Strategy Integration: Leveraging Opportunities With R&D New Product Teams
Laura L. Stover
Laura L. Stover, Sr. Director, Applied Materials, Santa Clara, CA 95051, 408-563-4801, Laura_Stover@AMAT.com
83rd Annual International Conference Proceedings - 1998
Successful Materials organizations are those most adept at collaborating with their R&D colleagues to integrate supply strategies at the concept stage. Leveraging mutually shared goals by participation in new product launch teams will result in delivery of new products with unprecedented velocity and immediate profit margin advantages.
The three main objectives of this presentation are to:
1. Clarify what strategy integration is, and how it applies to Materials professionals.
2. Propose how Materials professionals can position themselves to develop and implement strategy integration with their R&D colleagues.
3. Give examples of how Materials professionals might match strategies with the R&D new product team in order agree on mutually beneficial goals.
What is strategy integration? Specific examples of strategy integration in two high tech industries should demonstrate the concept before we narrow our definition to the Materials / R&D team application.
The integrated circuit industry surveys the marketplace far in advance of actual chip production, in order to gain understanding of what chip technologies its customers will need in the next few years. Then, it commits to delivery of a selected array of chip sets, so those same customers can, with confidence, begin designing the future chips into their products. In this example, strategy integration allows early paralleled efforts and time to market maximization in an industry with a sixteen month product life cycle.
The U.S. computer industry likewise demonstrates strategy integration when it partners with independent value-added software developers who are chartered with developing future software applications for the personal computers of the future. Like the magic appearance of Lion King stuffed toys exactly at the same time that the Lion King movie hit theaters across the world, it is absolutely not a coincidence that a software application hits the shelves in computer stores at exactly the same time as does the personal computer which can utilize that application.
One can see from these examples that strategy integration shares the following common attributes: future focus, paralleled activities, cross-organizational collaboration and shared mutual competitive advantage. For our purposes, let us turn these attributes into our definition of strategy integration and apply it to the Materials profession.
One common complaint from Engineering people about their Materials or Purchasing colleagues is that we are an obstacle instead of a value-added partner when it comes to product development and launch. Generalizing wildly, we are often perceived as parts-chasing, order-placing tacticians who will not make a move until a part is fully released, has a perfect specification or drawing, and is visible on a formal Materials Requirement Planning system. When Engineers begin to perceive us as future-focused like they are, with a passion for hitting the market during that small optimum time window, I submit that we will more often achieve the partnership that is our goal.
Strategy integration with R&D teams is critical to our companies as well as to our sense of professional contribution. We are all aware that a powerful set of market drivers, particularly in competitive high technology industries, causes our companies to adapt and perform or else to wither and die. These drivers are simple to state and universally important from delivery of the first product to the last:
* Lowest total cost
* Speed to market
* Highest quality
If we wish to have the best chance to influence decisions which will optimize cost, speed and quality, we need to first discuss positioning. Close your eyes for a moment and send yourself far away from Dallas and this stuffy convention center to the lush manicured terraces of Bali, Indonesia, where rice grows in small steamy family paddies under the hot equatorial sun. Float up to the top of the hillside and look down upon the sharply defined yellow-green steps that form these centuries-old miniature fields, and note the watercourse system in the form of little dams and ditches that allows carefully planned flooding to irrigate the rice in a perfect cascade effect. Now pretend you are the head chief of the watercourse system which enables four fertile crops per year. You are the gatekeeper who decides when the water flows. Got the mental picture?
So, are you positioned down on the lowest terrace? No, of course not. You are standing way up at the very top of the hill, bending over that very first little dam and raising the wooden door which will allow water to flow down to the next level, then down to the next, then the next, cascading down and down with so little effort and such exquisite irrigation productivity.
Sorry; you need to come back to Dallas and the present now. Using this mental picture that we have just shared, doesn't it make good sense that if we are to participate in efforts which will nearly effortlessly achieve lowest product cost, best speed to market and highest quality, we will position ourselves up at the top of the product life cycle hill, which is where all the important decisions are made?
Joining the product design team at the concept stage must be our goal. This is the only way we can avoid becoming an obstacle. This is the way that we can begin to work in parallel with our R&D colleagues. And this is the only way to set up agreements on mutually beneficial goals with new product teams.
Using the Total Quality Management Mirror technique, following is a listing of more of these negative perceptions that high technology engineers may have of us materials professionals, and conversely, a listing of those negative perceptions which we may have of our engineering colleagues. We will use this listing to create the "mirror" of the perception, which becomes the solution to the problem.
Engineers tend to think of materials people as:
* too slow; too passive
* too focused on price alone
* too technology-dumb
* too bureaucratic
* too risk averse
* too inaccessible
* too tactical
Materials professionals tend to think of engineers as:
* too fast to make a decision
* too focused on technology alone
* too business-dumb
* too incomplete on documentation
* too NIH (not-invented-here) to standardize
* too inaccessible at the concept stages
* too often picking the wrong supplier
* too often over-specifying the product
* too often designing pricey, unmanufacturable products
Once the laughter and the irritation fades away, we can use these perceptions, which are, after all, based on some truth, to make a "mirror" listing which will in many cases solve these problems. For ease of listing, we will use "MP" for materials professional and "TE" for technology engineer.
Perceived Problem Mirror Solution
* MP slow to respond * MP dedicated to program
* MP focused on price * MP uses total cost model
* MP technology-dumb * MP has technical degree
* MP bureaucratic * MP moves in parallel
* MP risk-averse * MP formally analyzes risk factors
* MP inaccessible * MP co-located with TE
* MP too tactical * MP demonstrates strategic thinking
* TE decides too fast * MP participates in decisions
* TE focused on technology * MP understands technology
* TE business-dumb * MP adds business value
* TE incomplete docs * MP sells benefits of complete docs
* TE does not standardize * MP does standards homework
* TE not accessible * MP co-located with TE
* TE picks supplier * MP sponsors/selects supplier
* TE overspec's the product * MP utilizes total cost model
* TE designs unmanufacturable * MP brings in correct supplier early
* TE accepts high proto price * MP negotiates part life cycle price
After years of unsuccessful efforts and finally many successful partnerships with R&D teams, I can assure you that this Mirror List leads to participation at the right time and leads to nearly effortless strategic integration and excellent results. Notice that the change in focus and activity can be driven by the materials professional, and does not depend on unrealistic expectations of change by the engineer.
Once you are on the team at the earliest stages of design, the integration of supply base strategies with product strategies can take place. Which specific
strategies are integrated clearly depend on corporate goals. It would be presumptuous to do more than give a few examples of strategy matches, but it is hoped that the following will prove helpful:
Supply base Strategy Product Strategy
* utilize preferred suppliers * hit the market first
* outsource all subassembly * meet margins goal
The strategy matching discussion around the first example, matching preferred supplier utilization with speed to market, might include several 'sales points' by the MP team member. If the preferred supplier set is utilized, the MP could guarantee:
a) quick-turn 2 day proto delivery
b) fast transition from proto to production volumes
c) beta testing capabilities at the supplier
d) documentation service to provide a full production specification drawing set.
The strategy matching discussion around the second example, matching an outsource strategy to specific margin goals, might include MP guarantees for:
a) production pricing from the outset which meets the margin goal
b) manufacturing engineering assistance by the supplier for the bundled assembly.
c) significant cost reduction from the added piece part prices.
In conclusion, strategy integration will allow us to provide valuable activities which demonstrate future focus, paralleled efforts, cross-organizational collaborations and shared competitive advantage to the benefit of our companies. With strategy integration we will be positioned to take best advantage of the skills which we have spent years developing.
The challenge: Who will be the windshield and who will be the bug? Be sure you are in the product development team vehicle, not out in front of it. Position your team.
The model: Implementation is the chariot of genius. Send in only proactive, technically and business competent professionals who can sell strategy integration. Send in the best.
The payoff: Show me the money. Be sure the MP team members achieve results that support the strategy integration. Deliver quickly.