No, You Can't Use that Part

The concept of creating teams to bring together design engineering and procurement isn't exactly new. For the past decade, large companies have tinkered with the idea. One reason: The potential benefits are so great. Since most of a product's cost is determined during design, it seems to make sense to have a sourcing professional involved to make sure that the components come from the company's preferred suppliers and are not near obsolescence.

"We have a preferred parts list with teeth in it so people are encouraged to use certain parts," says John Kravetz, engineering development manager at Honeywell International Inc. According to Kravetz, the parts list also steers engineers away from aging parts.

The pressure to create cross-functional teams has increased through the recent business downturn. Companies are struggling to increase productivity and become more efficient, and many have targeted-fairly or not-the design engineering process as inefficient and risky. "Procurement does the risk analysis," notes Gayle Sherwood, senior director of marketing at San Jose-based Agile Software Corp. "And they see that they can better manage those risks when procurement gets involved at the prototype stage."

Some managers see the advantage of creating teams that consist of a broader cross-section of interested parties. While the backbone of such teams may be design and procurement, they can also include suppliers, operations, and even logistics personnel.

Yet even as OEMs like Honeywell tout the value of teamwork between design and procurement and beyond, implementation has been sluggish. "I would estimate that no more than 10% of U.S. companies actually have set up cross-functional teams whose collaboration is sustained throughout the whole product development cycle," says Navi Radjou, senior analyst at Cambridge, MA-based Forrester Research Inc. (www.forrester.com).

It's not for lack of collaboration tools designed to facilitate communication between design and procurement. Engineers may not always like the idea, but software-based tools today even enable procurement to "peek" into a design while it's progressing and make recommendations on part choices.

It wasn't always this way. Early on, design collaboration was promoted as a tool to bring design teams together. Today, top managers see collaboration tools as a means to inject sourcing into the design process. "Collaboration in its early genesis was all about designers," says Simon Floyd, director of product marketing, at San Jose-based Cadence Design Systems Inc. "Now, companies want to integrate the rest of the enterprise, and the first group it integrates is procurement."

Even if it makes perfect sense to bring design and procurement together as a team, in practice, corporate politics and cultural differences persist. "There is a period of honeymoon during the early stage of the product development cycle when both sourcing and engineering get together," said Forrester's Radjou. "But past that stage, the old animosity between sourcing and R&D resurfaces." According to Radjou, the clash is cultural. "Most engineers feel their purchasing peers are penny-pinching morons who have no appreciation for aesthetics and the look-and-feel of products," says Radjou.

Others believe the two groups have an actual desire to work together to improve the company's operations. "Categorically, engineers want to work with procurement and procurement wants to work with engineers," insists Floyd from Cadence. Floyd identifies the problem as a difficulty in communication that can be alleviated with collaboration tools.

At Honeywell, the company included engineers in its supplier selection while at the same time bringing sourcing personnel into the design process. But cultural clashes have persisted. "Last year we went through an exercise to arrive at a preferred parts supply. Engineers were involved every step of the way," says Kravetz. "Yet that involvement didn't eliminate the tensions. They still say we're restricting their creativity."

Though collaboration tools provide the technology to bring procurement and design together, cultural differences remain a formidable obstacle. "Technology is ahead of change. The organizational change is the barrier right now," says Greg Maxwell, program manager of e-collaborative services at Exostar LLC in Herndon, VA. "If you're a stovepipe company, you're going to have some trouble. You have to communicate the rewards and values of cross-functional teams."

The trend of cross-functional teams is growing at large OEMs and their suppliers. Analysts now claim that the ability to create a bridge between design and procurement varies depending on how strongly teamwork is encouraged within the company. "Everybody is getting into it. Ten years back it was less common to see procurement involved in product development," says C.V. Ramachandran, VP at A.T. Kearney Inc. in Plano, Texas. "And some are more effective at it than others."

Whether its working smoothly or not, corporate management wants to take the cost savings and improve time-to-market. That requires effective cross-functional teams that can share the product design as it's created. "Designers are no longer able to work in a vacuum," says Jim Schaeffer, SVP of Avnet Design Services, a unit of Phoenix-based Avnet Inc. "The successful companies are figuring out the conversation between design and procurement needs to happen at an earlier stage."