per million parts) is required to get yield in the 99 percent range for a system composed of 400 parts. U.S. performance in engineering design can be compared to that of other nations on the basis of the speed and cost with which new product concepts and product improvements are brought to market and customer perceptions of the quality and performance of those products. The greater time from concept to delivery for U.S. than for Japanese products is illustrated by Figure 6 . 9 Manufacturing performance, including adherence to design specifications, flexibility, and efficiency, is also involved, but effective design is at the heart of the concept of continuous accumulated improvement —the drive to make a product better year after year. When measurements are made, it becomes clear that U.S. industry's loss of market share in many industries results from poor performance in the very areas in which successful foreign companies, particularly some Japanese companies, usually excel.10 Loss of market share resulting from poor design is likely to spread as foreign competition expands into other industries— aerospace, large appliance, and cosmetics industries being likely near-term targets. Figure 6: Lead Time For a Major Body Die (Months)

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IMPROVING ENGINEERING DESIGN: Designing for Competitive Advantage THE NATURE OF ENGINEERING DESIGN As the key technical ingredient in the product realization process, engineering design bears responsibility for determining in detail how products will be made to meet performance and quality objectives for the customer at a cost that permits a competitive price. It thus plays a key role in the ability of businesses to excel. Engineering design has both technological and social components. The technological component includes knowledge about engineering science, design methods, engineering models, materials, manufacturing, and computers. The social component includes corporate organization and culture, team design methods, the nature of the design task and of the designer, customer attributes, and employee involvement. An ever-evolving problem-solving activity, engineering design encompasses many different and increasingly advanced practices, including methods for converting performance requirements into product features, computer-integrated manufacturing, cross-functional teams, statistical methods, competitive benchmarking of products, computerized design techniques, and new materials and manufacturing processes. These and other methods used by the most competitive companies worldwide do not exist or operate independently, but rather are integrated into a unified process. The committee considered a broad range of engineering design activities, including practices, processes, principles, methodologies, and techniques employed in companies large and small. Although the committee did not focus on Very Large Scale Integration design or software design because these are narrower domains, significant successes in these areas are ascribed to the close coupling of product and process design and thus provide lessons for all areas of design. Findings—The Current State of Engineering Design in the United States Several committee members had past or ongoing professional experience in key roles in improving design practice in their respective companies. These committee members had benchmarked their firms against leading competitors and often found their firms wanting. Significant benchmarks often considered included factors such as cycle time, the number of iterations of the design cycle, and the number and administration of design changes. Starting with this background, a panel of these members developed a set of questions which they posed to a number of leading-edge companies. They found that these U.S. firms believe significant efforts will be needed to attain the advantages that already accrue to their most effective foreign competitors, who successfully apply advanced design practices. In addition,

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IMPROVING ENGINEERING DESIGN: Designing for Competitive Advantage attaining a similar level of competence involves a moving target. The companies visited were large and well supported. The committee did not explicitly study small and medium-sized firms, whose situation is starkly documented in various reports that show that their level of adoption of even computer-aided design (CAD) substantially lags that of foreign firms. The status of research in design theory was assessed by a different approach. A panel of experts in the field drafted, refined, and ranked a set of topics covering the various areas of investigation. They estimated the minimum support necessary to get “above-threshold” progress in these areas and compared these desired levels to existing levels of support. They concluded that current levels of support are far less than needed to advance the field. Addressing design education, the committee once again drew upon the extensive experience of its members, but also visited and posed questions to industrial firms on the adequacy of the education of newly hired engineers. The following general statements are offered with no intent to cover all cases; subsequent sections of this report identify wide variations in industrial and educational practice throughout the nation. Nevertheless, the committee's findings support the following statements on the current state of engineering design in this country. The best engineering design practices are not widely used in U.S. industry. 11 Many U.S. companies limited by existing practices are unwilling to try new ones, often because of management rather than technical barriers. Those U.S. companies that do try to identify and absorb current best practices are still often outstripped by their best foreign competitors, which continue to evolve new and still better practices. A higher rate of new product introduction in these foreign firms results in more rapid learning, which translates into more rapid improvement of design and manufacturing processes.12 Improvement migrates slowly in the United States because the process of sharing and disseminating design knowledge among companies remains dependent on informal networking of individuals. The key role of designers in the PRP is often not well understood by management. Most designers take on, often by default and without portfolio, an enormous range of new activities in support of the PRP, and management often does not recognize the importance of these nontraditional design activities. Motivation and support of designers is complicated because there is no way to use data from traditional cost accounting systems to evaluate the contribution of design to profit or to compare the effectiveness of different designs. In recognition of this problem, proposals for different cost accounting systems have recently been published.13 Some U.S. firms use design effectively, but they have had to change their goals and culture to do so. To move from stable, high volume, slowly changing production to continuous improvement requires profound cultural

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IMPROVING ENGINEERING DESIGN: Designing for Competitive Advantage change; firms that have made this shift have adopted an all-enterprise approach, employing dedicated agents to catalyze and support change. These firms use a product realization process as the vehicle for involving people at all levels and in all functions in defining, designing, and producing the product and moving it to market. They choose design practices to support the PRP and design the product, and they set metrics to guide the process. Partnerships and interactions among industry, research, and education are so limited that the relevant needs of each are poorly served by the others. With few exceptions, engineering design education and research is divorced from industry needs. For its part, industry does not articulate its requirements, support changes in the design component of curricula, or view education as an incubator of design talent. University design research efforts are often isolated from industry, and industry rarely uses the results of university research. Although some companies have fared well despite this environment, most (particularly medium-sized and small companies) suffer the consequences of outdated methods and poorly prepared new engineers in product quality, market share, competitiveness, and international trade. Current engineering curricula do not focus on the entire product realization process. Most curricula emphasize a few steps of conventional, essentially technical, design procedures. Curricula as a whole lack the essential interdisciplinary character of modern design practice and do not teach the best practices currently in use in the most competitive companies. The result is engineering graduates who are poorly equipped to utilize their scientific, mathematical, and analytical knowledge in the design of high-quality components, processes, and systems. Few have experienced design as part of a team, even fewer understand the multiple goals that motivate design, and most lack sufficient understanding of statistics, materials, manufacturing processes, cost accounting, and product life cycle considerations. Industrial training courses try to fill these gaps at considerable cost and with varying degrees of success. Industry's internal efforts to teach engineering design, intended to compensate to some degree for these shortcomings, are too fragmented and not institutionalized as natural components of the way business is performed. These efforts, affordable only by the largest companies, are not based on the fundamental understanding of design processes that could be provided by design research. Yet most engineers, including new employees, currently learn modern design techniques from industrial training courses. Although universities nominally bear responsibility for producing both practices and practitioners, they do not fulfill this role in engineering design in the United States. The breakdown extends beyond curricula. Universities do not, in general, value engineering design as an intellectual activity, either in research or in teaching. Lack of instructional materials and experienced faculty and the need for time-consuming interaction with

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IMPROVING ENGINEERING DESIGN: Designing for Competitive Advantage students make courses in design difficult to teach. Many who do teach design have little experience and are unaware of the most recent design techniques. The few efforts to revitalize university research and teaching in engineering design are fragmented, insufficiently funded, and not well enough coupled to the needs of industry to produce either well-prepared new engineers or useful research results. A revitalization of university research in engineering design has full scope of design for competitive products, and results are not well disseminated to industry. The National Science Foundation's (NSF's) program in engineering design theory and methodology is funded at too low a level and not yet recognized by the research community as a stable source of research leadership and support. NSF's Engineering Research Centers, some of which have design-oriented research thrusts, are a step in the right direction, but again, funding for design efforts is inadequate. The U.S. government has not recognized the development of superior engineering design as a national priority. Though engineering design is a primary determinant of competitiveness over the entire spectrum of manufacturing industries, it has not received the level of support that has been accorded specific product areas such as semiconductors and superconductors. This state of affairs virtually guarantees the continued decline of U.S. competitiveness over the long term. A complete rejuvenation of engineering design practice, education, and research—aimed at future needs rather than just at “catching up” to competitors' current standards—is fundamental to gaining and maintaining U.S. industrial competitiveness. An objective of this magnitude requires intense cooperation among industries, universities, and the government. In the United States, federal and state government policies have not traditionally been directed toward helping private enterprises enhance their competitiveness through adoption of advanced technologies, in part because technology-based industries have in the past faced little serious competition from foreign firms. Now nearly all foreign competition in high-value-added products is strengthened to some extent by various foreign government measures to increase the technological strength of key industries. Consequently, traditional government policies warrant intense restudy and, in all likelihood, revision. 14 THE CONSEQUENCES OF BETTER DESIGN PRACTICE, EDUCATION, AND RESEARCH Improving engineering design practice in U.S. industry will result in shorter development time, lower cost, and better match of products to customer

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IMPROVING ENGINEERING DESIGN: Designing for Competitive Advantage wants. The fastest way to realize these benefits is for the vast majority of U.S. companies to learn to use the advanced design practices that have already been implemented by leading-edge companies in the United States and abroad. It has taken these pioneering companies five to eight years to change their practices, yet many are willing to share their lessons, enabling other companies to learn and implement advanced design practices in a much shorter time. On a slightly longer time scale, better engineering design education will improve the practice of engineering in the United States. If the committee's recommendations are followed, in a few years universities will begin to graduate students whose knowledge of engineering design, contact with industry during their schooling, and awareness of good design practices will better attune them to the needs of industry and the realities of engineering design and dispose them to continuing education throughout their careers. These graduates will augment and eventually replace a generation of designers who received limited coherent engineering design education. Students who emerge from graduate engineering design programs familiar with current advances in theoretical foundations of design and forefront methodologies will not only contribute to engineering practice, but also be prepared to create new design tools, teach design to next generation students, and conduct research in design. The benefits of expanded design research will take longer to accrue — even with improved dissemination of research results to U.S. industry and greater eagerness on the part of industrial firms to use the results—but may have the greatest impact on productivity. Indeed, given the best result, it could provide the means for leaping ahead of the competition. Research will provide new design methods and principles to support more rapid development of further improved design practices. It will provide tools for faster and more complete learning of design methods by both practicing engineers and students, multiplying both the quantity and quality of design engineers. Research results will be further developed into computer programs, data bases, visualization devices and techniques, methods of predicting behavior and cost early in the design process, and other valuable, but today unforeseeable, mechanisms. It is crucial that improvements be made in each of the three areas of design—practice, education, and research. Halfway measures will not suffice. Simply adopting the design practices of foreign companies will doom U.S. industry to perpetual follower status. Educating new designers and performing research relevant to the needs of industry will require both the development of new faculty and intellectual and financial support from the companies at the forefront of engineering design practice. New research is needed to enable U.S. industry, when it is ready and able to accept new design methods and tools, to leap ahead of competitors.