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7 Symptoms of an Engineering Change Order Bottleneck

manufacturing_process_improvement.jpgA wide variety of documents are used during a manufacturing product development and design process.  These include Market Requirements Documents (MRDs), design sheets, research info, CAD/CAE drawings, standards and specifications, vendor catalogs, manufacturing instructions and a host of others.  

But perhaps most challenging are Engineering Change Orders (ECO), which are used to map Engineering requirements into Manufacturing requirements, and represent a major source of production bottlenecks within manufacturing organizations.   

There are seven symptoms of an Engineering Change Order bottleneck:

  1. Redundant and misdirected information flows.
  2. Poor accountability and auditability of Engineering Change Orders.
  3. Too much time spent physically handling paper documents.
  4. Extra time spent on unnecessary and manual coordination.
  5. Poor understanding of downstream consequences on other processes.
  6. Miscalculated downstream costs.
  7. Scattered and difficult to find Engineering Change Order information and knowledge, leading to repeated errors.

Many organizations report that the ECO process consumes one-third to one-half of engineering capacity, slowing efforts to drive manufacturing process improvement.  Some organizations have just given up try to improve the Engineering Change Order process; Christian Terwiesch and Christoph H. Loch note, “Both practitioners and researchers have tended to view ECO-related problems more as a tragedy than as a sign of process management.” 

Consider this survey of Manufacturers Alliance for Productivity and Innovation members:

  • On average, minor ECOs (e.g., slight drawing corrections or a minor bill of materials fix) take 4 days to process, and companies receive 34 of them each month.
  • Medium ECOs (e.g., a new SKU or component design) take 17 days to process, and companies receive 24 of them each month. 
  • Processing time for Major ECOs (e.g., new product line, product line redesign) can vary widely; the lower-end of estimates was 109 days, with an average process time of 142 days.

Given that even one engineering change can be expensive and time-consuming, with the downstream impacts often underestimated (one survey reports that 73% of organizations don't even know the actual cost of engineering change orders), the potential impact of a poor ECO process for manufacturers facing global competition is significant.  

Four principles are critical to effective ECO process management:

  1. How can you avoid changes in the first place?
  2. How can you detect problems early?
  3. How can you reduce the impact of an ECM change?
  4. How can you speed up the process? 

An effective ECO process – and one that makes an accurate assessment of the costs of the ECO – must include effective management of the information that drives the process.  This includes who initiated the ECO in the first place, how it impacts not only the product in question, but also other connected products, the true cost of redesigning the product, and how all of this interacts with inventory levels and supply chain requirements. 

Core to manufacturing process improvement is improving the ECO process by implementing a consistent, predictable and auditable information flow between the functional areas impacted by ECO changes.  One uniform document management backbone, used in multiple business areas, provides the ability to improve communication and reduce cycle time in the handoff of business functions across these functional areas.

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