Global Product Development Services – An Economic Boon for Clients

Companies in the manufacturing industry are responding to enormous economic and political pressures in a variety of ways. The combination of these pressures and responses is transforming the industry. From economic pressures such as high-cost labor pools and increasingly expensive raw materials prices, e.g., steel and petroleum, to responses such as outsourcing (global product development), consolidation within the industry, and assembly flexibility, companies cannot afford to remain static in any of their operations.

Studies on manufacturing product development have been done that give a picture of the present situation in the industry along with a 5-year forecast. The studies include key areas such as business philosophy, product design tools, communication types and engineering efficiency. A definitive response flagged in the study is a climb in Global Product Development (GPD), or outsourcing to global suppliers.

GPD may be defined as the maximizing of financial and operational productivity of the product development process by distributing product development tasks across different regions of the globe to efficiently match value-addition and cost. A portion of product development includes marketing activities to recognize and record the needs of the customer.

A key part of product development is engineering activities to conceptualize, design, analyze and refine new product ideas; tasks that plan and document manufacturing, operations and maintenance processes; and sustenance activities for the making of ongoing product updates, changes and refinements.

The studies done clearly demonstrate that companies deploying GPD strategies gain considerable financial and operational benefits. Direct financial savings near 0.5% of company revenue and 10% of the product development budget can be achieved. Indirect savings are achieved by ther operational enhancements featuring 24×7 engineering and the formation of additional specialized skill capacity by reinvesting cost savings.

Many OEM’s now utilize the GPD model leading to restructure of global design and operations for optimal utilization of global resources, increasing the pace of product development thus leading to expense reduction. The implementation of a GPD strategy needs the analysis of product development activities. A company needs investigation of the partition between high value-addition and the low value-addition activities and then requires to find the extent of portability of these activities.

The global product development service model is increasingly used in the modern manufacturing world to maximize efficiencies and minimize costs.