Transcript Global Sourcing and Development at HP: Inkjet Printers

Global Sourcing of
Design and
Implications For the
Supply Chain
Function
Paul Henderson
HP Global Engineering Services
[email protected]
© 2005 Hewlett-Packard Development Company, L.P.
The information contained herein is subject to change without notice
Today’s topics
•
A decision framework for sourcing of R&D
− Framing the decisions and alternatives
− Making decisions
− Parallels with supply chain
•
Models for doing outsourced design
− Mini-case studies
− Two models for doing outsourced design
•
The path forward
− Lessons learned
− Barriers and opportunities
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Setting context
•
Key points
− Spectrum from mfg to SC to R&D is becoming blurred
− Focus of this presentation: R&D, HP’s inkjet printer
business
− Near-shoring / Off-shoring / Outsourcing relevant to each
− Evolution: more design is moving toward being
“procured” or “sourced”; procurement and SC managers
will increasingly own or be involved in R&D decisions
− Moving from buying parts to buying partners
− Pivotal job holders, changing skillsets
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Making global sourcing
decisions
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‘Our’ definitions
•
Near-shoring – people who work for our company, but
in a geography near the US (Mexico, Puerto Rico, Brazil)
•
Offshoring – people who work for our company, but in a
remote geography (China, India, Russia, etc.)
•
Outsourcing – people who work for another company,
usually in a remote geography
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Key motivators for
offshoring/outsourcing design:
•
Nearshoring:
− Low cost structure w/stable workforce
− Tax advantages / government R&D subsidies
− Time zone proximity permits dynamic collaboration
•
Offshoring:
−
−
−
−
•
Lower cost structure w/semi-stable workforce
Tax advantages / government R&D subsidies
Supply chain proximity/synergy -> faster TTM
Protect critical IP
Outsourcing:
−
−
−
−
−
Increase scope and scale w/o increasing headcount
Focus internal people on higher-value, differentiating tasks
Convert cost structure from fixed to variable
Ramp up/down quickly, change partners if needed
Because you can
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What to outsource?
First, break the product
down into “sourceable”
elements.
product
Each face of this cube
is an interface that
must be managed
Large
format
AiO
A Sourceable
Element
Photo
W/S
ASIC
Paper path
Service
Station
Pen
Low-end A
size
subsystem
function or
lifecycle stage
July 18, 2015
Based on the work of Charlie Fine at MIT
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Whole subsystems
product
Large
format
AiO
Photo
ASIC
Paper path
Service
Station
Pen
Low-end A
size
W/S
Example:
outsourcing a
whole subsystem
(e.g.- power
supply)
subsystem
function or
lifecycle stage
July 18, 2015
Based on the work of Charlie Fine at MIT
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Lifecycle phase / activity
product
Large
format
W/S
ASIC
Pen
Low-end A
size
Paper path
Photo
Example:
outsourcing all
of one
lifecycle
phase
(e.g.- test)
Service
Station
AiO
subsystem
function or
lifecycle stage
July 18, 2015
Based on the work of Charlie Fine at MIT
9
Whole product
product
Large
format
AiO
Photo
Example: outsourcing a whole product
W/S
ASIC
Paper path
Service
Station
Pen
Low-end A
size
subsystem
function or
lifecycle stage
July 18, 2015
Based on the work of Charlie Fine at MIT
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Evaluate each sourceable element
For each candidate element, we ask the following
questions:
1. Is this important to the customer (CAV)? Does it
affect their sensory experience of the product? Are its
specs purchase criteria?
2. What is this element’s clockspeed relative to the rest
of the system or industry? Does it drive the evolution
of the rest of the system?
3. What is our competitive position?
4. What is the architecture of this element? How clean
are the interfaces?
5. How many suppliers are capable of delivering this
element?
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Based on the work of Charlie Fine at MIT
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Choose a plan of action for each element
1
Customer
Value?
2
Component
Clockspeed?
3
Competitive
Position?
Strong
None
Any
Many
Acquire and
consolidate
Invest to maintain leadership
Integral
Fast
5
Capable Suppliers?
Few
4
Architecture?
Invest
Acquire/Take Equity
strategic alliance
Invest
Acquire/Take Equity
Buy off the shelf
Weak
Modular
High
Divest or exit
Strong
maintain parity
Maintain capability
Slow
Integral
Invest
Joint development
Directed
Development
develop suppliers
outsource / multiplesource
outsource
Weak
0. Start
Here
Modular
spin out
divest
Strong
Fast
Integral
change architecture
Weak
develop suppliers
Low
outsource
Modular
spin out
divest
divest or exit
Strong
Slow
Integral
Weak
Any
change architecture
outsource
Adapted from unpublished work by Charley Fine, www.clockspeed.com
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Key points to address using this
framework
•
Defining ‘source-able elements’ is about
deciding which interfaces you will manage:
− Relationships between subsystems
− Relationships between lifecycle steps
− Relationships between products / product families
•
If the impact on customer experience is not
clear, model the result
− Savings vs. lost sales or increase in warranty
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Based on the work of Charlie Fine at MIT
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Implications for cross-general
evolution of platforms &
architectures
Supplier development
•
Takes several generations to get them up to speed
•
Progression is from commodity design to subsystem
design to entire cost reduced products to whole
products
Caveats
•
Erosion of internal capability
•
Switching costs
+
Design
responsibility
to suppliers
R1
+ Internal
support
provided
-
B1
Supplier
success
+
+
Ability to
switch
+
Internal
capability
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Models for doing
outsourced design
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Case study #1: Software driver
development
•
Mature technology, non-critical IP
•
Increasing ratios of external to internal resources
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Cost per release dropped to ~1/3
•
Key success factors:
− Honest dialogue with internal people about what is happening &
why; put them on higher value-added activities.
− Kept architecture, design, integration & program mgmt. inside,
moved testing, code writing & maintenance out.
− Minimized the number of vendors to keep OH low.
− Rotated outsource personnel through our operation to build
relationships and transfer know how.
− Set up the infrastructure to motivate the right behaviors
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Case study #2: Virtual mechanical
design
•
•
•
•
Needed to increase design capacity without
increasing headcount
PMs wanted to ‘control’ the resource
‘Virtual’ source for mechanical design
Key success factors:
− Managed the partners with a ‘star’ designer who is organizationally
separate from the development teams and insulated from resource
tug of war & POR battles
− Gradually assigned more complex design tasks as partners prove
themselves
− Use to do no-risk development, “what if…?”
− Removed it from the building so the designers weren’t distracted
− Providing a virtual service, PMs never knew that the person they
interacted with was working on multiple other projects
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Two alternative structures for
managing outsourced design
•
Coupled structure
− The outside engineering team actually becomes an
integrated part of the internal team.
− They are effectively the junior members of the team
and their work is closely supervised by members of the
internal team.
− Communication is about the task.
•
Decoupled structure
− The inside design team parcels out either parts of the
system for the external teams to design or specifies
tasks or parts of the process for the outside people to
do.
− The communication is at and about the interfaces.
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Disaggregate structure at HP: roles of internal,
outsourced and offshore design groups
Questions about specs and intent
Escalations that
can’t be resolved
locally
Internal
design
20%
Questions that relate
to system performance
Offshore
80%
design
Outsourced
design
Subsystem responsibility, Answers to simple
system questions
coaching
Specs, guidelines, coaching, answers to complex system performance questions
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Thoughts on selecting an
outsourced design model
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Nature of the design context - maturity and
separability:
− Platform vs. product
• Is this the first instance or a derivative?
− Modular vs. integral
• How well can the subsystems be decoupled?
− Explicit vs. implicit
• How well defined are the requirements & specs?
• How consistent are the processes?
• How well documented?
•
Organizational culture – need for control
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The path forward
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Cognitive inhibitors to outsourcing
design
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Unwillingness to imagine the future state – stuck
in the present
− “Nobody can do this but us…”
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Latching onto what we’re good at today as
strategically important
− “we’re good at it and we’re successful, therefore it must be
important…”
•
Reluctance to define the specific customer value
− “Everything is important to the customer.”
•
Reluctance to try a new approach
− “That’s too risky”
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Challenges for the future
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Do we know how to ask for what we really want?
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Are we sure we are getting what we asked for?
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When we buy from someone, are we also locking
ourselves into their cost structure?
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No internal entry-level positions anymore – can
we really get advanced expertise from the
outside?
•
Once you have divested of the capability, can you
bring up a different supplier?
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Questions ?