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Managing the Process of Ecos

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  MANAGING THE PROCESS OFENGINEERING CHANGE ORDERS: THE CASE OF THE CLIMATE CONTROL SYSTEMIN AUTOMOBILE DEVELOPMENT by C. TERVVIESCH* and C. H. LocH 97/56/TM *   PhD Candidate, at INSEAD, Boulevard de Constance, Fontainebleau 77305 Cedex, France.   Assistant Professor of Operations Management, at INSEAD, Boulevard de Constance, Fontainebleau 77305 Cedex, France. A working paper in the INSEAD Working Paper Series is intended as a means whereby a faculty researcher s thoughts and findings may be communicated to interested readers. The paper should be considered preliminary in nature and may require revision.Printed at INSEAD, Fontainebleau, France.  Managing the Process of Engineering Change Orders The Case of the Climate Control System in Automobile Development Christian Terwiesch   Christoph H. Loch Ph.D. Candidate   Assistant Professor INSEAD   INSE D 77305 Fontainebleau   77305 Fontainebleau France   France Abstract Engineering change orders (ECOs) are part of almost every development process, consuming a significant part of engineering capacity and contributing heavily to development and tool costs. Many companies use a support process to administer ECOs, which fundamentally determines ECO costs. We show in the case of climate control system development in a car, how a streamlined ECO management process can successfully complement the engineering efforts of avoiding and frontloading ECOs. This administrative process encompasses the emergence of a change (e.g., a problem or a market-driven feature change) to the final implementation of the ECO. We analyze this process, and identify three categories of problems which can substantially delay it: Congestion, Batching, and Organizational Structure. We explain and illustrate these problems in the case and propose methods of overcoming them.    Introduction Engineering change orders (ECOs) are part of almost every development process.They result from the fact that engineering is an iterative rather than a purely linear process and are traditionally targeted toward correcting mistakes, integrating components, or the fine tuning of a product [18]. ECOs are also an outcome of thegrowing level of parallelity in today's development processes, where information- absorbing downstream activities are often started prior to the completion ofinformation-supplying upstream activities and thus have to rely initially on preliminary information [14, 16]. The negative impact of ECOs has been reported in a number of studies. ECOs consume one-third to one-half of engineering capacity [19] and represent 20-50% of tool costs [15], which can easily account for over US$ 100M in large development projects. However, the management of ECOs is not well understood despite this importance. In the past, both practitioners and researchers have tended to view ECO- related problems more as a tragedy than as a sign of process management. In particular, the support process administering ECOs has received little attention, although it has been identified as one of the root causes of ECO costs [5]. It is this ECO support process that the present paper focuses on. In the case of climate control system (CCS) development in a car, we show how a streamlined administrative process can successfully complement the engineering efforts ofavoiding and frontloading ECOs. This administrative process encompasses the emergence of a change (e.g., a problem or a market-driven feature change) to the final implementation of the ECO. We analyze the process in greater detail, and identify three categories of problems which can substantially delay this process; we then propose methods of overcoming these problems. Development of Climate Control Systems In the present article we discuss the case of climate control system (CCS) development at a large automobile company. The CCS system is one subsystem of the overall vehicle and contains all components related to the climate environment forthe passengers, including air ventilation, air purifying, warm-up, and cool-down. We take the CCS system as the basis for this article because it is frequently affected by ECOs and exhibits strong couplings among the activities involved. At the same time,it is a system that is well-suited to illustrate problems and phenomena that are typical for other development processes as well. To quote a manager in our host organization: Here [in the CCS system] you find all the problems we have in the development of new vehicles: coordination with other components, coordination of components within the system, and information release to tooling. Along with the dashboard, the CCS is the car subsystem having the most interfaces with other activities (see Figure 1 for the CCS architecture). 2  Couplings in the Development Process The term development process applied to the development of complex products such as automobiles, airplanes, or computers implies a strong simplification. Thecomplexity in the development of such systems is better captured by speaking of processing networks: thousands of tightly coupled activities have to be kept in synch over the course of the development of the vehicle (e.g., [7]). User Interface Target ValueStatus Value  ir Output  r Air Guide   I   ir Distribution Temp. Conditioning Clean ir Control Air IntakeMain Unit   Signal   old ir ehydration   Signal   arm i   Positioning wring Heating Circuit   Cooling Circuit  ► Warm Water Warm Water Heat Reduction Radiator SignalSignal Aux Park eating Mech. Compressor Compressor Energy Signal   Engine Eng. Elect Signal Compressor Figure : CCS Architecture Couplings between activities in this processing network can be classified into two groups, product-product and product-process couplings. A product-product couplingexists between the development of two interacting components which are part of the same overall system. Geometric fit in the three-dimensional space of the vehicle package is the most common interdependence. Another example is the interdependence resulting from resource exchange, e.g. the heat energy supplied bythe en gi ne to the heating circuit, information provided from the control unit to the main unit, or fluids exchanged between the elements of the cooling circuit. Product-product couplings can occur between subsystems, e.g. CCS system and engine, as well as within subsystems, e.g. control unit and fans in the main unit. Product-process couplings describe the interdependence between an activity developing a component or product subsystem and the activity developing the corresponding manufacturing process. Examples from CCS development include the coupling between the development of the filter and the preparation of the corresponding stamping tools, or between the design of the control unit software and the preparation of the required ASIC technology. 3
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