Measuring the Effectiveness of Set Based Concurrent Engineering projects in CAREL
In 2013 CAREL (an Italian HVAC/R company) began exploring Set-Based Concurrent Engineering (SBCE) to increase their innovation yield and ensure this knowledge-intense part of the product development process is effective and has a stable timeframe. After the initial concept introduction, CAREL established a framework tailored to address its specific needs, while respecting the key principles of this approach. Although the newly established framework resulted in positive and prosperous outcomes, the company wanted a more formal, repeatable indication of process’s performance. For that purpose, CAREL developed a set of 7 Key Performance Indicators (KPIs) to measure 3 core areas of development.
CAREL is one of the world’s leaders in control solutions for air-conditioning, refrigeration, heating, and systems for humidification and evaporative cooling. CAREL prides itself as the company with a mission is to bring energy savings and reduce the impact of machinery and systems on the environment.
In 2007-2009, during the global economic crisis many companies were facing the challenge to remain competitive, but CAREL kept growing. This growth meant that leadership was required to find a solution, effective and flexible enough, to support that growth. They found the answer in the Lean Product Development approach.
To evaluate the performance of the Set-Based Concurrent Engineering (SBCE) efforts, CAREL identified three core areas of measurement: Risk, Innovation and Learning.
One of the key reasons why CAREL monitors only three areas is to allow teams to focus on their daily development tasks, to minimize turbulences in the process flow, and to prevent other unnecessary interruptions.
Below is a brief overview of CAREL’s KPIs for each of the measured areas:
“Reduce potential risks of failures across a product’s life cycle”
CAREL measures the severity of failure modes before and after SBCE is applied which allows it to understand what the Risk Reduction Index (RRIs) is. RRI reveals how much risk was reduced by and the following formula is used to calculate the RRI of each subsystem’s failure mode.
Innovation based KPIs
“Improve innovation or creativity in a project”
Innovation is measured for each project where SBCE is applied, using a bespoke tool where a novelty score is assigned to specific design factors for each identified design solution. Each design solution is categorized using the following three-level scoring system.
|Solutions common to CAREL and state-of-the-art||3|
|Solutions uncommon to CAREL but common to state-of-the-art||7|
|Solutions uncommon to CAREL and state-of-the-art||10|
The novelty score, design factors and the number of design factors are then used to calculate the novelty effectiveness.
Learning based KPIs
“Improve the quality of learning in a project”
CAREL measures the quality of learning through the total amount of Lessons Learned derived from the physical or virtual prototype tests. The lessons learned are divided into three KPIs in order to ensure the effectiveness of the knowledge captured. The fourth KPI is also measured, providing a quantitative overview on the new knowledge generated. These four KPIs are:
- Total knowledge created
- Total reusable knowledge created
- Total visual knowledge
- Total solutions/options considered
Learning quality is a qualitative assessment and therefore requires the involvement of an entire project team.
Which KPIs do you use to measure the effectiveness of your innovation processes? And if you implemented set-based design, did you need to modify the existing KPIs or even introduce some new ones? If you are interested in sharing your experience, do not hesitate to contact us on email@example.com.
CAREL’s Best Practices are presented and described on more than 25 pages in the Lean Product Development Best Practices book. CAREL’s chapter is only one out of the 10 chapters presenting the real-world application of lean product development in multinational companies.
The hard copy of the book with the 10 cases is available for only 74.99 EUR.
CAREL’s Lean Product Development case is available digitally free or charge to our members.
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ABOUT THE AUTHOR(S)
Lean Analytics Association
Matic has over 5 years of experience in working with global organizations from various industrial sectors, either leading or supporting the development and introduction of bespoke lean innovation and new product development solutions. Over the past years, Matic has co-developed a framework to enable better, faster and more integrated innovation across the entire value chain, enabling companies to maximize their innovation capability and deliver truly customer-centric products and services, while minimizing the risk of market failure.
Matic is a certified Service Design Thinking Facilitator, and the creator of the Set-Based Integrated Innovation Business Game co-developed with a multinational Swiss company. He completed his Master’s degree in Global Product Development and Management at Cranfield University in 2012.
Matic is a co-author of the Lean Product Development Best Practices book, and several journal and conference publications. He regularly appears as a speaker and workshop holder at various lean, product development and innovation conferences.
Alberto Rosso is a Lean Change Agent at CAREL Industries since 2007 after a very useful experience abroad working 3 years in the United States as ERP Manager.
He is also a Master trainer in Lean Management and has a vast experience deploying tools and impacting behaviors, working on leadership styles and applying change management approaches cross-functionally.
Now his main focus is in New Product Development, Innovation process, Road mapping.
Lean Analytics Association
Dr. Flores has over 20 years of experience collaborating as internal or external consultant in different manufacturing and services organizations, leading several initiatives related to Lean Thinking, Business Process improvement, Six Sigma, Supply Chain, Change Management, Open Innovation, Digital Transformation and Human Centered Service Design; providing also training and coaching.
She is co-founder and president of the Lean Analytics Association (LAA) and visiting scholar at the College of Management of the Ecole Polytechnique Fédérale de Lausanne (EPFL) in Switzerland.
She carried out her Post-doc at EPFL collaborating at the Lean Product and Process (LeanPPD) FP7 European project from 2009 to 2013. She completed her PhD in 2006 at the Politecnico di Milano studying Open Innovation Models to enable Industry-University collaboration for innovation. She obtained her Master’s Degree in Manufacturing Systems in 1999 and a Bachelor’s Degree in Mechanical Engineering from Monterrey Tec (ITESM) in 1996.