Product Development Practice Overview

Deloitte Consulting LLP

July 18, 2012

An Introduction to Deloitte
We are the largest professional services firm in the world

Deloitte Touche Global Consulting US Consulting and

Tohmatsu Limited and Advisory Advisory
Revenue: $28.8B Revenue $16.8B Revenue: $5.3B
Headcount: 182,000+ Headcount: 78,000+ Headcount: 16,000+

2 -2-
Deloitte’s Global Manufacturing Practice
Global footprint to serve clients

We have experienced manufacturing industry professionals worldwide, including:

Europe, Middle
East and Africa
3,500+ people Asia Pacific
Americas 3,300 + people
5900+ people • Belgium
• Central & Eastern • Australia
• Argentina Europe • Cambodia
• Brazil • Denmark • China
• Canada • Finland • India
• Chile • France • Indonesia
• Colombia • Germany • Korea
• Mexico • Ireland • Japan
• United States • Italy • Malaysia
• Venezuela • Netherlands • New Zealand
• Norway • Singapore
• Russia/ CIS • Philippines
• Spain • Taiwan
• South Africa • Thailand
• Sweden • Vietnam
• Turkey
• United Kingdom

3 -3-
Today, each industry is operating at a different maturity and therefore focusing
product development improvements efforts on different areas
o
 Companies in the Eminent space are focusing on Lean Product Development, Product Complexity Reduction and 360 design
 Companies in the Established space are focusing on standardizing development processes, establishing portfolio and
resource management
 Companies in the Emerging space are still determining how to apply product development to products and services
Process Maturity

Emerging Established Eminent

Aerospace
General Mfg Hi-tech
Automotive
Life Sciences

Consumer Packaged
Goods (CPG)
Best Practices incorporated:
• Process collaboration with contract
manufacturers
Retail & Apparel • Outsourcing engineering and design
activities to low-cost partners
• True cross functional product teams
Process Mfg
• Strong project management capability
• Cross functional executive led gate
meetings
Financial
Services (FS) • ….BUT…. Redeploying PLM to improve
efficiency
Utilities

PLM Tool Usage

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Where will the Leaders be in 2015? — 4 Key Takeaways

1. Open Innovation Processes

- Harvesting ideas, IP, and technology both within and outside
the company and leveraging social media where appropriate

2. Lean Product Development

- Responding to customer signals with high-value, tightly
coordinated development processes

3. 360º Development—holistic design & development visibility

- Manufacturability, sustainability, compliance, cost optimization,
and supply chain impacts of design choices are drivers of the
development process

4. Virtual Design, Development, and Manufacturing

- Digitizing to simulate the entire development cycle through
manufacturing and product use
- Full integration of product design and development with
customer and market strategy
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Product Development Services

Deloitte Consulting offers 360º services to address our clients’ strategic and operational
challenges in product development.

Experienced Professionals

400+ Product Development professionals

worldwide with expertise in:
– Strategy
– Process
– Technology
– Data & Lifecycle Management
– Organizational Effectiveness
– R&D Tax

300+ middleware professionals

Several thousand systems integration

professionals
“Of its Big Four peers, Deloitte dominates
and therefore competes most strongly
outside its peer group, particularly with
Accenture, IBM, and McKinsey.”
– Kennedy Consulting

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Deloitte Consulting is at the forefront of Product Development thought leadership
Lean Engineering: The Challenge
How to get more Product Complexity of Complexity Mastering Innovation
engineering for less Reduction

Innovation in Innovation thru

Emerging Markets Social Media The Innovator’s Solution The Innovator’s Manifesto

Product Development Practice Overview.ppt

-7-
We have developed a comprehensive suite of tools to enhance and accelerate product
development initiatives from start to finish

R&D Capability Maturity PLM Business Enterprise Value

Analytics Models Case Templates Map for PLM
Business Imperatives to Business Case Value Driver Analysis Tool Implementation Planning Tool
Solutions Mapping Tool
Representative Sample: Requirements Mgmt Value Stream Reconfiguration

A post mortem audit of a recent NPI program showed that Lean Engineering process improvements reduced effort time by
32% and cycle time by 55%.
Development Tool PLM Phase I Business Case

Benefit Description Worst Case

(-20%)
Annual Benefit ($M)

Base
Aggressive
Case (+20%)
Churn Analysis Churn Analysis per Program
1) Labor saved through
Eliminating non-value added work on BOM corrections as a
Hours beyond Gate 5 70,047 elimination of non value
3000 Gate3 Gate4 Gate5 Gate6
added work due to BOM
result of implementing improved PLM functionality and $14.7 $18.4 $22.0
Cum. Number of Changes

Hours spent on changes 28,019 standard PLM processes

corrections
2500 $2.66 M
Transfer rate $/Hr $95/Hour 2) Labor saved through
2000 Reducing time spent searching for related data by linking
elimination of time
Potential opportunity by reducing
$2.66 M searching for product data
specs, drawings, part data, and related engineering documents $19.5 $24.4 $29.2
1500 churn beyond Gate 5 to a part number
$2.43 M in multiple systems
1000 43-50% Changes (Average) Additional opportunity by reducing
$2.43 M 3) Labor saved through Eliminating the need to up update information in multiple
churn to acceptable threshold limits
500 30% Changes (Best In Class) elimination of duplicate systems by managing product and engineering data in a $3.7 $4.6 $5.5
Estimated benefits per NPI Program $5.11 M updates in multiple systems single, centralized PLM tool
0
2000 2001 2002 2003 2004 2005 2006 2007 Using PLM options and variant functionality to streamline the
4) Labor saved through
process of selecting feature and accessory codes, improve
optimization of features and
management of options and accessories, and reduce the
$2.5 $3.1 $3.7
accessories management
Value Stream Mapping errors in initial BOM creation
Value Stream Mapping
Statistics Improvement Client X can increase BOM accuracy, forecast accuracy, and
As-Is To-Be 5) Reduction in Inventory, reduce scrap, direct material spend, and associated carrying
Hand-offs Reduced 80% Scrap, and Rework costs by improving BOM management capabilities and
$27.9 $34.9 $41.8
engineering change control processes
Cycle Time Reduced 55%, from 414 to 185 days
Phase I will sunset several legacy systems, and transition
Effort Time Reduced 32%, from 165 to 112 days 6) Benefits from sun-setting
these capabilities to MatrixOne "Centrals“ – BOM & Product
legacy systems
Data Mgt, Features & Accessories Mgt, Document Mgt, Design
$0.4 $0.5 $0.6
Assessment Findings (Maintenance Costs)
Mgt and Change Control
 Churn is a result of low visibility into scope/ reqmt.

Making R&D Spell ROI v5 0070609 - BAE.ppt

changes and its cascading effect across systems Total Annual Benefit $68.7 $85.9 $102.8
 Lack of end-to-end traceability of requirements
Making RD Spell ROI v9 05192011.ppt

 Lack of a formal requirements flow-down, release NPV (5 Year) $164.0 $209.3 $254.6
and change control processes
 Lack of standards and framework for requirements
definition, structure, prioritization, timing, and reuse - 37 -

- 10 -

PLM Vision PLM IndustryPrint™ PLM Process Models Lean Engineering

Enterprise Lean Product
PLM Vision & Strategy PLM Process Modeling Tool PLM end to end business
Development Methodology
Industry best practice processes have been captured and documented for each PLM
Fundamental Capability
process templates
Portfolio Management
Integration Framework Enterprise Operations Excellence
CAD/ERP Integration, Data
Portfolio Analysis, Metrics,
Scorecard, Executive Dashboard
exchange, UI extensions, To-Be Engineering Change Process - 737 Roller Sunshade
process integration, SDK, Hand-off Statistics
Customer
web based portals (Iberia) Customer 737-ALIT Config. Mgmt. Pers. 8
NPI Process Management Engin eeri ng
Design Engin eering 6
NPI Process, Work Breakdown
Supplier Revie w Board Renton
Management OH & Support Engineering 1
Internal Pilot
Structure, Schedule, cost Manufacturing Contracts 5
Project Planning & Management Supplier Selection, RFP, 737 ALIT
Confg. Mgmt. Materiel 3
Field Service RFQ, Approved Personn el
Customer / Voice Other 6
manufacturer lists, design
Flight Deck
Requirements Management Tech Pubs for cost Desig n Lea d
Total 29
Voice, Requirements Mgt, System Marketing
Design Partner 2 Product Intra-Site 5
Design, Spec Management,
Integration and Validation Compliance Materiel Inter-Site 24
Procurement Solution
PLM Sales
Design for environment/ • The Platform-ALIT Configuration
recycle, material Management Personn el assum e end-
BOM Management Suppliers
Product Management
declaration, compliance Avionics to-end responsibility for the MC
Product def inition, Product Structure, assessment, WEEE,
Research Partners Systems Engineering • Organizational hand-offs ar e
BOM Views, Options & Variants, RoHS, REACH, EuP, ELV reduced b y 80% from 143 to 29:
Revisions, Ef f ectivity, Classif ication, Advanced Cabi n Systems – Platform-ALIT routes the r equest
BOM Comparison Technology
Design Engineering
Product Quality only to appropriate groups
Management – Valid ation/review tasks are
Electrical
Design Management reduced b y co-lo cating resources
CAPA ,RCA’s, Non- within the Platform
MCAD, ECAD, Simulation Conforming Material, Manufacturi ng – Consolidating & combin ing
Visualization Technology, audit , customer Engin eer organizational specialties within
Regi ona l
Design Practices complaints, field Director
Control the Platform-ALIT to create
service Informa tion Flow
Finance & File broadly skilled airplane
Contracts
Intra-site Physical Flow Pricing configuration manag ement
Design Collaboration Inter-site Physical Flow personnel
Content Management Longacres
Change Management Denotes site change • Access to on-line data elimin ates the
Visualization, Legacy Data Access, Bill of Denotes building change need for som e support r esources
redline/markup, vendor Problem Report, ECR,
Content, Style Sheets, Tech Proprietary and Confidential 23
/supplier/customer ECN, spec change, part
Publication Authoring,
collaboration changes, deviations, new
Language Translation
part release, etc.

-4-

INVENT PCAT OCM for PLM PLM Best Practices

Stage Gate Product Complexity Organizational Change Leading Practices for end to
Process Model Assessment Tool Management Approach end PLM processes
Example - High-Level BOM Definition Process
Conf igure
Rule
SBOM
CRM
PLM Rule 10
-Rule 11

Product Complexity Assessment Tool Drawing -Rule 12

Part
Document
ISO relevant infor-
EBOM
Graphic
mation for the task
Work
at hand. Please
Picture Part SBOM Routing

Product Development Practice Overview.ppt

follow standard Instruction
DSM Database DSM Outputs operating
procedures
Operation 10
-sub op 11 Operation 10
-sub op 12 Operation 20
Operation 20
-sub op 21 Operation 30
MS Access MS Excel Operation 30

 Consolidates common configurations  Summarizes unique

 Cross references: configuration data Vaulting
–Serial # to unique configuration  Links all revenue to cost data
–Serial # to service revenue  Provides pre-defined and ad-
MBOM RBOM Production MRP
–Serial # to service cost hoc reporting: Order
Operation 10
Operation 20
DSM Repository Op / Order Operation 30

Confirmation ERP
Consolidate Run queries to Generate
Create Export DSM
and link create DSM Graphical
consolidated tables to DSM
DSM data tables for Versions of
sources
data table
spreadsheets
spreadsheets
DSM Output Part Drawing
Drawing Document
 Unit Sales  Aggregate
 Sales Revenue Functional Costs Document ISO relevant infor-
Graphic
Work Operation MBOM RBOM mation for the task
 Box Margin  Average Cost ISO relevant infor- Repair at hand. Please
Picture
 Service Revenue  Order to Install
mation for the task
Graphic Order Completion Instruction
follow standard
at hand. Please Op 10 – Part X operating
 Service Margin  Fixed vs. Variable follow standard procedures
 Full Life Cycle Box Costs Picture
operating
-sub op 11
-sub op 12
Operation 10
-sub op 11
procedures -sub op 12
Margin  Service Cost Op 20 – Part X Operation 20
-sub op 21 -sub op 21
 Cost and Fulfillment  Full Life Cycle Op 30 – Part Y Operation 30
Profile

Mfg Execution System Service & Repair

-8-
Deloitte is among the top rated R&D Strategy and Product Development consulting
firms
R&D Strategy and Product & Service Development Consulting Marketplace 2009-2012

Kennedy Consulting Comments

 Of its Big Four peers, Deloitte
dominates and therefore competes
most strongly outside its peer
group, particularly with Accenture,
IBM, and McKinsey.

 Unmatched global scale and

industry breadth in MC consulting
offerings.

 Focus on Strategic Execution

resonates with clients seeking
project outcomes, not ideas or
strategic guidance alone.

 Equipped with a strong toolkit of

diagnostics, frameworks, and
methodologies in R&D strategy and
PSD consulting engagements,
developed and supported by the
firm’s research group.

Product Development Practice Overview.ppt

Source: R&D Strategy and Product & Service Development Consulting Marketplace; Kennedy Consulting Research & Advisory estimates

-9-
 We have over 15 years of experience in PLM consulting in large complex engineering
environments

Sample Clients Selected Results PLM Partners

Lockheed Martin Bell Helicopter  Reduced non-recurring engineering
costs by 30% and cycle time by 50%
Boeing Raytheon Cessna
Spirit Aerosystems Pratt & Whitney  Simplified design process information
Cobham flow; reduced NVA transactions by 70%
General Motors Nissan
Ford  Rebalanced development activities
Toyota Chrysler
with supplier reducing cost and cycle
Caterpillar Johnson Controls
time 50% for critical processes
General Electric Lubrizol
 Rationalized design specs; reduced
Ingersoll Rand Hill-Rom
supplier test failures by 50%
Medtronic Herbal Life
 Reduced sustaining engineering labor Tools & Accelerators
Johnson & Johnson
InvitroGen by 60%
 DPLM – Preconfigured PLM
Applied Materials
Tellabs  Lowered EC volume by 70%
AMD Lucent  R&D Analytics
HPSony Ericsson  Shortened ECN cycle time by 80%
Sprint Monster Cable  Capability Maturity Models
 Eliminated $6 MM per year of
Motorola SC Johnson  PLM Business Case Templates
warranty cost (low-volume program)
Revlon Coke Fiskars  Enterprise Value Map for PLM
 Recovered up to $5M in royalty
Levi’s Mondi
Kraft underpayments  Lean Engineering Process Models

Product Development Practice Overview.ppt

Pepsi
Sara Lee  Created over 20 spin-offs through  Org Change Management for PLM
Spectrum Brands
Tyson Bayer technology commercialization
 Product Simplification/Value Eng.

- 10 -
DPLM is an “out-of-the-box” Pre-Configured Solution which is based on Deloitte’s
deep experience in Process, Technology and People

Best in class processes from 15

years of experience in the PLM
Industry

DPLM

Best in class organizational

change support through
systematic training and clear
role definitions

Best in class configuration and

data migration through Siemens

Product Development Practice Overview.ppt

Partnership

- 11 -
Over the years we noticed the same themes and processes repeating on almost all
projects
Deloitte has found that 80% of the Product Development processes are largely similar. For this reason
we developed DPLM to focus on the 20% that are unique to a particular client.

80% 20% 100%

DPLM Processes Unique client Value Client PLM Process
Model

 Pre-defined process model  Addresses unique client

that covers a wide range of requirements (regulatory,
processes export control, security, etc.)

 Lean process design  Increases focus on strategic

goals
 Industry leading practices
- Customer satisfaction
 Integration across processes

Product Development Practice Overview.ppt

- Revenue Growth

- Product cost reduction

- 12 -
 Engineering Processes Benchmarking & DPLM Fit/Gap Assessment Approach
Our 6-10 week assessment approach involves a rapid but integrated assessment of Engineering Process
capabilities, Fit-Gap assessment to DPLM, as well as assessing organization change barriers

Assessments

Vision and objectives for

product development
Product development Fit / Gap to DPLM with Prioritized
Move beyond the fundamental building blocks towards a collaborative
vision in response to three primary business drivers
capabilities assessment recommendations to implementation Business case
Business Drivers

The imperative to optimize, Development

Justifying product development
communicate and accelerate Process
development projectsto the bottom-line Collaboration
Initiatives

improvement is hard-linked
Benchmark
improve roadmap
Benefits* Engineering Efficiency
Slippage can be understood, measured, and reduced through practical improvements to planning,
Product Development improvement will …typically, soft benefits justify the
Time-to-Market design processes, and the appropriate use of engineering tools
deliver benefits across the lifecycle…
The imperative to flawlessly initiative
20% tobut hard numbers are used
50%
Cumulative Releases and Revisions

Supply Chain in the business case Managing slippage Contract SOP SOP+90
manage increasingly complex
Collaboration  Slippage in core engineering and pre-production processes
supplier operations COGS Timin The roadmap stages will be executed in parallel where feasible to Implementing redesigned development processes and PDM will
Benefit Value is caused by limitations in:
g
3% to 10%
Soft Benefits – Management and planning
Manageable
Slippage accelerate the implementation result in $62 million undiscounted cash inflow benefit and $28
Reduced installation & services – Design processes and disciplines million costs
$ re 3% - Medium
The imperative to simplify and
he Competitive
costs – Design tools and systems Master Implementation Roadmap
To
Design
Value Curve
Labor/Headcount 15% Irreducible
Change
reuse design data and so cut re
COGS reduction: Long  Slippage can often be managed via adjustments to Months
he
Collaboration 5% to 15% 1.5% -
existing processes and systems coupled with the use of
Changes
(actual)
development time and +cost Fr
om Traditional 15% $28 million
Value Curve Stages 6-year cost
Time-to-market reduction effective metrics to proactively manage churn Initial 2 4 6 8 10 12 14 16 18 20 22 24
20% - Long Releases $62 million
(planned
Time 50% 6-year
0
and actual)
Use PDM 2.0
undiscounted Financial Gains*
Hard Benefits Year 1 Year 2
Stage 1: Common Stage Gate Process
Stage Gate Process Go-Live cash inflow
 $16 million NPV
– Development Headcount reduction 10% - Short Reconfiguration of work Core
Software DIAB
Delphi
project

VISIO
Supplier
Location
Team 1
Design Manufacturing Volume End of Expert3 TPU WORD
Core Software Platform
Lead  371% ROI
Start Start Production Production
40% Core FAST
Reader Engine
VISIO EXCEL

8  Reconfiguration of work methods reveal root causes to

Software PPT

 $103 million increase in profit

CC WORD
Use PDM 3.0 for design
Team
© Deloitte Consulting 2002. All rights reserved. Expert2 DIAB
TPU
CW
EMAIL
Reader
ePROJ
PVA
EMAIL EMAIL VISIO
Common Engineering and CAD Documentation Standards Launched Implementation Costs
Product rework and scrap reduction
FAST

Medium inefficiencies, then enables improvement through multi- CC

CW
WORD
Reader Common PDM Design Ready  $32 million cost saving
15% EMAIL EMAIL
Requirements Stage 2: Engineering & CAD  Software  Training
 $985 million increase in revenue
Core DIAB
Design Team Benefits
Source: Gartner Group
dimensional reconfiguration Software
Expert1
TPU
FAST
CC
CW
WORD
Reader
EMAIL
VISIO

Documentation Standards, PDM Team 2

 Hardware  Maintenance
Revenue
Revenue
Legacy System Decommissioning Medium
EMAIL

Requirements & Design BU 1

 Service  Internal
Enhancement
Enhancement
Cost
Cost Saving
Saving
1% - 5%  The method displays process complexity graphically to Core
Hardware EMAILReaderWORD VISIO project VISIO WORDReader
EMAIL
System
Coordinator
Upgrade to/use PDM 3.0
Go-Live
 Data
highlight the areas for improvement BU 2
 Reduced TTM  Duplication
 Increased  Redundancy handling
Operational Gains
Sources: CIMData, PTC, AMR, Gartner, Agile, Deloitte Client engagements, various public domain To-Be Purchasing WORD
VISIO VISIOWORD
EXCELReader Pilot Go-Live development  Info. Search  Recall
Implementation
Reader
Group EMAIL

 21% reduction in NPD cycle time

MentorHLynx
EMAIL capacity  Project  Waste
As-Is CW
project VISIO
Core Stage 3: PDM Implementation – BU1 , Team 3 BU 3 management  Manu.
 6.5 employee redeployment over
WORD

Key: Low $ Medium $$ High $$$ CC EXCEL

Hardware
Technical Lead Go-Live (legacy Phase-Out) downtime
Effort Time TPU
FAST
project VISIO

WORD
Reader
Mentor
BU 2, BU 3
Cycle Time Technical
Software Lead
EMAIL
DIAB
CC
CW VISIO

WORD
VISIO

WORD
EXCEL

Reader
HLynx
EMAIL
Team 3 six years
FAST
EMAIL
EXCEL Core
Mentor Hardware
*Note: For more specific benchmark benefits for each initiative please see Appendix B 1000 800 600 400 200 0Days Lead Software
TPU Reader Expert1
Team 3
DIAB Technical HLynx
Architect Mentor
Writer EMAIL
EMAIL HLynx Core
© Deloitte Consulting 2002. All rights reserved. 9 17 Core EMAIL
Hardware
Expert2
Hardware Expert3
Stage 4: PDM Implementation – BU 4
Copyright © 2008 Deloitte Development LLC. All rights reserved. 17 BU 5 Team 4

BU 4
Team 4
Go-Live
BU 5
Go-Live

Process efficiency PDM 3.0 date

© Deloitte Consulting 2002. All rights reserved.

PDM 4.0 date

17
* Note: Calculations for a six year period

© Deloitte Consulting 2002. All rights reserved. 24

assessment

 Critical areas for performance

improvements
 Fit/Gap to DPLM
 Root causes of inefficiency
DPLM Fit/Gap  PLM roadmap to address root causes
assessment  Organizational change barriers

Change readiness
assessment
- 13 -
The capabilities assessment evaluates maturity along 17 fundamental capabilities

Engineering Capability maturity model assessment

- 14 -
 Deep Dive Example - Change Control
Maturity

Workflow is Automated
standardized Globally Global CC
Advanced

A single global Globally across the consistent Integration dashboard with

change control consistent enterprise & process and role Communication Standardized across the balanced metrics
process that is approval process provides full for consolidation, extends to all Customer and enterprise on risks, costs,
close looped from with pre-defined cross functional split, and disciplines, supply Supplier process (Manf., CRM, timing and
problem report to cross functional collaboration with batching, with base and required with integrated Purchasing reason code that
ECN that is Change Control automated well defined customers to share workflows and systems) and are all used for
workflow enabled Board flexibility for Fast guidelines and impact of ECN shared metrics select suppliers approval and
Tracking with approvals with feedback allocation
approvals mechanisms
Fundamental Capabilities

Guidelines Workflow for

provided for Integration Limited number
Multiple change evaluation of ECN is structured Ad-hoc Communication is Manual methods between PD, of metrics to track
Basic

control processes ECRs to create and electronic but consolidation structured with for change Engrg. and Mfg drivers for
that flow from ECNs, but the has limited process that multiple channels control with systems with changes.
problem reports process is not functional varies by (email, dashboard, select customers common ECx #
to ECRs to ECOs participants & Manual
to ECNs standardized and limited flexibility Business Unit meetings) and suppliers field, some dashboards
there is no to Fast Track rekeying required created
standard CCB

Paper based No Change No process or No integration

Control Board or Manual workflow No process in Only reason code
change control defined gate for authorizing role in place for Communication is place. between tracked for
process with evaluation to sporadic and intra- systems, Manual
Low

limited review process ECR and creating consolidate, split department based Ad-hoc process look-ups and change control,
collaboration for approving ECN or batch followed rekeying required No dashboard
changes

Disciplined ECR/ ECO Customer & Cross- Change Control

Change Control Approval Change Control Consolidation, ECO Supplier functional Metrics &
Process Process Workflow. Split, and Communication Change Control Change Dashboard
Batching Integration

Current State Desired State

1 - 15 -
We also perform deep fact based analytics. One Example: Engineering Churn Analysis

Churn caused by unnecessary rework and change can be reduced through practical improvements to engineering processes
and tools. To understand the root cause of churn, engineering changes and resource data need to be analyzed:

ILLUSTRATIVE
Managing Churn

 Typically, churn in core product development processes is

caused by limitations in:
– Management and planning
– Design processes and disciplines
– Design tools and systems
 Chief among these causes are unexpected content
growth and poorly coordinated or late design changes
 Churn can often be managed via adjustments to
existing processes and systems coupled with leadership
recognition of it as a major competitive issue

ILLUSTRATIVE
Engineering Resources

 Design resource consumption patterns can also reveal

churn (and quality risks) as designs are reworked to
completion

- 16 -
Another example is depicting value stream analysis to depict Operational Complexity

Additionally, organizations need to employ a more rigorous value stream analysis technique to reveal work configuration
complexity in business processes. Reductions to operational complexity and cost are easily visualized and quantified.

Value Stream Mapping Traditional View of Engineering Workflow (10 Steps)

Enterprise Operat ions Excellence Appendix

 Traditional process mapping masks the

To-Be Logical Process M ap: ECR/E CO Process
actual behavior of the process

Plant (raising ECR

and implementing
Drawings are
H andoff to the
ECR is written by adjus ted, c hanges

change)
res pons ible ECO
Reques t to c hange the manufac turing are prototy ped, in
Implementer begin
model is made engineer/quality PRO-E and ECR
the implementation
tec hnic ian is s ubmitted to
proc es s
Change Board

 Work configuration mapping reveals:

Change Board
ECR is rev iewed,
approv ed and
c ategoriz ed

– Multiple dimensions of work Engineer c hec k s

Engineer
draw ings and
Get appropriate
tak es c ategoriz ed Releas e ECO
approv als
ECRs to mak e a
s ingle ECO

– Numerous transactions/ hand-offs

ECO Implementer
Begin determining
requirements and
potential effec tiv ity Set effec tiv ity date
dates for and dis tribute ECO
implement the

– Disjointed flow of information

ECO

make changed part

Supplier/Plant the
Reply with date
new part/c hange
to part c an be
made by

Proprietary and Confidential 15

Value Stream Reconfiguration Actual Workflow (63 Steps)

project Supplier
Core
Software DIAB VISIO Location
 Reconfiguration design involves:
Delphi
Expert3 TPU Core Software Platform
WORD
Lead
FAST VISIO EXCEL
Core Reader Engine
Software WORD PPT
CC Team
– Workflow changes Expert2 DIAB
TPU
CW
EMAIL
Reader
ePROJ
PVA
EMAIL EMAIL VISIO
FAST

– Policy changes
CC WORD
CW Reader
EMAIL EMAIL
Core Requirements
DIAB

– Organizational alignment Software TPU

VISIO
Design Team
FAST
Expert1 CC WORD
Reader
CW EMAIL
EMAIL

– Physical work location

Core System
EMAIL
Hardware EMAILReaderWORD VISIO project VISIO WORDReader Coordinator

VISIO VISIO
WORD WORD
Purchasing Reader EXCEL
Group EMAIL Reader
Mentor
HLynx
EMAIL

project VISIO
CW WORD
Core
CC EXCEL
Hardware
FAST VISIO
Technical Lead
project Reader
TPU WORD Mentor
CW VISIO VISIO
DIAB HLynx
Technical EMAIL CC EXCEL
WORD WORD EMAIL
Software Lead
Reader
FAST
EMAIL
EXCEL Core
Mentor Hardware
TPU Reader Expert1
Lead Software DIAB Technical HLynx
Architect Mentor
Writer EMAIL
EMAIL HLynx Core
Hardware
Core EMAIL Expert2
- 17 - Hardware Expert3
 Representative Sample: Full Engineering Process Value Stream Reconfiguration
Actual resource allocation and change data for the X-Program has been used to estimate potential benefits. A conservative
estimate shows that reducing churn beyond TG5 saves 62,456 hours ($6.2M in potential benefits)
Churn Analysis
TG 1 TG 2 TG 3 TG 4 TG 5 TG 6 Churn Analysis per Program
Cumulative Number of Changes

2000 Actual hours beyond Tollgate 5 108,224

All Changes
Initial Releases
Hours spent on changes 62,456
1500 $6.2M
Transfer rate $/Hr $99/Hr

1000 Potential opportunity by reducing

$6.2M
$3.0M churn beyond Tollgate 5
1.5x

500 Additional opportunity by reducing

1.3x (Best In Class)
churn to acceptable threshold $3.0M
limits
0
Estimated total potential benefits in
$9.2M
engineering from just Churn

Value Stream Mapping

Value Stream Mapping
Statistics Improvement
“As-Is” “To-Be”
MIC Airfoil
Principal
Design Airfoil
Principal
Systems Reduced 77%
PTG Eng 2 MIC
eSDR Eng Chief eDAS PTG Eng Chief
R0 Tech eDRB Eng R0 Tech
eSDR Eng
PSA Review
Team
eSDR eAIT
eBOM eDR
Airfoil
PSA MOne
MOne MOne
MOne
Review
Team Design Hand-offs Reduced by 40%
Moeller eSMS DART
MOne MOne Eng 2
eDAS
15 k 20
Newt. TL
eSDR 15 20 20 eNPP eSDR Moeller eSMS
eAIT
Labor Savings $85M Annually
20 eBOM
15 MOne MOne
20 eDRB eDR
20 DART
Tech 20 Tech k Airfoil
20 eNPPNewt. 10
20 20
Testing Pubs 90 50 20 20 Pubs 20 10 TL
20 15 50 20
Design MOne 10
10
MOne
15 10
Team 15 20 eDRBeDAS eAIT Eng 1 30
VC 15 Testing
eDRB 20 eNPP 15 20 2 Design

Selected Improvements
Design 20 30 Newt. eDR 2
20 Team MOne 2
MOne Eng 1
Eng 3 kk
151515 50
200 22
20 20 20
eBOM 50 20 100
15 4 15 15 15 12 2545
eNPP eDRDART
15
2020 4 4
50
20 Airfoil 20 25 45
12 25
eDAS eSMS 4 4 50 eNPPNewt. 20 25 10101010 10
15 15 4 4 kk50 Mgr Design 20 25 20
Airfoil
eSDR eAIT Newt. 50 eSMSMOne 15 MOne
27 k
4 50
90 60200
90 k Mgr
Eng 3
 Standardized change control process for all data/
eDRB 20 50
20 k k27 60 100
20
eNPPeSMS 20 15 20 20 45
20 eNPP
20 20 50 Newt. Aero 25 25
Aero
MOne MOne
functions improves the impact analysis and reduces churn
MPE Newt.eSDR 25
50
50 90 Eng MPE eSMS
Eng
50 50
Eng 4 Eng 50
25 45
eSDReSMS eNPP 25 25
4 4 Newt. Systems 25
4 4 4 4
Systems
4 4 4 4 4 4 4 4 4 4 MOne 4 4 4 MOne
4 4
 Requirements flow-down is formalized, with clear
4
PurchDART 4 Integration eSMS Integration
Sourcing eSMS eDR Team Purch
Team
Sourcing eSMS MOne

prioritization, and hand-off across each system level

AME eAIT
eSMS TC5
Design
eSDR Design AME MOne MOne Review
eNPP TC5 Newt.
DART eNPP DART Review MOne MOne Team
eSMS


MOne
eBOMNewt.
SQE Newt.

Aero
Newt.
DART
eBOM

Drafting
Team
SQE
Aero
Mgr Proj
Lead
Drafter
Drafting
TL Formal decomposition and release of requirements
Proj Mgr TL Mgr
Mgr Lead
Drafter
reduces the iterative churn required to complete each
- 18 - design stage
 Representative Sample: Systems Engineering Value Stream Reconfiguration

A post mortem audit of a recent NPI program showed that Lean Engineering process improvements reduced effort time by
32% and cycle time by 55%.

Churn Analysis Churn Analysis per Program

Hours beyond Gate 5 70,047
Gate3 Gate4 Gate5 Gate6
3000
Cum. Number of Changes

Hours spent on changes 28,019

2500 $2.66 M
Transfer rate $/Hr $95/Hour
2000
Potential opportunity by reducing
$2.66 M
1500 $2.43 M
churn beyond Gate 5
1000 43-50% Changes (Average) Additional opportunity by reducing
$2.43 M
30% Changes (Best In Class)
churn to acceptable threshold limits
500
Estimated benefits per NPI Program $5.11 M
0
2000 2001 2002 2003 2004 2005 2006 2007

Value Stream Mapping Value Stream Mapping

Statistics Improvement
As-Is To-Be
Hand-offs Reduced 80%
Cycle Time Reduced 55%, from 414 to 185 days
Effort Time Reduced 32%, from 165 to 112 days

Assessment Findings
 Churn is a result of low visibility into scope/ reqmt.
changes and its cascading effect across systems
 Lack of end-to-end traceability of requirements
 Lack of a formal requirements flow-down, release
and change control processes
 Lack of standards and framework for requirements
definition, structure, prioritization, timing, and reuse
- 19 -
The business case specifies the ROI and is critical to long-term PLM program support.
The Teamcenter Enterprise Value Map clearly shows the impact to shareholder value

Deloitte benchmarking data Detailed cost/benefit and ROI analysis

Companies are realizing benefits from PLM drive significant benefits from
improving efficiency, reducing waste and improving profitability

Selected PLM Benchmark

Performance Improvements
Strategic & Operational Benefits of PLM
Improved Efficiency
R&D Productivity Increase 20-30%
Time-to-market reduction 25% - 75%
Data access time reduction 20-80%
Manual data entry reduction 66% - 77%
Part re-use increase 2% - 18%
Reduced change orders 15 - 45 %

Reduce Waste
Change-order time reduction 40-60%
BOM accuracy increase 85%
Rework and scrap reduction 15%
Obsolete Inventory Reduction 8-10%
ECO volume reduction 25%
Process adherence increase 300%
Reduce Tooling Spend 10-15%
Non recurring engineering 20-60%
Warranty reduction 10-15%
Sun setting IT systems

Source: Deloitte Research Improved Profitability

Gross Margin increase 1% - 3%
Change-order cost reduction 25-33%
Manual BOM cost reduction 50% - 95%

U.S. Consulting Report Template_101106

Group technology availability 24 - 50 %
Improved capacity utilization 16 - 40 %
Sources: Deloitte Consulting Project work, Deloitte Research

19

Data gathering Detailed PLM Enterprise Value Map

Business case

- 20 -
Companies are realizing benefits from PLM drive significant benefits from improving
efficiency, reducing waste and improving profitability

Selected PLM Benchmark

Performance Improvements
Strategic & Operational Benefits of PLM
Improved Efficiency
R&D Productivity Increase 20-30%
Time-to-market reduction 25% - 75%
Data access time reduction 20-80%
Manual data entry reduction 66% - 77%
Part re-use increase 2% - 18%
Reduced change orders 15 - 45 %

Reduce Waste
Change-order time reduction 40-60%
BOM accuracy increase 85%
Rework and scrap reduction 15%
Obsolete Inventory Reduction 8-10%
ECO volume reduction 25%
Process adherence increase 300%
Reduce Tooling Spend 10-15%
Non recurring engineering 20-60%
Warranty reduction 10-15%
Sun setting IT systems

Source: Deloitte Research Improved Profitability

Gross Margin increase 1% - 3%
Change-order cost reduction 25-33%
Manual BOM cost reduction 50% - 95%
Group technology availability 24 - 50 %
Improved capacity utilization 16 - 40 %
Sources: Deloitte Consulting Project work, Deloitte Research

- 21 -
Following the assessment, we help our clients execute their transformation roadmap
by using our proven tools and accelerators to deploy Lean Engineering Processes
and PLM tools

We have developed a very integrated set of tools that are specific COTS end-to-end Business
Process Models from Requirements, BOM, Change, Documents Mgt. through Manufacturing
Planning BOM Release
Industry best practice processes have been captured and documented for each PLM
Fundamental Capability

Enterprise BOM Management

Example - High-Level BOM Definition Process
Configure
Rule
SBOM
CRM
PLM Rule 10
-Rule 11

Drawing Part
-Rule 12

Document
ISO relevant infor-
EBOM
Graphic
mation for the task
Work
at hand. Please
Picture
follow standard Instruction Part SBOM Routing
operating Operation 10
procedures -sub op 11 Operation 10
-sub op 12 Operation 20
Operation 20
-sub op 21
Operation 30
Operation 30

Vaulting

MBOM RBOM Production MRP

Order
Operation 10
Operation 20
Op / Order Operation 30

Confirmation ERP

Part Drawing
Drawing Document
Document ISO relevant infor-
Graphic
Work Operation MBOM RBOM mation for the task
ISO relevant infor- Repair at hand. Please
Picture
mation for the task
Graphic Order Completion follow standard
at hand. Please Op 10 – Part X Instruction operating
follow standard procedures
Picture
operating
-sub op 11
-sub op 12
Operation 10
-sub op 11
procedures -sub op 12
Op 20 – Part X Operation 20
-sub op 21 -sub op 21
Op 30 – Part Y Operation 30

Mfg Execution System Service & Repair

-4- Copyright © 2008 Deloitte Development LLC. All rights reserved. 20

Level 1 and Level 2 Level 3 Process Maps Level 4 Sub activity and Engineering and PLM
Process Maps roles maps Best Practices
Compilation

Tell Me  Key changes, concepts, terms, and definitions

Conference Room Pilot Material - Key concepts
Mapped to Show Me  Demonstration of procedure steps
activities/tasks
Let Me  Hands-on practice
Fit-Gap Analysis

Help Me  Go-live support and job aids

Mapped to PLM
Configuration

Categorized by Process
Training Materials

Categorized by
Sub-Process

- 10 - Training Guide Job Aid Simulations

Pre-defined set of unit, Detail Business Process Conference Room Pilot Pre-defined Training
functional and integration & PLM requirements “In-a-Box” Materials
testing scripts

- 22 -
Our process maps incorporate Deloitte’s lean engineering best practices and include
all major PLM processes to accelerate blueprinting

Deloitte’s Pre-defined PLM Processes

- 23 -
Our approach is to start with our “Out-of-the-Box” processes and modify (~20%)
where necessary to meet client specific needs
An enterprise process model provides standardization while allowing the necessary flexibility for the business units. It
also enables improved decision making, better quality, lower implementation and recurring costs

Deloitte PLM Standard

Standardization across Business Units
Processes
Standard OOTB
DPLM Processes
(80%) Unique Specific Processes:
BU/Division/Customer
(20%)

Country Legal
Drawing versions reqs &
Management regulations

Requirements
Product Customer
Management
Configuration Requirements

Engineerng
Global Global Teamcenter
Change
Part Numbers Data Model
Process

- Standard Processes

- Specific Processes

- 24 -
Blueprinting maps lower levels of detail to activity maps and PLM activities

Deloitte PLM Process Models – Level 1 – 4 Decomposition

Level 1

Activity Map (Level 3)

Level 2 & 3

Sub-activities/Roles (Level 4)
Level 4

Process Process Process Process Process Process Process

Details Details Details Details Details Details Details
Metrics & Templates

Roles & Roles & Roles & Roles & Roles & Roles & Roles &
Responsibilities,

Resp. Resp. Resp. Resp. Resp. Resp. Resp.

Roles,

Metrics & Metrics & Metrics & Metrics & Metrics & Metrics & Metrics &
Dashboard Dashboard Dashboard Dashboard Dashboard Dashboard Dashboard

Templates Templates Templates Templates Templates Templates Templates

DPLM Req’s
Decisions &
Design

Key Design Decisions

DPLM Process and Technical Requirements

- 25 -
Each PLM process task/activity is linked to requirements, PLM tool configuration, key
performance indicators and roles

Requirements Configuration

Roles
Sample of Configured Roles
KPIs Engineering Lead

Project Team Test Lead

Program Manager

Change Control Board

Administrator
Configuration Manager

Project Team Quality Lead

General Manager

Senior Project Manager

Requirements: Satisfied requirements are linked to the process step/activity

KPIs: Each measured KPI is linked to the process it satisfies
Configurations: Linked to any PLM tool configuration that is required to satisfy the requirements
Roles: From a pre-defined set of roles, corresponding roles are linked to the process task/activity

- 26 -
DPLM delivers efficient and cost effective PLM transformation to our clients

30 % shorter implementation
time
Deloitte’s Pre-defined PLM Processes

40% lower implementation

cost

15% higher engineering

efficiency

Reduced PLM program risk

and risk of customization

Ability to see PLM processes

from Day 1 that have deep
Lean Engineering and Best
Practices embedded

- 27 -
Deep dive example
Example Deep Dive – Engineering Change Process
By applying lean principles, prior project experience and industry standards, detailed engineering processes have been
created that are optimized and integrated

Level 2
Change Request

Engineering Change
Request

Engineering Change
Order

Manufacturing
Change Order

Supplier
Change Order

Stop Order

Problem Request

- 29 -
Example Deep Dive – Engineering Change Process
Detailed Change Order Processes drive the configuration and workflow definition

ECR Level 3 ECR Workflow

ECR Attributes

ECO Level 3

ECO Workflow

ECO Attributes

ECR – Engineering Change Request

ECO – Engineering Change Order
- 30 -
Example Deep Dive - Engineering Change Process
Pre-defined material for Engineering Change will be leveraged for conference room pilots, user acceptance, validation
and training during the implementation

Use Cases Test Scripts

Training Material

- 31 -
Who to Contact

Deloitte Consulting LLP Deloitte Consulting LLP

127 Public Sq, Suite 3300 225 West Santa Clara St.
Cleveland, OH San Jose, CA 95113-2303
Brian Meeker United States Mark Davis United States
Principal Principal
Mobile: + 1 330-283-8369 Mobile: + 1 408-464-6060
Office: +1 216-830-6732 Office: +1 408-704-4637
Fax: +1 216-706-7010 Fax: +1 408-704-9488
[email protected] [email protected]
www.deloitte.com www.deloitte.com

Deloitte Consulting LLP Deloitte Consulting LLP

191 Peachtree St Ste 2000 200 Berkeley St.

Atlanta, GA 30303-1749 Boston, MA
Kelly Marchese United States Stavros Stefanis United States
Principal Principal
Mobile: + 1 404-915-2346 Mobile: + 1 603-674-7675
Office: +1 404-631-2240 Office: +1 617-437-2352
Fax: +1 216-706-7010
[email protected] [email protected]
www.deloitte.com www.deloitte.com

- 32 -
About Deloitte
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