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3803_Strategic Product Development_ASUG v4
- 1. Orange County Convention Center Orlando, Florida | June 3-5, 2014 Strategic Product Development and Cost Estimates for Futuristic Products Vedant Borse (HCL AXON)
- 2.  Understand Product Costing and Challenges with estimating cost of Future Product  Eliminate Manual/ Excel based calculations and reduces the risk of estimation variance  Closed loop Solution Approach for accurate Product Costing, Planning and Execution LEARNING POINTS
- 3. How do I estimate Cost? Detailed Level Estimates BOM with Detailed Part List •Travel •Freight •Contract •Labor •Vehicle •Parts •Test CostManpower + Executive Advance Planning Departments/ Project - 6Years - 4Years - 3Years High Level #1 Estimates Buildable Combinations Matrix (BCM) •Travel •Freight •Contract •Labor •Vehicle •Parts •Test CostManpower + • Development Complexity Known • Feature List Unknown • Parts List Unknown High Level #2 Estimates Features and Parts List (High Level) Features List •Travel •Freight •Contract •Labor •Vehicle •Parts •Test CostManpower + • Feature List Known • Parts List Partial • Development Complexity Calculated • Parts List Known • Feature List Known • Development Complexity Calculated Reduce Estimation Accuracy to: +/- 5% Reduce Estimation Accuracy to: +/- 0.5%
- 4. Challenge 1: Varying YoY Cost Estimates -10% -5% 0% 5% 10% 15% 20% 0 50 100 150 200 250 300 Year 6 Year 5 Year 4 Year 3 Year 2 Year 1 Actual Cost Variance Cause  Development Assumption Not Clear in Early Stage  Estimator include Buffer in budget  Detail Spending Is not clear Sample Lifetime Cost History for a Single Vehicle Development Estimates Variance ~20% Variance Year on Year Estimation Est. Vs Actual ~5% Var.
- 5. Challenge 2: High Consolidated Variance (80.00) (60.00) (40.00) (20.00) - 20.00 40.00 60.00 Year 6 Year 5 Year 4 Year 3 Year 2 Year 1 Actual Product F Product E Product D Product C Product B Product A Total Variance Issues  Poor Estimation Accuracy occurs in all projects.  Poor Spending Control occurs in all projects. Year on Year Estimation Est. Vs Actual Actual
- 6.  No Part List/ BOM data results in to estimate cost Long estimation process  Varying range of complexities, type of development, its flow, duration, etc leads to hundreds of permutation and combination to estimate a product cost for Labor, Parts, Products, Design, Build, Test, Prototype Cost, Whitebody, etc.  Unclear varying factors forces use of weak resource estimates technique resulting in Inaccuracy in Project Resource Planning for future Products (Eg. 20% avg. variance/Prj )  Shorter time to market and increasing variant launch (Minor Model, Major Model, NPDI) adds to more pressure on estimates and product development, resulting in incorrect estimates  Use of custom tools or Excels adds difficulty in collating estimates from multiple business units  Unavailability of robust estimation technique limits alternatives/ estimates scenarios (Eg. 3/Prj), thus Limiting alternatives/ estimates scenarios for Lineup Planning of multiple vehicle and multiple launch years projects Future Product Cost Estimates Challenges
- 7.  Microsoft Excel  Custom Home Grown Solution  MS Access  Highly customized PLM Solution  Guestimates/ Person Dependent Current Estimation Tools
- 8.  Varying Year on Year costing estimates results in Bad Image to investor  More reporting requests, thus requiring large pool of planning resources required for estimation and report preparation  Inability to created multiple estimates scenarios for each vehicle, while creating single lineup for all vehicles across globe for each variant becomes distant possibility Consequence
- 9. HCL AXON PLM Practice • Resource expertise in SAP PLM PLM Highlight:  Leader in SAP PLM Implementation (12+ years practice, 40+ implementation)  HCL AXON has amongst the highest number of PLM client references  SAP PLM/PPM Practice COE’s in US, Asia and Europe Unique Industry Specialization:  Pharmaceuticals, Consumer Healthcare, Consumer Packaged Goods, Discrete Manufacturing and Professional Services. Delivered the largest PPM user in Pharma and the most complex project in CPG Platform Pioneer  Developed an accelerator for PLM/PPM in Consumer Healthcare  First SAP partner globally for the Rapid Deployment Solution (RDS) of Portfolio and Project Management (SAP PPM)  SAP partner globally for the Rapid Deployment Solution (RDS) for Visual Enterprise (VE)  SAP Ramp up Partner with dedicated SAP PLM Lab (PPM 6.0, PLM 7.0) SAP Endorsement  Co-authored R&D whitepapers with SAP  More Sapphire conference success stories than any other partner  Top collaborator with SAP for PLM in Life Sciences Manufacturers pursuing integrated PLM/MES/ERP environments in HCL's primary industries - particularly those with SAP as their ERP platform - should consider HCL for PLM services. “
- 10. Solution options  Easy Cost Planning  PDCE  iPPE  BOBJ PCM Criteria  No Material Master, varying range of complexities, type of development, its flow, duration,  Show possible permutation and combination  Calculate 2.5 Billion data combination and generate results for  Cost: Labor, Parts, Products, Design, Build, Test, Prototype Cost, etc.  Quantity: Manpower, Products, BOM/MM, etc Solution Options
- 11.  Combination of Process improvement with enablement via right technology should be the mantra  Build a closed loop estimation process Closed loop Solution: SAP PPM+PCM+ECC f(x) Approval Workflow PCM Profitability & Cost Management PPM Portfolio & Project Management Project Execution FinancialTime Reporting Features and Parts Project System Project Highlights  First PPM-PCM Integration  First Unified UI Integration  First PCM-BODS-PCM Real- time Integration
- 12.  Automotive Estimation formulas are very complex  They involve varying parameters  Type of development (Minor Model, Major Model Change MMC), Full Model (FMC) or New Product (NPDI))  Varying range of complexities (Carryover, Modify, New)  Build Lot (Stages of Development) and duration  Development flow  Departments (Body, chassis, Interior, Electrical, Transmission, etc  While estimating the process Crash test vehicles has further complex dimension  Every Company has a complex formula for estimation  N_Motor CFM: Common Module Family  F_Motor BCM: Buildable Combinations Matrix  T and Y Motor has similar methods Define Formula
- 13. BOBJ-PCM Formula and Lookup Super User can control Formula Tables, Condition to apply specific Table, Structure of Table and Formula
- 14.  Build Estimation Projects  Extent Project for Next Levels of Estimation  Extent Estimation Project to Execution Project  Variance Analysis between estimates and Actuals to improve the formula via a Closed Loop process (PCM-PPM-ECC Integration)  Build a Lineup view of all the projects stacked together Define Project and Lineup
- 15. Project Planning and Estimation Inputs
- 16. Calculation in PCM Underlying Calculation in PCM from inputs from PPM
- 17. Rollup Estimation to Project and Lineup
- 19. SAP Implementation (Old vs New)NewSystem(SAP)OldSystem(Manual) Resource Estimation and Formula Project Resource Estimation Lineup Scenario Resource Simulation Financial Manual Process Project Estimates Project Lineup f(x) Approval Workflow PCM Profitability & Cost Management PPM Portfolio & Project Management Project System Project Execution Financial Time Reporting TTP Project Benefits -Improved Accuracy from 20% to 5% due to formula PDCA -Best Decision Making due to Alternatives: 3 scenarios to10 scenarios - Huge Annual Saving in terms of Estimation House and Cost Issues: -Manual Repeat process -Low Accuracy -More Efforts Timesheet Calculation via spreadsheets Calculation via spreadsheets Parts System Parts System High Efforts/ yrs for Estimation Lower Simulation/ Project High Efforts/ Project for Estimation Higher Simulation/ Project Lower Efforts/ Project for Estimation
- 20.  Better Planning decisions, by providing:  More accurate estimates. Accuracy improvement from  20% avg./Prj → 5% avg./Prj (If condition change, clear analysis reasons)  More lineup alternatives. Increase Alternatives from:  3 scenarios→10 scenarios  Time Saving  Forecasters time: 130hrs/Prj→10hrs/Project (About $0.4M Saving) Benefits
- 21. THANK YOU THANK YOU FOR PARTICIPATING Vedant Borse Solution Architect, PLM / PPM / PCM HCL AXON EAS Division – HCL Technologies 15 Exchange Place, Suite 730, Jersey City, NJ 07302 Mob: +1 919 744 6166 www.hcl-axon.com www.hcltech.com www.hcl.com HCL Booth #213