Industrial strategies for development derive from studies of the evolution of market and customer demand. They have to consider the existing technology to make it easier to determine opportunities for innovation of the product and pro- duction processes. To identify priorities for research and investment plans, it is fundamental to evaluate the existing and potential industrial capacity of the company realistically, having in mind its weak and strong points, to direct efforts toward key success factors.
Figure1.2shows the three typical aspects involved in strategic planning. The final target to be followed in cooperation with the different departments of a company is the ‘‘value generation’’.
Company resources involved in the production process and productivity key management indicators
Our focus is now on production processes, for which the major part of manu- facturing company resources (manpower, investments on systems and work in
process, materials and energy) are normally employed. The typical key manage- ment indicators used to evaluate the effectiveness of the employment of resources, in terms of output/input ratio, are as follows:
Increasing these productivity factors helps to reduce the cost of production and get the gross profit margin in positive numbers considering the same sales value/price of the products.
For this reason, in the following chapters we will be dealing with meth- odologies for analysis and improvement of such productivity indexes. We should also say that improvement plans must extend to the entire ‘‘supply chain’’, in consideration of an integrated production process.
mission
strategies resources plans
Industrial development Technological and
Normative scenario Customers demand
evolution
World-wide Markets
Competitors and shares
Internal capacities Acquired capacities and
partnership VALUE CREATION
Fig. 1.2 Activities for strategic planning process
1 Manpower productivity Quantity of transformed product/quantity of manpower or quantity of man-hours dedicated
2 Production systems productivity Quantity of transformed product/nr of days or hours used for producing
3 Direct material utilization degree Net direct material requirement based on design elements (final product)/gross requirement based on
transformation process 4 Energy and auxiliary materials
productivity
Quantity of transformed product/specific energy and auxiliary materials used in transformation processes 5 Investments productivity Production capacity used during product industrial life
cycle/product specific investments
Other strategic key success factors
The above Key Management Indicators are directly connected to product competitiveness, while sales success and company results are also dependent on the following factors:
• Product quality and innovation
Value/cost ratio determines product profitability, which depends mostly on the innovative capacity of the company and on the quality level perceived by customers.
This argument is considered in Chap. 8, dedicated to ‘‘continuous improve- ment’’ management.
• Customer service level
This represents the capacity to respond in terms of timing, quality and quantity to the fulfilment of obligations engaged with final and intermediate customers.
Methodologies for achieving a level of service towards customers are addressed inChap. 6, dedicated to Management of Logistic Processes.
It is very important to underline that the capacity to fulfil the product range in the required mixed model, with short process lead time, is strictly related to the strategies adopted for engineering of ‘‘Production Systems’’, as we will see in Sect.1.4.
• ‘‘Time to market’’
This is the period of time necessary for the technical and industrial development of a product, starting from the definition of the ‘‘concept’’ or ‘‘style model’’ up to the commercial launch. The capacity to launch a new interesting product faster than one’s competitors is directly linked to success in sales and the company’s resulting economics.
This argument is considered inChap. 2, dealing with new product development and engineering.
• Product and company brand image
This fundamental aspect will be not approached in this text because it is an argument for marketing strategies. What is important to emphasize here is the fact that product and company brand image depend not only on communication strategies but especially on the perception by customers of a particular level of quality. Brand image is sustained by product innovation that does not sacrifice the essential marks of its origins, considered important for brand distinction.
Industrial development and life cycle of a product
Figure1.3 shows the macro phases that feature in the industrial life and development cycle of a product:
The development of a new product requires preliminary research activities for establishing performance and qualitative targets born out of the stated mission of the brand or company. Parallel to this, a qualitative and quantitative analysis of market requests is run to define sales targets, as well as their relation to the best of one’s competitors. In this way, the level of production required can be planned on a sufficiently wide temporal horizon.
After this phase, executive project and manufacturing engineering activities follow. Thedevelopment cycle of a new productends with the start of production and commercial launch in the market.
The industrial life cycle of a productbegins with start of production and ends with completed sales in the market, even if the company has to provide technical assistance and physical maintenance to customers subsequent to the sales. Another parameter is thetechnical life cycle, which depends on the product’s functional duration (the actual use) and on technical and economic considerations.
In the following chapters, we will take a wide approach to matters related to new product industrialization and the management of their production systems, referring from a general point of view to theirindustrial development and life cycle.