3. LINKING INTERVIEW STUDY RESULTS TO THE DESIGN-TO-COST
3.2 The inspection of interaction between procurement, product development
functions
This chapter inspects the present condition of cross-functional interaction and the challenges of the functions in the contemporary business environment. Above all, the understanding of the status interaction between different functions lays a foundation for understanding the requirements of a DTC framework. There is always something that could be done better between functions and according to the interview of the procurement director, more attention should be paid on the collaboration between all functions. In particular, more attention should be paid to the interface of company
functions and to the flow of information between these functions. The procurement director said:
“We have a possibility to improve cooperation through all functions, from selling to product development, engineering and manufacturing.”
“How could we conduct this whole process effectively? We are now moving from one function to another, from engineering to procurement, from procurement to manufacture, etc. We have plenty of information gaps. The solution is to re-write the whole process again. What is the correct form to give the information onwards and what are the right tools for this? Now we have plenty of divergent methods of working.”
On the basis of the interview study, it can be said that it is significant to look at the coherency of employees’ understanding to give the information onward in congruent form. If the employees do not comprehend each other, the interaction between functions may be insufficient and there is a risk of misunderstanding the information.
From the view of the most employees of procurement, the early involvement of procurement and suppliers to the product development projects is valuable. This is true especially when the focus of the development project is something else than the development of the company’s own technology and there is a need for an extrinsic resource. Furthermore, some of the interviewees representing procurement wished that product development and procurement could be more associated with each other.
One notable subject concerning the interaction is that different functions see the target for development of the DTC from divergent aspects. According to the procurement category manager, engineers are tightly booked for customer projects and they do not have enough time for DTC projects. Resources of the employees are one of the challenges. The procurement category manager describes the situation:
“Sometimes we may not have enough resources to take on all design-to-cost projects because engineering has to bear a heavy load in the beginning, especially in the phase where we are looking into different potential initiatives.
They are quite often heavily booked in our customer projects. We need more engineering resources. That is one essential target that we have to reach.”
Like the above-mentioned procurement category manager, the interviewees of product development deemed that the present personnel of procurement do not have enough time to participate in DTC projects since they are so intensively tied into to customer projects. The product development director said:
“The challenge is that procurement does not have enough time. They are all the time involved in buying, hence it is challenging to get them connected with these product development projects.”
The product development director adds:
“Do the employees of procurement have enough time to procure? In some cases, they do not have. – In our own project, the focus should always be on the fact that the procurement gets sufficient input data in time. Hence there would be enough time for professional procurement. Clearly, this concerns both engineering and procurement functions.”
Based on these citations, a dissent between procurement and product development interviewees can be seen. Both parties remark the lack of personnel resources. One solution to diminish dissenting opinions is to add communication and transparency between these functions. After all, it is significant that the functions notice by themselves where there might be shortcomings and how they could be corrected. The product development director said:
“We are slightly siloing people that we do not converse enough about these subjects. We must look at the mirror and sometimes invite representative of procurement to a department meeting and tell them about these things.”
However, it is significant to notice that, from all the functions of the interviewees, there is one common acquisition; the aim of the collective positioning of the common target for all functions. The functions wanted the common target to be transparent and that the target is constructed with a common process. When the targets are positioned together, it is easier to execute goals and the situation is clear for all sides.
According to a procurement director:
“Positioning the goal to the procurement and the other functions it is essential that the target is transparent and a shared process, for instance shared DTC targets. On the basis of shared targets, it is easier to commence collaboration.”
According to a product development director:
“We have now had slightly separate targets, but when we have shared targets, we follow them together and support each other to reach the targets.”
According to a production director:
“We should have the shared development aspirations and rationale for these wishes throughout the organization, in spite of the function. -- . We must be able
to describe our subject to the other functions, because we do not all see the same things and we do not have similar ideas.”
All these three functions emphasize the same thing: the functions must have shared targets. The shared targets diminish the segregation of functions. It is valuable that the management has set the shared horizontal goal to the functions and that it is measurable in a sensible way. If the targets of the functions are not compiled in a horizontal view, there is a risk that the functions are part-optimized to fulfill their own targets. This may lead to harmful results concerning the interest of the whole company. In conclusion, based on the quotations from different functions in this Chapter, it can be said that the cross-functional teams are one solution to increase information flows between different functions and also to diminish the silo effect between different functions.