By Matthew Littlefield, president and principal analyst, LNS Research
In the fast-paced world of electronics manufacturing, optimizing the New Product Introductions (NPI) process is critical for success. A key to efficiently introducing products is having strong change management capabilities, specifically when it comes to engineering change orders (ECO) and product or component revisions. ECOs must be quickly communicated to seamlessly cycle existing inventory through and launch new products.
The Impact of Engineering Change Orders
As a consequence of ECOs in electronics manufacturing, inventory can become obsolete in a short period of time. During the product lifecycle, there may be alterations to a product’s components, the bill of materials, product codes, assembly instructions, processes…and the list goes on. These can originate directly from the engineering team, or come in the form of a customer request; regardless, the effective management of these changes is critical.
Because ECOs touch so many different business processes at once, it’s important that there’s a strong, centralized system to manage the changes. Traditional methods, such as paper-based systems or manual processes, are no longer agile or efficient enough when compared to the automated processes enabled by today’s leading ERP solutions. Many companies have wasted considerable resources attempting to cling to old processes that manage change through emails and spreadsheets. To create a competitive advantage in the marketplace with a speedy NPI process, electronics manufacturers need a robust system that manages ECOs across the value chain, from suppliers through distribution.
Timing is Everything
When thinking about the processes needed to manage ECOs, manufacturers should remember that ECOs can involve hundreds or thousands of changes across many products. This can be extremely cumbersome to manage, so manufacturers must have a platform for easily communicating and managing these changes. Quickly bypassing traditional methods, ERP solutions – which are often integrated with other scalable and easily implemented information systems – can achieve the needed process speed.
Leading manufacturers today have strong functionalities and change management abilities to reduce negative impacts associated with ECOs. An important concept to remember is that ECOs affect far more than just engineering. Over the same platform, a procurement manager could change an order from suppliers, an engineer could change product codes and the bill of materials and manufacturing could be notified to cease production of inventory that will eventually become obsolete if production is continued.
With the effective management of change through software, new or updated products can be introduced seamlessly, without creating any of the bottlenecks associated with manual changes in processes, product codes, assembly instructions and such. In an industry where NPI is closely associated with success, this should be a main focus for electronics manufacturers companies today.