Fig. 1. Pipelining. Release projects into execution based on the most limiting resources.

Hyper-competition has become a cliché in the consumer goods markets, with a constant pressure to innovate on the one hand and continuously cut costs on the other. The appliance industry is no different. U.S. companies have responded by outsourcing/off-shoring manufacturing to countries like China while retaining high value added activities like product design and development at home.

The result is that New Product Development projects have become both mission-critical (that is the only differentiator) and complex, meaning that cross-company coordination is required in the manufacturing readiness phase. At the same time, the payoff is huge for companies that can master this challenge. For instance, with product life cycles having shrunk from years to months, even four weeks gained in NPD can yield a 15 percent increase in revenues.

Fig. 2. Buffering. Assign buffers where they can do the most good (protect the longest path).

Sometimes, the situation is even more dire: given the seasonality of demand for many appliances, retailers like Wal-Mart will often dictate the due-dates for new products. If manufacturers cannot meet them, they can be completely shut out.

That is the situation that a $300M North American manufacturer of household appliances such as blenders, coffee makers, toasters, clothing irons and food processors faced in 2003. The company had to bring out four new toasters in record time or lose those sales forever.

Making incremental changes was not an option. They needed a radical new approach to running NPD projects. It was imperative to increase speed and throughput by 30 percent or more. That is when the company decided to adopt Project Flow, a system of execution for doing more projects faster based on Critical Chain and Lean concepts.

At the Project Flow Conference in September 2004, the company’s director of product engineering reported that it had succeeded in protecting its toaster business, and also increased its NPD across the board from 34 to 52 new products introduced in the first year and to 70-plus products introduced in the second year with no increase in headcount. Furthermore, the number of projects coming in on time increased from 74 percent to 88 percent.

Execution is imperative

Fig. 3. Buffer Management. Drive execution priorities based on relative buffer consumption.

How can the company increase its NPD speed and throughput when it has been difficult to meet even current commitments and the engineering staff was already overworked? The appliance company decided to examine how its engineers’ time was being spent in execution.

The OEM found that time spent in execution could be classified into three buckets: work, the time spent on actual work and interruptions.

The time wasted on interruptions. All too often, engineers were waiting for issues to be resolved, decisions to be made, priorities to be clarified, multi-tasking on other higher priority work, waiting for materials and tooling, and other disturbances to be cleared up.

Parkinson’s Law. This law describes another way time is consumed. The law states that work expands to fill the time available because people tend to continue polishing the work, or because they slow down when they expect delays on parallel paths in the future.

Once everyone acknowledged that substantial acceleration in NPD was possible if only the Interruptions and Parkinson’s Law could be contained, it was time to find a solution.

Senior executives in the company heard about a new concept called Critical Chain, and found that Realization Technologies had designed a complete system of execution called Project Flow around that concept. Upon detailed investigation, they determined that Project Flow was the way to go to achieve their objectives.

Managing multiple projects

As the appliance company director pointed out, uncertainties are what make projects valuable and difficult to manage. Everyone understands that plans are only approximate, and that projects are riddled with uncertainties that include:

Customer requirements change.

Technical problems found.

Additional work discovered.

Vendors do not deliver on time.

Work materializes slower than expected.

Approvals do not come in on time.

Priorities change. It is also a fact that contention for resources is a reality. Still, traditional methods of product management assume a perfect world, one where events can be precisely planned, and everyone knows exactly when projects will get the resources they need.

In single, simple projects, companies can accommodate these uncertainties by adding a little safety in each task. However, in contrast to single project work, with multiple projects, small uncertainties multiply as delays on one project cascade to others through shared resources.

As a result, the required safeties become very large and, all too often, tasks that should take hours and days end up taking days and weeks. Thus, creating precise schedules for people and tasks is actually a recipe for disaster in multi project situations. Yet, this is what traditional project management methods force people to do.

Moreover, as uncertainties multiply, plans go awry. Lacking a good way to prioritize resources across multiple projects, people are constantly pulled from one project to fix other projects’ problems. Priorities become unclear and people start multi-tasking. The result is not surprising; delays and firefighting break out all over.

Experienced managers, such as those at the leading consumer appliance company, intuitively know the devastating effects of uncertainties and contention for resources. Therefore, they historically had responded by starting their projects as soon as possible to have any hope of meeting their commitments. Unfortunately, though, when too many projects were in execution, it only increased contention for resources.

Even though this scenario was repeated from project to project on a consistent basis, most organizations continue to be surprised by the ensuing schedule slips on present-day projects. Again and again, they shift their focus from that of delivering projects to that of explaining delays.

They find that adding more software to track and report delays does not help, nor is making project managers more skilled at negotiating resources for their projects at the expense of all other projects. To obtain the required leap in performance, old rules for managing uncertainties and shared resources must be abandoned, and that’s what the company did.