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Specifications-Do we really understand what they mean?
Specifications-Do We Really Understand What They Mean? Rajesh Nellore, Klas S6derquist
Gary Siddall, and Jaideep Motwani
P
eople engaged in development work communicate requirements with the help of specifications, or “specs.” Developing a product such as an automobile results from the interaction of thousands of collaborators who belong to various departments. Different types of specifications convey each department’s distinct requirements-market segment specs originate from the marketing department, after-sales specs from the after-sales department, and so on. They all come together to form the product’s overall technical specifications, which are then broken down by subsystem and component. The original equipment manufacturer (OEM), its suppliers, or both develop these specifications. In varying degrees, OEMs and suppliers cooperate to fulfill a set of needs. However, in examining many development projects, we have observed that suppliers do not always satisfy the specifications. In fact, the final developed product might be totally different from the product that was originally intended. Both the OEM and the suppliers blame each other for the failures, and occasionally some of the suppliers are let go. To understand the reasons behind this problem, we set out to identify the different facets of a specification. We conducted in-depth case studies in six automotive supplier firms and one European automotive manufacturer, and sent questionnaires to 400 global automotive suppliers. Although these studies were conducted in the auto industry, the findings have implications for companies in other industries as well. What Is a Specifkation Problem? Let’s take an example to understand the problems caused by the disregard for specifications. A customer satisfaction inquiry revealed problems with the radio in a car model. Specifically, the customer could not listen to the music because of a continuous humming noise. The root cause of SpecificatiomvDo
We Really Understand
What They Mean?
the noise was magnetic interference from wire harnesses above the radio. The automotive manufacturer determined that the supplier was at fault and tried to force the supplier to pay the damages. But the specifications did not require the supplier to evaluate the effects of magnetic interference. So the manufacturer was unsuccessful in collecting damages from the supplier, and it had to foot the bill for more than a thousand radios that had already been produced. This problem can be traced back to the fact that the supplier obtained only approximate parameters in the specifications from the OEM, calling for further development by the supplier itself. However, the supplier’s capabilities and capacities were not suited to such a task; it required well-defined, detailed specs from the OEM. Problems like this are often due to buyers and suppliers interpreting the term “specification” in different ways. And with so many different types of suppliers, the specification parameters have to be made very carefully. Kamath and Liker (1994) have classified suppliers into four types: Partner, Mature, Child, and Contractual (or Commodity) suppliers. Partners. which sit at the top of the hierarchy, are able to develop entire subsystems and work with different concepts through an independent engineering capacity. Mature suppliers, which we will call Adult, need only rough specifications as a base for starting the development work; these might include the minimum distance between the radio and the wire harnesses in the dashboard, the 63
illumination intensity in the instrument panel, and so on. Child suppliers need complete and detailed specifications to commence work, which define the materials, dimensions, and functionality of a component, and require the supplier to manufacture the component as stated. Commodity suppliers are those who make standard parts that can be ordered from a catalogue. All of these suppliers can be part of a network; a Partner supplier can deal with an Adult supplier, which in turn deals with Child and Commodity suppliers. Note that whereas detailed specs are complete in all respects, rough specs, as mentioned, only form a base which the supplier must further develop and refine. Partner suppliers can and do create this base on their own.
Table 1 Meaning of a Specifications Survey Responses Percentage of Suppliers
ID #
Responsesto the question “What do you understand is meant by the term ‘*cification?“’
1.
Requirements of the customer/user that the product has to fulfill.
56%
2.
A very careful description of a product or a process.
52%
3.
Technical descriptions of products and processes, which may contain drawings.
50%
4.
Norms that specify several characteristics of the part or
45%
5.
A preliminary product performance requirement that
42%
6.
The description of a product and its properties as well as the methods of obtaining it. The methods could include details about the level of technology involved.
34%
7.
The summary of all important data, limits, methods, performances, and targets. Some of these parameters may be in the form of drawings.
32%
8.
The definition of the product properties that are necessary
31%
9.
Technical regulations and drawings.
26%
10.
The requirements for meeting the function.
20%
11.
Manufacturing in accordance with customer requirements.
18%
n our car radio example, the problem with the magnetic interference occurred because the supplier did not understand the specifications, So our survey was designed to determine how suppliers define the term. Distributing questionnaires to the 400 auto supply companiesspecifically, to the engineering manager responsible for the OEM in each-we asked them to respond to an open-ended question: “What do you understand is meant by the term ‘specification?“’ The responses are tabulated in Table 1. These different issues were then discussed with product development managers and operational design staff in the case study suppliers, who shared the same understanding of the term and agreed on the relevance of the issues. Through the use of the open-coding technique described in Strauss and Corbin (19901, this further analysis resulted in a categorization of factors shown in Table 2 in decreasing order of importance. We can now analyze those categories in an effort to foster an understanding of the facets of a spec.
I
Communication
system to be fulfilled in order to guarantee its good functioning and, of course, to meet customer requirements. allows the product to meet customer needs and survive satisfactorily “in use.”
or that will be measured.
12. A vehicle for common understanding of requirements.
EXPLORINGTHEPARAMETERS
15%
13.
Any written communication.
14%
14.
A description of process operations and acceptance standards.
10%
A specification
is a document that is used in building a product. Because changes are a part of the development process, specifications must reflect the changes, Making all changes incorporated into the specification would lead to improved communications and a quality product, because all-important details regarding the product and its interfaces would be documented and not overlooked. However, communication efficiency can be hampered if there is redundancy in the specifications. To strengthen communication and avoid confusion-related errors, redundant statements need to be minimized. Roozenburg and Dorst (1991) support this by stating that people are less apt to read specs that are very long. Communication can also be strengthened by adapting specs to alternative formats for the different kinds of suppliers. It is generally important to assess what formats, phrasings, or terms best clarify the spec for the supplier at hand. Clark and Wheelwright W993) point to four modes of communication that have great significance in the relation between specifications and the suppliers: (1) integrated problem-solving; (2) early involvement; (3) early start in the dark; and (4) serial interaction. As Table 3 shows, involving suppliers, classifying them accordingly, and using the appropriate modes of communication can facilitate the understanding of specifications. Partner suppliers work with concepts and present them to the OEM even before the OEM decides to start work on a project. There is continuous interaction between the OEM and the Business Horizons / November-December
1999
supplier both before and after the start of the project, which implies a need for integrated problem solving. The Adult supplier needs such rough specifications as product requirements, customer requirements, and functionality descriptions to start work. Hence, there is a need for early involvement once the rough specs have been determined. The Child and Commodity suppliers need a serial mode of interaction because they do not contribute in any way to the product design but simply manufacture to specifications. However, an early start-in-the-dark pattern can be used for long-time Child suppliers in the process of becoming Adult suppliers. Specifications can be operational (used as a working document), which facilitates communication when dealing with suppliers, regardless of their category. Thus, they can be communicated or written in such a way that they convey the same message to all concerned. Once the specifications have been submitted, either by the suppliers or by the OEM, they need to be discussed further to avoid misunderstandings. In most cases, face-to-face communication is best for solving problems. More discussions and early work should be achieved before the specs are implemented. Multiple communication techniques can be used, such as a written confirmation after a telephone conversation to clarify the matter, seminars to discuss the specifications, and so on. Also, regular review meetings and liaison work are required to understand the capabilities, requirements, and limitations of each collaborator. Product
Requirements
The product requirements can be separated into a general description of the product (which could be a narrative description to get a feeling for the product) and a technical description to allow satisfactory performance in use. Specifications need to mention not only the end product but also the ways and means of obtaining it. One of the most important requirements is to examine whether the product will work well, which means that the properties to be measured must be known in advance. In other words, what is going to be measured must be clearly stated. The targets the product has to fulfill-cost, quality, lead time, and so on-are to be included in the technical description. This corroborates what Roozenburg and Dorst point out: that the specifications should contain quantitative measurement indicators demonstrating that the requirements and benefits have been met to the extent needed by the customer. In summary, the argument being proposed is to enlarge the scope of the specification to include not only the final product, but also the process of arriving there. Specifications--Do
We Really Understand What They Mean?
Table 2 Categorization of Definition Factors Included in Questionnaire Responses Category Communication Product requirements Functionality Process requirements Standards Drawings Customer requirements Level of technology
Reqonse ID # AI114 I, 2, 4, 5, 6, 7, 8, 10 2, 3, 4, 7, IO, 11, 13 2, 6, 7, 8, 10 1, 3, 7, 9, 14 3, 7, 9 I, 4 6
Table 3 Supplier/Communication Type of Supplier Partner Adult Transition phase from Child to Adult Child Commodity
Mode Interface
Communication Mode Integrated problem-solving Early involvement Early start in the dark Serial interaction Serial interaction
Functlonallty Functionality refers to the practical use of the product rather than the technical details. An example of functionality would be the OEM telling the supplier “to provide an audio system that corresponds to the brand image of the OEM and is of premium quality to the end user of the car.” A specification may contain a list of these functionalities and the requirements needed to meet them. Often, Partner suppliers can be given a free hand in determining the requirements to achieve the functionality as stated by the OEM. This is because Partners have the required capability and capacity to understand functionality and its implications, often infusing ideas and useful designs of their own. Because Child suppliers do not have these capabilities, they must be given detailed specifications that are complete in all respects. Process Requirements A specification can include the process requirements that will be used for manufacturing the product. Perhaps the suppliers chosen to deliver the product have processes that do not match manufacturing needs. Hence, the process requirements should be mentioned in the specifications to validate that the product can be produced in the manner the customer requires. For example, audio equipment (radio) suppliers should use automated diagnostics to check the printed circuit 65
Figure 1 The Contimmm from Narrative to Quantitative Specifkations Partner
Mature
Contractual
Child Low
High
tain drawings, which provide details that cannot be put into writing. It is important to remember, however, that drawings are the outcomes of specifications, and not vice versa. In the car radio case cited earlier, the manufacturer sustained huge losses in generating the drawings first and then writing 10 to 50 pages of technical regulations to supplement them. Instead, it should have used a top-down approach, whereby the specifications led to the drawings. The need for drawings and detailed quantitative information increases as one moves from dealing with Partner suppliers toward dealing with Child suppliers. Partner and Adult suppliers are expected to develop their own drawings and quantitative requirements based on rough and essentially narrative specifications from the OEM. Figure 1 illustrates the continuum from narrative to quantitative specifications with respect to different suppliers. Customer Requirements
board, allowing for early rectification, scrap reduction, and quality improvement. Standards Specifications can cover the standards that are to be followed in manufacturing a product. This is emphasized by Smith and Rhodes (19921, who identify 32 different primary elements of a specification. There are standards for components (all edges in a car’s panel area should have a minimum radius of 2.5mm to prevent injuries) and for certain constituents within the components (quicksilver and certain types of glues are not allowed to be used). There are legal standards, performance standards, and country standards. And there are standards for the processes used in the manufacture of components, such as cleaning the printed circuit board with citrus fluid to offer the best combination of purity and respect for the environment. Knowing and understanding all the different standards can help prevent late changes. All possible legal guidelines, dates for certification, and liability issues should be identified and a risk analysis undertaken to get the development process progressing without barriers. Standards are an important part of specifications and can be used in the dialogue with suppliers. Partner and Adult suppliers are expected to know the standards; the other types, however, will likely require explicit descriptions of the standards in order to understand and implement them. Drawings Because many features in a specification need pictorial explanations, the specification may con66
Customer requirements give the necessary impetus to create the product requirements, which in turn lead to the process requirements. Thus, specifications need to cover all three sets. It is important that the product and process requirements be created in parallel with identifying the customer requirements. When the OEM gives a specification to the supplier, the OEM becomes the supplier’s customer and its requirements must be fulfilled. In turn, the OEM’s requirements are generated from the needs of the final customers, the people who buy the end product. Suppliers need to consider the benefits of the product they make not only for the OEM, but also for the end consumer. Hence, manufacturers and suppliers should hold a customer requirement/benefit discussion in which the specifications can be used as a working document that, according to Smith and Reinertsen (1991), can speed up the development process. The discussion should indicate the opportunities not only of satisfying the customer requirements, but also of providing additional benefits to the customer by pushing performance forward. If the customer requires a telephone, the OEM can provide a telephone as well as an additional benefit, such as a microphone that allows interface with the customer’s existing telephone. The supplier can satisfy the requirement of the OEM by providing a microphone, and can also benefit the final customer by adapting the microphone interface to a number of different brands of phones. The requirements and benefits stated in the specifications should be comprehensive so that they are easily understandable and contain an overview of the product that is being manufactured. Business Horizons / November-December
1999
Level of Technology Technological sophistication influences the interfaces between the different components and systems within a product. Statements on the proposed functionality of a product must consider the level of technology involved. If the technology can be developed for a component or system without knowledge of the interfaces, then the specs need not contain details about the interfaces. On the other hand, if the technology to be developed requires knowledge about the interfaces, then the specs should ensure that the necessary details are taken into account. The capability level of the supplier is a significant factor in determining how to interpret the knowledge about the interfaces. Adult and Partner suppliers would take the lead and start direct talks with the suppliers of interfacing components and systems. On the other hand, Child suppliers would again need drawings that include all possible considerations of the interfaces. The specifications can consider whether the technology is static (remains the same compared to previous components) or dynamic (contains innovation). Within certain parts, there can be a combination of both. If this difference is understood, then the work can proceed faster; the static parts can be adapted immediately, and resources can be allocated specifically to the dynamic ones. DEMONSTRATING AND APPLYING THE MODEL
S
mith and Reinertsen define a specification as “a written description of a product to guide the development process.” We argue that such guidance can be improved if the specifications satisfy the eight integrated parameters discussed in our analysis and shown in Figure 2. As these parameters indicate, the specification process resembles the total design concept suggested by Hollins and Pugh (1990), representing the chain of activities from identifying to satisfying the need. Poor or nonexisting parameters might jeopardize cost, quality, and lead time. We shall demonstrate here how the model works in a given case. Note, however, that even if it works in many cases in a given company, that does not mean it will work in all possible cases. Hence, the parameters need to be applied carefully.
automotive industry. In charge of total interior design, the supplier provided the complete seats along with the carpets. As an Adult supplier, it needed such rough specifications as product requirements, customer requirements, and functionality descriptions from the OEM before it could generate the concepts. A number of Child suppliers worked for the interior system company. One of them was the armrest supplier, which came from a different industry (plastics) that focused mainly on appliances, refrigerators, and so on. But it did not understand such automotive industry demands as plush finishes, particularly those in premium automobile interiors. Given responsibility for manufacturing the armrest to the design sent by the interior system company, the Child supplier provided an injection-molded armrest that was “gated” at the center. In other words, the point at which the nozzle injecting hot plastic meets the armrest mold was visible when opened. Lacking the refinement of the rest of the car’s interior, the armrest became the cause of numerous customer complaints. The Adult supplier responsible was questioned and expressed regret that it had not informed the Child supplier of the demands of the interior. Postmortem To better understand this problem, we can consider it in terms of the key elements of the supply network as proposed by Harland (1996): end customer, competitive priorities, supply network
Fisure2
Dimensions of a Specification
The Case This particular case concerns the manufacture of an armrest for a car. The armrest fell under the “interior” subsystem, so it was outsourced to one of the largest interior system suppliers in the Specifications-Do
We Really Understand
What They Mean?
67
structure, and supply infrastructure. Figure 3 illustrates the case with respect to these parameters. The Child supplier’s lack of knowledge of the auto industry and its competitive priorities was the main cause of the problem. But there was also a lack of understanding on the part of the Adult interior supplier about how to deal with a large base of plastic suppliers not necessarily aligned with the auto industry. Upon examining the specifications from the OEM, it was found that despite the Adult seat supplier’s need for rough specs, the OEM had sent only such functionalities as “make the interior suit our car.” When the specs submitted by the seat supplier to the Child armrest supplier were checked, there was no mention of the OEM’s interior demands. In fact, the armrest supplier did not understand that the final customers of the OEM paid a very high price for premium cars and thus demanded a premium interior. Applications The model in Figure 2 helped alleviate these problems. The interior supplier was also asked to follow the same model when communicating with its own suppliers. For the next car model of the OEM, the Adult interior supplier was given a specification that detailed the functionality, customer requirements, and product requirements. The right communication mode was used-that is, the rough specifications were communicated after the automotive manufacturer had carefully articulated them. In this way, the seat supplier was better able to understand the demands for the OEM’s vehicle interior. The seat supplier gave only a drawing to the Child supplier, which indicated that the “gating”
could appear only at the corners but not at the center of the armrest. The drawing also encompassed all other parameters, including customer requirements (smooth interior), product requirements (dimensions), communications (late, after the drawings were complete and simulated), level of technology, standards (of the segment in which the OEM operates), and functionality (what the armrest was supposed to do). Thus, that specific problem was solved.
C
ompanies in diverse industries employ a variety of suppliers. In learning how to manage them effectively, they have to balance the type of specifications with the suppliers’ capabilities and capacities. The importance of the dimensions of the specifications varies with the type of the supplier. The eight dimensions we have identified must be observed throughout the complex network of an OEM and its entire supplier base, including the different levels of suppliers. Partner suppliers are expected to satisfy each of the dimensions by understanding the OEM business and aggressively seeking information from the onset. Adult suppliers need the functionality description and product and customer requirements to perform their work, then they must satisfy the remaining five dimensions. Child suppliers must receive at least a drawing in which the rest of the parameters are articulated by the OEM. And Commodity suppliers deliver a standard product, so there is no need to exchange dimensional specifications between them and the OEM, although the OEM must understand exactly what it is buying. Understanding these different needs and taking care to provide the correct specifications will go a long way toward ensuring quality products. Cl
Figure 3 Supplier Network Depicting the Development and Mamhxure of an Armrest
Major Customer: Automotive industry Minor Customer: Only automotive customers Supply Network!Structure: Systems supplier Su..ly Network!Infrastructure: Need customer data regarding finish
Major Customs White goods industry Minor Customer Automotive industry Competitive priorities: Low-cost finish, no plush finish Supply Network Strucure: Many plastics suppliers to choose from Supply Network Infrastructure: Need to understand requirements in the automotive industry
68
Business Horizons / November-December 1999
References Y. Aoshima, “Inter Project Technology Transfer and the Design of Product Development Organizations,” IMVP working paper, MIT, Boston, 1993. K.B. Clark and SC. Wheelwright, Managing New Product and Process Development: Text and Cases(New York: Free Press, 1993). C. Harland, “Supply Network Strategies: The Case of Health Suppliers,” European Journal of Purchasing and Supply Management, 2, 4 (1996): 183-192. B. Hollins and S. Pugh, Successful Product Design (Oxford, Eng.: Butterworth, 1990). R.R. Kamath and J.K. hiker, “A Second Look at Japanese Product Development,” Haward Business Rev&u, November-December 1994, pp. 154-166. C. Karlsson, R. Nellore, and K. Sbderquist, “Black Box Engineering: The Role of Product Specifications,” Journal of Product Innovation Management, 15, 6 (1998): 534-549. N.F.M. Roozenburg and K. Dorst, “Some Guidelines for the Development of Performance Specifications in Product Development,” Proceedings from the 8th International Conference on Engineen’ng Design, August 27-29, 1991, Zurich, pp. 359-365. D.G. Smith and R.G. Rhodes, “Specification Formulation-An Approach that Works,” Journal of Engineering Design, 3, 4 (1992): 275-289. P.G. Smith and D.G. Reinertsen, Developing Products in Halfthe Time (New York: Van Nostrand Reinhold, 1991).
Specifications--Do We Really UnderstandWhat They Mean?
A. Strauss and J. Corbin, Basics of Qualitative Research: Grounded Theory Procedures and Techniques (Newbury Park, CA: Sage, 1990).
Rajesh Nellore, a manager in the Advanced Procurement Planning Division of Scania in Sweden when this article was written, now works for Advanced Purchasing and New Technology at General Motors in Warren, Michigan. Klas Siiderquist is an associate professor of operations management at the Grenoble Graduate School of Business in Grenoble, France. Gary Siddall is an assistant finance director of Delphi Harrison Thermal Systems, Delphi Automotive Systems, Lockport, New York. Jaideep Motwani is an associate dean at Binghamton University’s School of Management, Binghamton, New York. For providing thoughtful comments on this work, the authors would like to thank the following people: Urban Johansson, Kerstin Johansson, Stig Nordin, and Kjell-Ake Eriksson of Saab Automobiles; Robert Davis, Jr., Jon Kellner, and Eric Alstrom of General Motors; Mlkeal Creutz of Saab Australia; lngmar Stoor, Commodity Manager at Scania; anonymous senior officials at Toyota Motor Corporation in Japan; Paul Bertrand, a vice president at Frigidaire; and T.V. Srinivasan and Roger Johansson of Adam Opel AG.
69
Gary Siddall, and Jaideep Motwani
P
eople engaged in development work communicate requirements with the help of specifications, or “specs.” Developing a product such as an automobile results from the interaction of thousands of collaborators who belong to various departments. Different types of specifications convey each department’s distinct requirements-market segment specs originate from the marketing department, after-sales specs from the after-sales department, and so on. They all come together to form the product’s overall technical specifications, which are then broken down by subsystem and component. The original equipment manufacturer (OEM), its suppliers, or both develop these specifications. In varying degrees, OEMs and suppliers cooperate to fulfill a set of needs. However, in examining many development projects, we have observed that suppliers do not always satisfy the specifications. In fact, the final developed product might be totally different from the product that was originally intended. Both the OEM and the suppliers blame each other for the failures, and occasionally some of the suppliers are let go. To understand the reasons behind this problem, we set out to identify the different facets of a specification. We conducted in-depth case studies in six automotive supplier firms and one European automotive manufacturer, and sent questionnaires to 400 global automotive suppliers. Although these studies were conducted in the auto industry, the findings have implications for companies in other industries as well. What Is a Specifkation Problem? Let’s take an example to understand the problems caused by the disregard for specifications. A customer satisfaction inquiry revealed problems with the radio in a car model. Specifically, the customer could not listen to the music because of a continuous humming noise. The root cause of SpecificatiomvDo
We Really Understand
What They Mean?
the noise was magnetic interference from wire harnesses above the radio. The automotive manufacturer determined that the supplier was at fault and tried to force the supplier to pay the damages. But the specifications did not require the supplier to evaluate the effects of magnetic interference. So the manufacturer was unsuccessful in collecting damages from the supplier, and it had to foot the bill for more than a thousand radios that had already been produced. This problem can be traced back to the fact that the supplier obtained only approximate parameters in the specifications from the OEM, calling for further development by the supplier itself. However, the supplier’s capabilities and capacities were not suited to such a task; it required well-defined, detailed specs from the OEM. Problems like this are often due to buyers and suppliers interpreting the term “specification” in different ways. And with so many different types of suppliers, the specification parameters have to be made very carefully. Kamath and Liker (1994) have classified suppliers into four types: Partner, Mature, Child, and Contractual (or Commodity) suppliers. Partners. which sit at the top of the hierarchy, are able to develop entire subsystems and work with different concepts through an independent engineering capacity. Mature suppliers, which we will call Adult, need only rough specifications as a base for starting the development work; these might include the minimum distance between the radio and the wire harnesses in the dashboard, the 63
illumination intensity in the instrument panel, and so on. Child suppliers need complete and detailed specifications to commence work, which define the materials, dimensions, and functionality of a component, and require the supplier to manufacture the component as stated. Commodity suppliers are those who make standard parts that can be ordered from a catalogue. All of these suppliers can be part of a network; a Partner supplier can deal with an Adult supplier, which in turn deals with Child and Commodity suppliers. Note that whereas detailed specs are complete in all respects, rough specs, as mentioned, only form a base which the supplier must further develop and refine. Partner suppliers can and do create this base on their own.
Table 1 Meaning of a Specifications Survey Responses Percentage of Suppliers
ID #
Responsesto the question “What do you understand is meant by the term ‘*cification?“’
1.
Requirements of the customer/user that the product has to fulfill.
56%
2.
A very careful description of a product or a process.
52%
3.
Technical descriptions of products and processes, which may contain drawings.
50%
4.
Norms that specify several characteristics of the part or
45%
5.
A preliminary product performance requirement that
42%
6.
The description of a product and its properties as well as the methods of obtaining it. The methods could include details about the level of technology involved.
34%
7.
The summary of all important data, limits, methods, performances, and targets. Some of these parameters may be in the form of drawings.
32%
8.
The definition of the product properties that are necessary
31%
9.
Technical regulations and drawings.
26%
10.
The requirements for meeting the function.
20%
11.
Manufacturing in accordance with customer requirements.
18%
n our car radio example, the problem with the magnetic interference occurred because the supplier did not understand the specifications, So our survey was designed to determine how suppliers define the term. Distributing questionnaires to the 400 auto supply companiesspecifically, to the engineering manager responsible for the OEM in each-we asked them to respond to an open-ended question: “What do you understand is meant by the term ‘specification?“’ The responses are tabulated in Table 1. These different issues were then discussed with product development managers and operational design staff in the case study suppliers, who shared the same understanding of the term and agreed on the relevance of the issues. Through the use of the open-coding technique described in Strauss and Corbin (19901, this further analysis resulted in a categorization of factors shown in Table 2 in decreasing order of importance. We can now analyze those categories in an effort to foster an understanding of the facets of a spec.
I
Communication
system to be fulfilled in order to guarantee its good functioning and, of course, to meet customer requirements. allows the product to meet customer needs and survive satisfactorily “in use.”
or that will be measured.
12. A vehicle for common understanding of requirements.
EXPLORINGTHEPARAMETERS
15%
13.
Any written communication.
14%
14.
A description of process operations and acceptance standards.
10%
A specification
is a document that is used in building a product. Because changes are a part of the development process, specifications must reflect the changes, Making all changes incorporated into the specification would lead to improved communications and a quality product, because all-important details regarding the product and its interfaces would be documented and not overlooked. However, communication efficiency can be hampered if there is redundancy in the specifications. To strengthen communication and avoid confusion-related errors, redundant statements need to be minimized. Roozenburg and Dorst (1991) support this by stating that people are less apt to read specs that are very long. Communication can also be strengthened by adapting specs to alternative formats for the different kinds of suppliers. It is generally important to assess what formats, phrasings, or terms best clarify the spec for the supplier at hand. Clark and Wheelwright W993) point to four modes of communication that have great significance in the relation between specifications and the suppliers: (1) integrated problem-solving; (2) early involvement; (3) early start in the dark; and (4) serial interaction. As Table 3 shows, involving suppliers, classifying them accordingly, and using the appropriate modes of communication can facilitate the understanding of specifications. Partner suppliers work with concepts and present them to the OEM even before the OEM decides to start work on a project. There is continuous interaction between the OEM and the Business Horizons / November-December
1999
supplier both before and after the start of the project, which implies a need for integrated problem solving. The Adult supplier needs such rough specifications as product requirements, customer requirements, and functionality descriptions to start work. Hence, there is a need for early involvement once the rough specs have been determined. The Child and Commodity suppliers need a serial mode of interaction because they do not contribute in any way to the product design but simply manufacture to specifications. However, an early start-in-the-dark pattern can be used for long-time Child suppliers in the process of becoming Adult suppliers. Specifications can be operational (used as a working document), which facilitates communication when dealing with suppliers, regardless of their category. Thus, they can be communicated or written in such a way that they convey the same message to all concerned. Once the specifications have been submitted, either by the suppliers or by the OEM, they need to be discussed further to avoid misunderstandings. In most cases, face-to-face communication is best for solving problems. More discussions and early work should be achieved before the specs are implemented. Multiple communication techniques can be used, such as a written confirmation after a telephone conversation to clarify the matter, seminars to discuss the specifications, and so on. Also, regular review meetings and liaison work are required to understand the capabilities, requirements, and limitations of each collaborator. Product
Requirements
The product requirements can be separated into a general description of the product (which could be a narrative description to get a feeling for the product) and a technical description to allow satisfactory performance in use. Specifications need to mention not only the end product but also the ways and means of obtaining it. One of the most important requirements is to examine whether the product will work well, which means that the properties to be measured must be known in advance. In other words, what is going to be measured must be clearly stated. The targets the product has to fulfill-cost, quality, lead time, and so on-are to be included in the technical description. This corroborates what Roozenburg and Dorst point out: that the specifications should contain quantitative measurement indicators demonstrating that the requirements and benefits have been met to the extent needed by the customer. In summary, the argument being proposed is to enlarge the scope of the specification to include not only the final product, but also the process of arriving there. Specifications--Do
We Really Understand What They Mean?
Table 2 Categorization of Definition Factors Included in Questionnaire Responses Category Communication Product requirements Functionality Process requirements Standards Drawings Customer requirements Level of technology
Reqonse ID # AI114 I, 2, 4, 5, 6, 7, 8, 10 2, 3, 4, 7, IO, 11, 13 2, 6, 7, 8, 10 1, 3, 7, 9, 14 3, 7, 9 I, 4 6
Table 3 Supplier/Communication Type of Supplier Partner Adult Transition phase from Child to Adult Child Commodity
Mode Interface
Communication Mode Integrated problem-solving Early involvement Early start in the dark Serial interaction Serial interaction
Functlonallty Functionality refers to the practical use of the product rather than the technical details. An example of functionality would be the OEM telling the supplier “to provide an audio system that corresponds to the brand image of the OEM and is of premium quality to the end user of the car.” A specification may contain a list of these functionalities and the requirements needed to meet them. Often, Partner suppliers can be given a free hand in determining the requirements to achieve the functionality as stated by the OEM. This is because Partners have the required capability and capacity to understand functionality and its implications, often infusing ideas and useful designs of their own. Because Child suppliers do not have these capabilities, they must be given detailed specifications that are complete in all respects. Process Requirements A specification can include the process requirements that will be used for manufacturing the product. Perhaps the suppliers chosen to deliver the product have processes that do not match manufacturing needs. Hence, the process requirements should be mentioned in the specifications to validate that the product can be produced in the manner the customer requires. For example, audio equipment (radio) suppliers should use automated diagnostics to check the printed circuit 65
Figure 1 The Contimmm from Narrative to Quantitative Specifkations Partner
Mature
Contractual
Child Low
High
tain drawings, which provide details that cannot be put into writing. It is important to remember, however, that drawings are the outcomes of specifications, and not vice versa. In the car radio case cited earlier, the manufacturer sustained huge losses in generating the drawings first and then writing 10 to 50 pages of technical regulations to supplement them. Instead, it should have used a top-down approach, whereby the specifications led to the drawings. The need for drawings and detailed quantitative information increases as one moves from dealing with Partner suppliers toward dealing with Child suppliers. Partner and Adult suppliers are expected to develop their own drawings and quantitative requirements based on rough and essentially narrative specifications from the OEM. Figure 1 illustrates the continuum from narrative to quantitative specifications with respect to different suppliers. Customer Requirements
board, allowing for early rectification, scrap reduction, and quality improvement. Standards Specifications can cover the standards that are to be followed in manufacturing a product. This is emphasized by Smith and Rhodes (19921, who identify 32 different primary elements of a specification. There are standards for components (all edges in a car’s panel area should have a minimum radius of 2.5mm to prevent injuries) and for certain constituents within the components (quicksilver and certain types of glues are not allowed to be used). There are legal standards, performance standards, and country standards. And there are standards for the processes used in the manufacture of components, such as cleaning the printed circuit board with citrus fluid to offer the best combination of purity and respect for the environment. Knowing and understanding all the different standards can help prevent late changes. All possible legal guidelines, dates for certification, and liability issues should be identified and a risk analysis undertaken to get the development process progressing without barriers. Standards are an important part of specifications and can be used in the dialogue with suppliers. Partner and Adult suppliers are expected to know the standards; the other types, however, will likely require explicit descriptions of the standards in order to understand and implement them. Drawings Because many features in a specification need pictorial explanations, the specification may con66
Customer requirements give the necessary impetus to create the product requirements, which in turn lead to the process requirements. Thus, specifications need to cover all three sets. It is important that the product and process requirements be created in parallel with identifying the customer requirements. When the OEM gives a specification to the supplier, the OEM becomes the supplier’s customer and its requirements must be fulfilled. In turn, the OEM’s requirements are generated from the needs of the final customers, the people who buy the end product. Suppliers need to consider the benefits of the product they make not only for the OEM, but also for the end consumer. Hence, manufacturers and suppliers should hold a customer requirement/benefit discussion in which the specifications can be used as a working document that, according to Smith and Reinertsen (1991), can speed up the development process. The discussion should indicate the opportunities not only of satisfying the customer requirements, but also of providing additional benefits to the customer by pushing performance forward. If the customer requires a telephone, the OEM can provide a telephone as well as an additional benefit, such as a microphone that allows interface with the customer’s existing telephone. The supplier can satisfy the requirement of the OEM by providing a microphone, and can also benefit the final customer by adapting the microphone interface to a number of different brands of phones. The requirements and benefits stated in the specifications should be comprehensive so that they are easily understandable and contain an overview of the product that is being manufactured. Business Horizons / November-December
1999
Level of Technology Technological sophistication influences the interfaces between the different components and systems within a product. Statements on the proposed functionality of a product must consider the level of technology involved. If the technology can be developed for a component or system without knowledge of the interfaces, then the specs need not contain details about the interfaces. On the other hand, if the technology to be developed requires knowledge about the interfaces, then the specs should ensure that the necessary details are taken into account. The capability level of the supplier is a significant factor in determining how to interpret the knowledge about the interfaces. Adult and Partner suppliers would take the lead and start direct talks with the suppliers of interfacing components and systems. On the other hand, Child suppliers would again need drawings that include all possible considerations of the interfaces. The specifications can consider whether the technology is static (remains the same compared to previous components) or dynamic (contains innovation). Within certain parts, there can be a combination of both. If this difference is understood, then the work can proceed faster; the static parts can be adapted immediately, and resources can be allocated specifically to the dynamic ones. DEMONSTRATING AND APPLYING THE MODEL
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mith and Reinertsen define a specification as “a written description of a product to guide the development process.” We argue that such guidance can be improved if the specifications satisfy the eight integrated parameters discussed in our analysis and shown in Figure 2. As these parameters indicate, the specification process resembles the total design concept suggested by Hollins and Pugh (1990), representing the chain of activities from identifying to satisfying the need. Poor or nonexisting parameters might jeopardize cost, quality, and lead time. We shall demonstrate here how the model works in a given case. Note, however, that even if it works in many cases in a given company, that does not mean it will work in all possible cases. Hence, the parameters need to be applied carefully.
automotive industry. In charge of total interior design, the supplier provided the complete seats along with the carpets. As an Adult supplier, it needed such rough specifications as product requirements, customer requirements, and functionality descriptions from the OEM before it could generate the concepts. A number of Child suppliers worked for the interior system company. One of them was the armrest supplier, which came from a different industry (plastics) that focused mainly on appliances, refrigerators, and so on. But it did not understand such automotive industry demands as plush finishes, particularly those in premium automobile interiors. Given responsibility for manufacturing the armrest to the design sent by the interior system company, the Child supplier provided an injection-molded armrest that was “gated” at the center. In other words, the point at which the nozzle injecting hot plastic meets the armrest mold was visible when opened. Lacking the refinement of the rest of the car’s interior, the armrest became the cause of numerous customer complaints. The Adult supplier responsible was questioned and expressed regret that it had not informed the Child supplier of the demands of the interior. Postmortem To better understand this problem, we can consider it in terms of the key elements of the supply network as proposed by Harland (1996): end customer, competitive priorities, supply network
Fisure2
Dimensions of a Specification
The Case This particular case concerns the manufacture of an armrest for a car. The armrest fell under the “interior” subsystem, so it was outsourced to one of the largest interior system suppliers in the Specifications-Do
We Really Understand
What They Mean?
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structure, and supply infrastructure. Figure 3 illustrates the case with respect to these parameters. The Child supplier’s lack of knowledge of the auto industry and its competitive priorities was the main cause of the problem. But there was also a lack of understanding on the part of the Adult interior supplier about how to deal with a large base of plastic suppliers not necessarily aligned with the auto industry. Upon examining the specifications from the OEM, it was found that despite the Adult seat supplier’s need for rough specs, the OEM had sent only such functionalities as “make the interior suit our car.” When the specs submitted by the seat supplier to the Child armrest supplier were checked, there was no mention of the OEM’s interior demands. In fact, the armrest supplier did not understand that the final customers of the OEM paid a very high price for premium cars and thus demanded a premium interior. Applications The model in Figure 2 helped alleviate these problems. The interior supplier was also asked to follow the same model when communicating with its own suppliers. For the next car model of the OEM, the Adult interior supplier was given a specification that detailed the functionality, customer requirements, and product requirements. The right communication mode was used-that is, the rough specifications were communicated after the automotive manufacturer had carefully articulated them. In this way, the seat supplier was better able to understand the demands for the OEM’s vehicle interior. The seat supplier gave only a drawing to the Child supplier, which indicated that the “gating”
could appear only at the corners but not at the center of the armrest. The drawing also encompassed all other parameters, including customer requirements (smooth interior), product requirements (dimensions), communications (late, after the drawings were complete and simulated), level of technology, standards (of the segment in which the OEM operates), and functionality (what the armrest was supposed to do). Thus, that specific problem was solved.
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ompanies in diverse industries employ a variety of suppliers. In learning how to manage them effectively, they have to balance the type of specifications with the suppliers’ capabilities and capacities. The importance of the dimensions of the specifications varies with the type of the supplier. The eight dimensions we have identified must be observed throughout the complex network of an OEM and its entire supplier base, including the different levels of suppliers. Partner suppliers are expected to satisfy each of the dimensions by understanding the OEM business and aggressively seeking information from the onset. Adult suppliers need the functionality description and product and customer requirements to perform their work, then they must satisfy the remaining five dimensions. Child suppliers must receive at least a drawing in which the rest of the parameters are articulated by the OEM. And Commodity suppliers deliver a standard product, so there is no need to exchange dimensional specifications between them and the OEM, although the OEM must understand exactly what it is buying. Understanding these different needs and taking care to provide the correct specifications will go a long way toward ensuring quality products. Cl
Figure 3 Supplier Network Depicting the Development and Mamhxure of an Armrest
Major Customer: Automotive industry Minor Customer: Only automotive customers Supply Network!Structure: Systems supplier Su..ly Network!Infrastructure: Need customer data regarding finish
Major Customs White goods industry Minor Customer Automotive industry Competitive priorities: Low-cost finish, no plush finish Supply Network Strucure: Many plastics suppliers to choose from Supply Network Infrastructure: Need to understand requirements in the automotive industry
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Business Horizons / November-December 1999
References Y. Aoshima, “Inter Project Technology Transfer and the Design of Product Development Organizations,” IMVP working paper, MIT, Boston, 1993. K.B. Clark and SC. Wheelwright, Managing New Product and Process Development: Text and Cases(New York: Free Press, 1993). C. Harland, “Supply Network Strategies: The Case of Health Suppliers,” European Journal of Purchasing and Supply Management, 2, 4 (1996): 183-192. B. Hollins and S. Pugh, Successful Product Design (Oxford, Eng.: Butterworth, 1990). R.R. Kamath and J.K. hiker, “A Second Look at Japanese Product Development,” Haward Business Rev&u, November-December 1994, pp. 154-166. C. Karlsson, R. Nellore, and K. Sbderquist, “Black Box Engineering: The Role of Product Specifications,” Journal of Product Innovation Management, 15, 6 (1998): 534-549. N.F.M. Roozenburg and K. Dorst, “Some Guidelines for the Development of Performance Specifications in Product Development,” Proceedings from the 8th International Conference on Engineen’ng Design, August 27-29, 1991, Zurich, pp. 359-365. D.G. Smith and R.G. Rhodes, “Specification Formulation-An Approach that Works,” Journal of Engineering Design, 3, 4 (1992): 275-289. P.G. Smith and D.G. Reinertsen, Developing Products in Halfthe Time (New York: Van Nostrand Reinhold, 1991).
Specifications--Do We Really UnderstandWhat They Mean?
A. Strauss and J. Corbin, Basics of Qualitative Research: Grounded Theory Procedures and Techniques (Newbury Park, CA: Sage, 1990).
Rajesh Nellore, a manager in the Advanced Procurement Planning Division of Scania in Sweden when this article was written, now works for Advanced Purchasing and New Technology at General Motors in Warren, Michigan. Klas Siiderquist is an associate professor of operations management at the Grenoble Graduate School of Business in Grenoble, France. Gary Siddall is an assistant finance director of Delphi Harrison Thermal Systems, Delphi Automotive Systems, Lockport, New York. Jaideep Motwani is an associate dean at Binghamton University’s School of Management, Binghamton, New York. For providing thoughtful comments on this work, the authors would like to thank the following people: Urban Johansson, Kerstin Johansson, Stig Nordin, and Kjell-Ake Eriksson of Saab Automobiles; Robert Davis, Jr., Jon Kellner, and Eric Alstrom of General Motors; Mlkeal Creutz of Saab Australia; lngmar Stoor, Commodity Manager at Scania; anonymous senior officials at Toyota Motor Corporation in Japan; Paul Bertrand, a vice president at Frigidaire; and T.V. Srinivasan and Roger Johansson of Adam Opel AG.
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