Global Engineering/Product development through India


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Track C - Engineering Services

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  • Global Engineering/Product development through India

    1. 2. <ul><li>Understanding Global Engineering and Product development through India </li></ul><ul><ul><li>India assessment </li></ul></ul><ul><ul><li>How did we develop our vision? </li></ul></ul><ul><ul><li>How does the future look like in this space? </li></ul></ul>Agenda:
    2. 3. “ The World Is Flat”, Thomas Friedman, presents seven rules that he believes are true for a business to succeed in the “flat world”: Rule #1: When the world goes flat Rule #2: And the small shall act big … Rule #3: And the big shall act small … Rule #4: The best companies are the best collaborators. Rule #5 : In a flat world Rule #6: The best companies outsource to win, not to shrink.
    3. 4. <ul><li>80 years old </li></ul>Caterpillar is a Global Organization <ul><li>World leader </li></ul><ul><li>Largest manufacturer of construction and mining equipment, diesel and natural gas engines and industrial gas turbines. </li></ul><ul><li>Technology leader in construction, transportation, mining, forestry, energy, logistics and electric power generation. </li></ul><ul><li>Caterpillar had sales and revenues of $41.5 billion in 2006 </li></ul><ul><li>Approximately fifty percent of sales and revenues were to customers outside of the United States , thus making Caterpillar a global enterprise. </li></ul>
    4. 5. Lines of Business
    5. 6. Global Footprint 278 facilities in 40 countries on 6 continents 182 Cat dealers with 1,923 branches and 1,587 rental stores
    6. 7. Strategic Vision Values alignment… <ul><li>Critical Success Factors </li></ul><ul><li>People </li></ul><ul><li>Quality </li></ul><ul><li>Product </li></ul><ul><li>Emerging Markets </li></ul><ul><li>Trough </li></ul><ul><li>Strategic Areas of Improvement </li></ul><ul><li>New Product Introduction </li></ul><ul><li>Encode 6 Sigma </li></ul><ul><li>Our Values in Action </li></ul><ul><li>Integrity </li></ul><ul><li>Excellence </li></ul><ul><li>Teamwork </li></ul><ul><li>Commitment </li></ul>
    7. 8. Lower Emissions Requirements Driving acceleration in NPI agenda…
    8. 9. Global Engineering opportunities……… Generic Development Enabling Development Core Vehicle level Systems Integration Experience Complexity
    9. 10. Challenges <ul><li>Geographic differences </li></ul><ul><ul><li>Time zones </li></ul></ul><ul><ul><li>Visa Issues </li></ul></ul><ul><ul><li>Administrative </li></ul></ul><ul><li>Specific Training – Skill set vs. product training </li></ul><ul><li>Cultural differences  Communication </li></ul><ul><ul><li>PRAM - Plan  Relationship  Agree  Maintain </li></ul></ul><ul><ul><li>“ Just say no” </li></ul></ul><ul><ul><li>“ I don’t know” </li></ul></ul>
    10. 11. Our Values <ul><li>Integrity </li></ul><ul><ul><li>Continuous feedback in all directions </li></ul></ul><ul><ul><li>Build relationships </li></ul></ul><ul><li>Excellence </li></ul><ul><ul><li>Establish roles </li></ul></ul><ul><ul><li>Provide room to learn </li></ul></ul><ul><ul><li>Create success stories </li></ul></ul><ul><li>Teamwork </li></ul><ul><ul><li>Change management </li></ul></ul><ul><ul><li>Cultural Training </li></ul></ul><ul><li>Commitment </li></ul><ul><ul><li>Support at all levels  Team and Management –Long-term relationships </li></ul></ul><ul><ul><li>Involve partners up front </li></ul></ul>Integrity Excellence Teamwork Commitment
    11. 13. How did we develop the Vision ?
    12. 14. Caterpillar Confidential: Green (11/09/05)
    13. 15. <ul><li>High-performing Global Product Development Team </li></ul><ul><li>Develops Superior Products through Set Based Engineering and Global Engineering Strategy </li></ul><ul><li>Delivers Excellent Value to Product Group Customers </li></ul>Vision
    14. 16. PPD Global Engineering 105 Team Members In-house and offshore Cat India Design center at Satyam
    15. 17. Current Product Development Few Concepts each sub-system Developing sub-systems independently and then Integrating all at Machine level Unplanned changes Fire fighting Point Based Concurrent Engineering Iterate if required Information extracted from Toyota product development system-James Morgan & Jeffrey Liker
    16. 18. Vision for future Product Development Projects Many Concepts each sub-system <ul><li>Evaluate against System Interactions </li></ul><ul><li>Cost </li></ul><ul><li>Interface studies </li></ul><ul><li>Eliminate the weak, add knowledge and combine different ways </li></ul>Set Based Concurrent Engineering Information extracted from Toyota product development system-James Morgan & Jeffrey Liker
    17. 19. Point-Based Engineering 3 Bicycles Set-Based Engineering 3 Frames 3 Drives 3 Wheel sets 3 Brakes 3 Suspension =243 Combinations Moving from Point-Based to Set-Based Engineering Information extracted from Toyota product development system-James Morgan & Jeffrey Liker <ul><li>Multiple subsystem alternatives explore more cheaply (allows platform projects) </li></ul><ul><li>Expanded subsystem learning feeds knowledge back for future projects </li></ul>
    18. 20. Traditional Model Global Model Product Development Model <ul><li>Not leveraging Caterpillar Core skills for core activities </li></ul><ul><li>Excessive dependency on single talent pool - career moves due to growth </li></ul><ul><li>Lack of capacity and flexibility Project Peaks/Lows </li></ul><ul><li>Resource constraints - Lack of proper balance between New product development & Current product support </li></ul><ul><li>Better alignment between product development Generic/Enabling/Core activities </li></ul><ul><li>Multiple resource pool </li></ul><ul><li>Resource flexibility for project Peak/Low needs </li></ul><ul><li>Proper resource deployment across product development and current product support </li></ul>
    19. 21. Set-Based Engineering Operation Model Global Engineering capabilities Set-based concepts from Global Partners Specifications General Targets Sub-System Targets
    20. 22. How did we develop this model? <ul><li>Evaluated through pilot projects- Jan06 to March06 </li></ul><ul><li>Engagement started in April06 </li></ul><ul><li>Started with in areas where we can create success stories </li></ul><ul><li>Change management through success stories, travel to STC to understand Satyam capabilities (Leadership Team, Team Leads……) </li></ul><ul><li>Product knowledge training through Team Leads </li></ul><ul><li>Weekly planning meetings in U.S </li></ul><ul><li>Quarterly governance meetings </li></ul><ul><li>Outstanding mid-career recruitment from Satyam </li></ul><ul><li>Took advantage of Satyam’s existing ODC’s for Leadership recruitment </li></ul><ul><li>Satyam’s world-class training for new recruits (3 months) </li></ul>
    21. 23. Evaluation of Global Engineering Model- through value chain Global -Inception Cultural Challenges Positional authority Power Distance Uncertainty avoidance Individualism Project Team Development Recruitment/Retention Communication Education &Training Management Style International Operations Difference of work ethics Buy-in from Parent operations Access & Technology
    22. 24. What do we need to be successful? <ul><ul><li>Leadership Team with “Driving” force to “Delight” Customers </li></ul></ul><ul><ul><li>Servant Leadership to remove “Fear of unknown” to Customers </li></ul></ul><ul><ul><li>Leadership Channeling their Ambition toward building Best in class </li></ul></ul><ul><li>Leadership </li></ul>E ngage and Develop Others S ee the Future R einvent Continuously V alue Results and Relationships E mbody Values
    23. 25. <ul><li>People/Culture: </li></ul><ul><ul><li>Highly motivated People with Relentless Execution towards Time, Cost & Quality </li></ul></ul><ul><ul><li>Disciplined Thoughts , Confront the Brutal Facts of their current reality. </li></ul></ul><ul><li>Towering Technical/Process/Project management Capabilities </li></ul><ul><ul><li>World Class Core Competencies in functional areas of engagement </li></ul></ul><ul><ul><li>World class processes to deliver Superior Quality </li></ul></ul><ul><li>Capacity through Peak Needs </li></ul><ul><ul><li>Business model to Support customer needs on Product development Initiatives </li></ul></ul><ul><ul><li>Resource availability between 2 to 6 weeks </li></ul></ul>What do we need to be successful?
    24. 26. Challenges Process Knowledge, Quality & Governance Change Management Loss of core competency, Intellectual Property, Access,Security and Connectivity
    25. 27. <ul><li>Change Management among Leadership Team </li></ul>Change Management <ul><li>Change Management among CAT/Contract employees </li></ul>
    26. 28. Many reasons for the failure of Change Management initiatives. Lack of leadership Too many projects happening at once Not managing pain Losing focus on why changing Reward not in line with new order No direction, nobody willing to make the final decision Not communicating Trying to tackle too much at once Not managing risks No Leadership support Assumptions about the objectives have not been tested Losing sight of the end game Source: Global survey of > 100 PA change management experts Insufficient time spent on the right priorities
    27. 29. Employee response curve for change Time Response Sell the Bargaining benefits and Depression/ Acceptance Train develop the Provide resources Testing Sell Support the rewards the Denial Provide evidence Convert opinion Anger the formers
    28. 30. <ul><li>Increase urgency </li></ul><ul><ul><li>Make change stick </li></ul></ul>Tips on Change management <ul><ul><li>Don’t let up </li></ul></ul><ul><ul><li>Create short term wins </li></ul></ul><ul><ul><li>Empower action </li></ul></ul><ul><ul><li>Communicate for buy-in </li></ul></ul><ul><ul><li>Get the vision right </li></ul></ul>
    29. 31. <ul><li>IP Risks </li></ul><ul><li>Potential leakage of IP through existing project team member </li></ul><ul><li>Potential leakage of IP through resource Attrition </li></ul><ul><li>Potential leakage of IP when resource roll out from Cat’s project team and joins competitors project team. </li></ul><ul><li>Loss of core competency </li></ul>Intellectual Property, Loss of core competency, Access,Security and Connectivity
    30. 32. Product development critical roles (10% of PD Resources) <ul><li>xxxxxxxs </li></ul><ul><li>xxxxxxx </li></ul><ul><li>xxxxxxx </li></ul><ul><li>xxxxx </li></ul><ul><li>xxxxxx </li></ul>Product development enabling roles (40% of PD Resources) <ul><li>xxxxxxx </li></ul><ul><li>xxxxxxx </li></ul><ul><li>xxxxxxx </li></ul><ul><li>xxxxxxx </li></ul>Product development generic roles (50% of PD Resources) <ul><li>xxxxxx </li></ul><ul><li>xxxxxxxx </li></ul><ul><li>xxxxxxx </li></ul>Categories of Product development (PD) Roles Maintain “As-Is” 94% Most critical tasks remain “As-Is” Portable to Off-Shore Portable PD Resources 6% 1% of PD Resources 40% Moderately critical tasks remain “As-Is” 60% 24% of PD Resources 10% Less enabler tasks remain “As-Is” 45% of PD Resources 90% + + = 70% PD Resources Hypothetical offshore model-example-Telecommunication industry
    31. 33. Looking at the Future
    32. 34. <ul><li>Rule # 6 </li></ul><ul><li>The best companies outsource </li></ul>Flattening of the world rules reviewed <ul><ul><li>To win, not to shrink. </li></ul></ul><ul><ul><li>They outsource to innovate faster and cost effectively </li></ul></ul><ul><ul><li>Gain market share </li></ul></ul><ul><ul><li>Hire more and different specialists </li></ul></ul>
    33. 35. <ul><li>Every morning in Africa, a gazelle wakes up. </li></ul><ul><ul><li>It knows that it must outrun the fastest lion or it will be killed… </li></ul></ul>Execution <ul><ul><li>Every morning in Africa, a lion wakes up. It knows that it must out run the slowest gazelle or it will starve… </li></ul></ul><ul><ul><li>It does not matter whether you are a lion or gazelle. When the sun comes up you had better be running </li></ul></ul>
    34. 36. Current spending on engineering services world wide by the different industries ($750 billion in 2006) is projected to increase to $1.1 trillion by 2020.  The market is highly fragmented by industry, Engineering services is a growth market. <ul><li>Automotive at 19% </li></ul><ul><li>Aerospace at 8% </li></ul><ul><li>Utilities at 3% </li></ul><ul><li>Heavy Engineering 40% </li></ul><ul><li>High-Tech/ Telecom is the dominant and fastest growing sector, with 30% of the market.  </li></ul>
    35. 37. Businesses are increasingly viewing off shoring as a way to counter market forces that are exerting pressure on engineering services.  Key Future Trends <ul><li>While cost control remains a concern </li></ul><ul><li>Companies are also seeking access to a high quality talent pool </li></ul><ul><li>For growing capacity </li></ul><ul><li>Increase productivity with Creativity and Process automation. </li></ul>
    36. 38. Indian IT and software industry proved that they can perform and meet Global Needs Accomplishments <ul><ul><li>Companies in India have developed capabilities </li></ul></ul><ul><ul><li>Skill sets </li></ul></ul><ul><ul><li>Leadership </li></ul></ul><ul><ul><li>Culture </li></ul></ul><ul><ul><li>Invested in technology platforms to leverage this opportunity </li></ul></ul>
    37. 39. <ul><li>India’s current revenue base in the offshored engineering services market is about $1.5B </li></ul><ul><li>India is well-positioned to increase its market share of engineering offshoring </li></ul>Business opportunity <ul><ul><li>By 15% to 30% by 2020. </li></ul></ul><ul><ul><li>The potential engineering market in India could exceed $60B by 2020. </li></ul></ul>