By forming a strategic collaboration with suppliers, OEMs can have it all. The key is implementing Web-based CPD services via flexible ASP business models.

Perched atop the manufacturing pyramid, large OEM organizations rely on their foundation of suppliers and partners to overcome competitive forces. They are confronted by seemingly incompatible mandates: decrease time-to-market, improve quality, foster innovation, and reduce costs. It's in their best interests to work closely with their suppliers for long-term success. In fact, when collaboration among OEMs and suppliers is elevated from a logistical or administrative function to a truly strategic role, OEMs can focus on core competencies and optimize intellectual assets while outsourcing processes that are integral to finished products.

Elevating the supply chain to the level of a design and development partner creates a ripple effect of benefits that are consistent with an OEM's primary objectives. Studies have shown that the average discrete manufacturer realizes a 12 percent reduction in time-to-value, a 20 percent reduction in development costs, and a 7 percent reduction in manufacturing costs by collaborating with the supply chain early in the design process.

Of course, the physical co-location of engineers and supply chain partners in a single building with common CAD and data management systems is unrealistic. In addition, traditional global collaboration techniques suffer from the inefficiencies associated with incompatible systems and different time zones. The ability to collaborate, therefore, hinges on the "new economy" of the Web and, more important, the applications that facilitate virtual co-location across worldwide physical boundaries.

Transforming A Linear Process

A product development strategy that encourages ownership of design and manufacturing processes throughout the supply chain can be evolutionary in nature. Such a strategy might begin with the secure distribution of master designs to suppliers.

In handing off design and manufacturing functions to third parties, tools for efficiency, quality, and accountability become paramount. Research indicates that up to 80 percent of product cost is embedded by the time the design is "tossed over the wall" to manufacturing. This figure implies that enhancements to product development processes that improve early stage efficiency can trigger far greater cost advantages than attention to downstream functions.

Conversely, early design flaws, or even seemingly minor decisions that have a less than optimal impact, can propagate through the development cycle. Ultimately, these flaws manifest themselves as spiraling project costs, deteriorating product quality, and dangerously protracted time-to-market.

Virtual co-location and real-time collaboration via the Internet strike at the inefficiencies of traditional global collaboration. What has been a linear process can become concurrent and dynamic. Web-based Collaborative Product Development (CPD) services migrate this linear design function to a common platform where it becomes a concurrent and distributed process. Such tools allow user-friendly integration with legacy systems while dissolving cost barriers to implementation.

Focusing on the challenges confronted by large manufacturing enterprises with global outsourcing requirements, some companies are using an Application Service Provider (ASP) model to provide Internet-based applications and services that are easily accessible and uniformly compatible. For instance, applications such as Alibre Design can serve as the catalyst for the next level of supplier collaboration and outsourcing. With a Web-based distribution model, there are no delays or costs associated with sales channels or resellers in the implementation; and all documentation, support, training and tutorials are available online. Plus, 3D models and 2D drawings can be published as master data and immediately accessed, visualized, queried, and manipulated by the supplier-partner – without re-interpretation or re-digitizing. With data compatibility assured via support for open standards such as STEP, OEMs can enlist the most appropriate and cost-efficient suppliers regardless of geographic location.

MVP: Collective Knowledge

The individuals that collectively constitute a company's expertise represent the organization's most valuable resource. Web-based CPD unleashes the collective knowledge of the enterprise and the extended supply chain to fuel rapid development and innovation.

By extending true peer-to-peer (P2P) functionality across the supply chain, the creative barriers of simple markup and review tools are dissolved. Partners can have easy access to the native design and modeling capabilities that fuel enhancements to product design and manufacturability. OEMs can tap into the far-reaching expertise of a geographically dispersed supply chain and capture innovation that improves time-to-market and profitability.

The ability to design anywhere and build anywhere ultimately means that an organization can thrive in a highly competitive, rapidly changing market. Moreover, CPD services are fueled by the energy of real-time, instantaneous, spontaneous interaction. Whether a company is in the infancy of its collaborative strategy – pushing data out to suppliers for manufacturing – or has evolved to true collaborative design and development, the Internet levels the playing field and CPD services empower the teams.

Paul Grayson is president of Alibre Inc.