Northern-Telecom-B

DONOTCOPYHarvardBusinessSchool9-596-064Rev.June2,1997ProfessorRobertJ.Dolanpreparedthiscaseasthebasisforclassdiscussionratherthantoillustrateeithereffectiveorineffectivehandlingofanadministrativesituation.ThisversionwaspreparedbyResearchAssociateSylvieRyckebuschunderthesupervisionofProfessorRobertJ.Dolan.Itisarewrittenversionofanearliercase,NorthernTelecom(B),HBSNo.593-104.Certainnon-publicdatahavebeendisguised.Copyright©1996bythePresidentandFellowsofHarvardCollege.Toordercopiesorrequestpermissiontoreproducematerials,call1-800-545-7685orwriteHarvardBusinessSchoolPublishing,Boston,MA02163.Nopartofthispublicationmaybereproduced,storedinaretrievalsystem,usedinaspreadsheet,ortransmittedinanyformorbyanymeansÑelectronic,mechanical,photocopying,recording,orotherwiseÑwithoutthepermissionofHarvardBusinessSchool.1NorthernTelecom(B)NorthernTelecom'sExecutiveCommitteeacceptedthe$54millionplantodevelopthenewGreenwichkeysystemsproductline,althoughsomemembersregardeditasahigh-riskproposition.Oneyearlater,inSeptember1986,BPD'sgeneralmanager,MikeEnnis,wasshakinghisheadasheleftthedevelopmentteam'sG0programreviewmeeting.HewastryingtokeepGreenwich'sdevelopmentontrack,butdisagreementsamongthemanufacturing,design,andmarketinggroupsoftheGreenwichteamwerehamperingprogress.ANewProductDevelopmentProcess:NewproductdevelopmentatNorthernnowfollowedastructuredgatingprocedurewithfourgatesandaformalsign-offandreleaseateachgate(G):G0:PredesignandPlanningG2:FieldTestswithCustomersG1:ProductDefinitionG3:ProductLaunchEnnishadstructuredproductdevelopmentactivitiessothatGreenwichwasthevehicleforbothgloballeadershipandprofitabilityinkeysystems.Greenwich'sdevelopmentprocesswasateameffortofthemarketing,design,andmanufacturinggroupstofulfillthebasicbusinesspropositionofappropriateprice,absolutesimplicity,andusablefunctionality.EnnisandHowieBender,vicepresidentofBellNorthenResearch(BNR),wereco-chairsofmonthlyprogramreviews.AstheclientofBNR,EnnisfirstinsistedthatallmembersoftheBNRteamassignedtoGreenwichworkinthesamelocationandonlyonGreenwich.TheproductdevelopmentteamwastounderstandtheentireGreenwichbusinessplan.Second,thespecificclientofthedesigngroupwithinNorthern'sBPDwasredefinedtoincludenotjustthemarketinggroupbutalsothemanufacturinggroup.Thedesignjobwasconceivedofastheco-designofboththeproductandthemanufacturingprocess.Theteamwastoldtozero-basethemanufacturingoperation,forgettingabouthowthefactorycurrentlyoperated,thepeopleskillsonhand,andtheavailableequipment.Themandatewastofindtheoptimalcombinationofproductandmanufacturingprocesstoachievethebusinessobjective.Ennis'philosophywastobuildamultidisciplinaryteamthatstayedwiththeproductfromconceptionstagethroughthefirstreleaseatG3andbeyond.AfterG3,theteamwouldworktofillouttheproductline,thensimplifyDONOTCOPY596-064NorthernTelecom(B)2andcostreducetheentiremanufacturinganddeliverysystem.RossMatthews,directorofManufacturingEngineering,elaborated:Thiswasaverynewroleforusinmanufacturing.Manufacturingwasnowbeingpulledintotheproductdevelopmentprocesswellaheadoftheproductdefinitionstage.Beinginontheconceptualstageofthingswasnotanythingwehaddonebefore.Atfirst,itsoundsgreatÑyouwillbeabletovoiceyourconcernsearlierandgetpeopletothinkaboutyourissues.Butit'sabigchangetoo.Forthefirsttime,wehadtounderstandthewholebusinessprocessbecausewehadtofigureoutwhatmanufacturingshouldbe.Whatcycletimetargets,overheadlevelsshouldwehave?HavingeaseofmanufacturebecomeadesigncriterionofthepeopleatBNRwasn'teasyeither.ManyoftheBNRdesignershadneverbeeninafactory.Youcan'tdesignsomethingforeaseofmanufacturingifyoudon'treallyunderstandhowmanufacturingworks.So,webroughtthemallherefromOttawatoCalgarytoseewhatgoeson;firsttheleaddesigners,thentherest.Itcostabout$1500inexpensesforeachofthe30ofthemandtwodaysoftheirtimeandours,butitwaswellworthittohavethemjustlookatanassemblyoperation.Theythenquicklyunderstoodtheimplicationsofthevariousdesignactionsonus.The24-hourLeadTimeProblem:Thiswholeprocessofcoordinationandtheteamconceptwasnotsmoothbyanymeans.Inthewordsofonemanager,Althoughthegoalswereshared,themeansprovokedheatedargumentthatsimmeredonthefaredgeofopenbattleformonths.Attherootoftheargumentsweretheapparentlyconflictingdemandsofthemarketing,design,andmanufacturinggroups.Inoneinstance,themarketinggroupconcluded,basedonitsstudyofresellersandend-users,thatlowinventoryandquickdeliverytimewasthekeytotakingmarketsharefromthePacificRimmanufacturers.Theyaskedthemanufacturinggrouptoseta24-hourmanufacturingcycle-timegoal.Themanufacturinggroup,ontheotherhand,thoughtthata24-hourcycle-timewasunrealistic,asitcouldnotbeachievedwithoutcompletelyredesigningthemanufacturingprocess.TheyarguedthatbecauseresellerswerecurrentlyaccustomedtowaitingfourmonthsforproductdeliveryfromthePac-Rimmanufacturers,cuttingthedeliverytimetotwoweekswassufficienttomeettherequirementforfastdeliverywhilekeepingmanufacturingcostslow.Oneengineerpointedoutanotherproblemwiththeidea:Buildingtoorderwithoutbufferinventorywillonlybecosteffectiveifwe'vegotasteadystreamofordersinthepipeline.Cany