When and How To Select Product Development Consultant
We have prepared this article in order to help both start-ups and Large Corporations take their product to the market and generate bigger profits. We have compiled various experience from more than two decades in product development hoping the reader will take them only as personal opinions, where any similarity with actual companies, real people and life stories is purely coincidental.
SELECTING A CONSULTANT
M Selecting a consultant is one of the most significant decisions a client makes during product development process. Number of good ideas ended in garbage bins or on the shelves of one-dollar stores leaving the owners with the question: What went wrong?
Whether the product did not perform its intended function or the specified manufacturing process and materials were not appropriate does not make much difference when sales are low and when company does not perform.
Even more often companies end up with products that do sell and generate 'predicted' Return on Investment, hiding the real value and potential of the original idea.
Unfortunately executives in such companies almost never ask themselves how much they could have earned if the product they are selling was designed a bit better. Key to working with a consultant is knowing when to use one, how to select the right one and how to work effectively with one.
WHEN TO SELECT CONSULTANT
M Majority of large corporations have internal resources they can use for product development. But if that is not the case, the external viewpoint of a consultant is very helpful if not crucial. Determining if a consultant can add value is considered a first step in the consulting process. In large corporations typically executive management will determine first if the there is internal capability in house for all steps of the product development process, and if those resources are available to work on the specific project meeting the desired deadlines.
Entrepreneurs and start up typically do not have all necessary expertise to perform the product development process without help of the experts. For them help from product development consultant is paramount. The decision wether to use the consultant is clear.
Consultants offer expertise in multiple facets of the product development and the actual value added exceeds far beyond one particular skill or the capability that is not present with in-house resources. Almost always companies which do outsource part or whole product development process to the consultants discover that there are many other aspects in the product development process which would be almost impossible to accomplish without expertise of the product development experts.
WHEN THE PICTURE IS NOT CLEARM
any High Tech companies shift their focus from the big product development picture to the very specialized internal resources and core technology they have mastered. Quite often product manufacturing costs, 'shoe box' designs and cost of accessories diminish the actual advantage of the developed core technology.
While for start-ups the impressive development funds large corporations have at their disposal, appear as the great advantage the fact is that large corporations suffer from number of weaknesses. Starting from available but not appropriate resources, while start-ups do not have available resources and are free to select the appropriate product development consultant, large corporations often have very specialized resources with expertise in a narrow field but very limited or no product development expertise at all. Typically the project activities are distributed to number of designers and engineers who focus on their own particular assignments not having the big picture. Product development synergy is lost almost at the very first step. Quite often expertise in the particular field is not complemented with the knowledge of the production and related costs.
It is common pit fall for large corporations to rely on the available resources neglecting the fact that not all engineers have the product development expertise or skills required for successful product development Additionally simple logic to use the resources available just because they are available and appear to be more economical solution, often is the worst mistake many large corporations make. While that may keep some people occupied the results may end up disproportionately bad. Even more often the results exist and no one ever suspects anything went wrong. This is even more pronounced in companies with strong hierarchy and layered management where top management is completely separated from technical decisions while technical people are not involved with financial side of the business.
WHY INTERNAL RESOURCES ARE NOT GOOD
While a CEO or Engineering managers may grin on this statement we do have to ask them when was the last time your mechanical engineer ordered the parts? The fact is that all ordering and financial dealings with the suppliers is done by Purchasing department. Quite often engineers do not have idea how much certain design costs. To make the things worse some large corporations have manufacturing capabilities in house. The cost of manufacturing is never calculated per part or per particular feature and even if it is (for some other purposes than design) that info is NOT made available to the designers. Typically designs by in house resources are made with very limited knowledge about actual mfg costs if any. Secondly the narrow specialization in some particular field makes this problem even worse.
Engineers doing the same part or subassembly over and over again slowly but surely loose contact (if they had it in the first place based on the previous carriers) with the real world. It takes a lot of different products and designs for an engineer to get the 'feel' for the costs. Many engineers spend the whole professional life in an environment dealing with only one type of the problems, using only few available manufacturing processes, often limited to those available in house, etc. Compare experience of a sports doctor and family doctor in a village. Certainly they are not exposed to the same type of the problems. Some corporations do send engineers to trade shows, provide additional training and at least try to expand the views but that is typically limited only on the particular field. Bottom line is that expertise in one specific field can not be transferred to the product development, and that variety of experiences in the whole PD process from idea to the production including the production support makes product development engineers capable of doing the product development.
If a large corporation does not have industrial design in house they most likely do not have real product development capabilities but specialized core technology engineers only.
Second aspect is Corporate Hierarchy. Project rolls down from CEO to Managers. Managers are given the budget typically based on the previous years and now they have to distribute the project to the available resources. The core technology goes 'as always' to the same people while all other stuff is going to the juniors. No one ever refuses the project or admits not having the required skill. The big picture is not offered and no one is seeking for it. The result is some assignments will go to the available resource who do not have the necessary skill. Managers become product development experts, while they are not directly involved in design and most likely having no product development experience and typically limited knowledge of processes and related costs only based on the past experience which is, again, most likely from the same company.
Clearly large corporations become isolated bubble where designs are done the same way over and over again, no new visions, no new ideas, no opportunities for improvements. Does this bother CEO? Actually no. Product is designed, produced and generates the profits, nothing to complain about. Theoretical margin of 50% on the product that costs $100 to make, is 'job well done' for the most of decision makers. Who would care (if they do not know it is possible) that only 25% of cost reduction in production would render for the same product margins of 100%. It is simple calculation. And if the product looks better? More compelling. Again if company is selling say 50,000 units per year, no one will ask questions if the new product could be sold at 55,000 units. What happened to 100,000 units? On the other hand owners and directors are scared of 'micro management' and deliberately delegate their decision to those they feel should provide the necessary expertise - managers..
Even the decision if the part of the Product Development should be outsourced is delegated to the Managers. Naturally the answer is almost always negative. Typically managers:
- lack the BIG Picture, do not work with ROI,
- have goal to work only within budget set by the 'top' cutting on all costs, even for the necessary expertise
- fail to recognize that appropriate resources are not available and needed,
more so if the company is well established when trying to execute the project the same way it has been done in the past
- available resources (employees) task inappropriately for sake of keeping them busy
- have Can-Do approach and believe that hard work is the solution for everything
(particularly in companies where managers are appointed or praised for their hard work)
- ensure personal job security by getting involved & keeping all activities under his/her umbrella (technocrat model)
- perceive product development experts consultants as competition or danger
When you think if your engineering manager:
- 1) Is he/she very hard working person?
- 2) Are all other people in engineering department younger than him/ her? (excluding the people on significantly lower positions)
- 3) Is he/she always agreeing to the budget and other decisions from top.
- 4) He / She never went above the budget / nor asked for budget change.
- 5) You already expect him/her to say we can do it in house.
- 6) Often makes references to (some) previous product
- 7) Occasionally makes reference to his /her previous job or unverifiable facts from an industry giant
- 8) Occasionally makes comments that all products should look alike so brand is recognizable
Additionally the large corporations tangle up in red tape. Number of procedures that have to be followed, complex approval process, regular periodic meetings that follow the standard schedule and are often not suited for the project dynamics, meetings involving excessive number of people often those who are not related or barely related to the subject matter, open discussion on issues that are plain simple even the discussions for purpose of discussion with no obvious result. Some companies follow standards prescribed by standards such as ISO or use MRP software or revision control software making the design and engineering work additionally slow. While many will argue how not all companies suffer from these weaknesses it appears that this is a result of human nature and particular work environment.
Compared to the 'design studio model' where decisions are made on the fly with limited number of key players, where focus is on deliverables with the goal to complete the project as soon as possible and start the new one immediately, every large corporation appears to be big slow and inefficient bear.
Third weakness of the large corporations is actual motivation. Engineers in large corporations acutely do not have to be very productive. The fact is although many will never admit that job security of every designer is the duration of the project. Longer the project -- longer he or she has a safe job. (Naturally as long as the project is not late because of him or her). It is so familiar picture. Concurrent engineering. We all need to come to the same page. The whole design team is so busy. Meetings in the mornings, meetings in the afternoon. But the fact is that on every five engineers you need one to manage the project, facilitate the meetings and establish the concurrent engineering. The job security of the engineering manager is the very same project. Longer the project longer he/ has his job. We could provide at least ten common excuses Engineering managers make when project is late. Bottom line no one is acutely motivated to finish the project sooner.
In large corporations with big turnaround, you have people who are spending time looking for the new job. Some go check on Facebook. Actually that is not a big problem. the problem is that the same engineer does not really care if he is going to put tolerance of +/- 0.1 mm or +/- 0.01mm while that alone can double the cost in case of some small shaft. How well will it work, who cares, he already has a new job offer. Statics say that in large corporations often up to 30% of people on the project were not on the project from the start to finish. The lack of motivation results with poor and expensive designs.
|How they compare||Corporations||Start-Ups|
Speed and Cost
Startups often provide better and more successful products although working with limited budget.
WHY IS OUTSOURCING BETTER SOLUTION?
The most of the product development consultants offer the necessary expertise. Focusing on the product development from idea to production your product is developed in shortest possible time and with big picture. (Still large corporations can keep development of the certain core technologies in-house). Projects management is product development oriented and directed towards the goals and deliverables. The whole process is light and flexible. Most of product development consultant are creating their 'job security" by diversifying and doing multiple projects for multiple clients. It is in their best interest to execute the project in the shortest possible time. On the other hand they are highly dependant on the actual success of the project both with the same client and with the new clients. Consultants offer both different mind-set and skill-set.
FINDING THE RIGHT PRODUCT DEVELOPMENT CONSULTANT
F inding the right consultant, much like other major decisions, can be done by talking with friends or colleagues, even using the internet. Depending on the size and nature of the project you should look for the consultant that has appropriate skills. When a list of potential consultants is created, the next step is to call each to find more about their experiences and determine the closest fit. Be specific but do not waste time asking about irrelevant projects. (The testing jig for landing gear might not be interesting if you are developing a toaster). Talk about relevant projects but do not look for the exact match. The most likely you will not find the consultant who just finished the project that is exactly the same as yours. There are no experts for say 'toaster' and if you do come across one you should wonder if your product will be any different than your competitor's.
If you are looking for an engineering help look for appropriate certification, which provides some assurance that the engineers are qualified.
Technical skills typically required - your product development consultant must have necessary expertise in the following disciplines:
- Project management
- Systems Analysis
You and your consultant will be working closely together. Both sides have to feel comfortable having open discussions. Chemistry is important to help the flow of ideas, positive criticism and ability for each side to influence decisions particularly if you are working with a small product design company. If you are working with a large consulting corporation, you will most likely have assigned project leader and meet your engineers or designers once or twice, if ever.
Design project work is typically divided between designers and engineers specializing in in the particular field according to the required specialty. (Logical subsystems) Product is divided into E.g. electronics, structure, plastics and enclosures, user interface etc. Designers and engineers from different fields then work together accommodating each others specific technical requirements. The project duration will be determined by the subsystem that needs the most time.
It is very difficult to split the logical parts into smaller parts and have more people work on it in the same time. (Off course there are vary large projects with large number of logical subsystems that are some times split not only between designers but even design companies) For moderate projects such as consumer products, you will never find a company that will split e.g. Back of the remote controller and the battery cover and let two people work on those parts in the same time. The number of mechanical interfaces is so large that it is almost impossible to do so and is much smarter 9adn logical) if the design of both components is performed by the same design engineer.
Splitting of the project bellow the logical subsystems may increase risks while time savings are almost insignificant. While there are concurrent design and engineering techniques the two mating parts are best designed if designed by single person. On the other hand more people on the project will inevitably increase the amount of time spent on meetings, project management and all related fees, quite often without significantly improving the delivery dates.
If dead lines and time to market are not the most important factor for your project selecting the smaller consulting company will almost always result in smaller project costs / fees, you will be dealing directly with design engineers, have more control over the product development process, while your design engineers will have full overview of the whole product and will not have to spend time cooperating with number of people involved in the project.
YOUR PRODUCT DEVELOPMENT NEEDS
Before you start selecting product development company you may determine what particular skills and knowledge your product development company should have in order to provide you with the necessary assistance:
- Industrial Designers:
- Stile, shape of the product | Industrial Design | Market research | Ergonomics | User Interface | Finishes and Colors
- Mechanical Engineers:
- Research and Testing | Engineering of components | Mechanisms or moving components | Mechanical Design | Thermodynamics or other specific engineering knowledge
- Stress and material strength | Tolerances | Geometrical Fit | Verification and Validation
- Manufacturing processes | Assembly process | Materials selection
MEET THE CONSULTANT
To find out who will be working on your project the best approach is to actually meet face to face with your potential consultant. Ask to meet project manager and major design engineer who will be working (with you) on the project.
If you have bigger team or interaction with different departments in your company is required; it is good idea to introduce the consultant to some key players on your team, too: The introduction of an outside consultant can arouse suspicion and resentment. Consultants are often perceived as threat or those who will point fingers.
The consultant may request some preliminary information before meeting in order to screen the projects that may not be their line of work. Be prepared to explain what kind of services you are looking for, type or industry for your product and if you are not prepared to disclose all details of your product, at least provide some idea by talking about the similar products.
QUALITY OF SERVICES and WORK
T he client may select an consulting engineer by direct appointment, referrals or by a formal selection procedure. For large corporations which are familiar with the industry usually the most viable option is referrals. Word of mouth seems to be preferred method of advertising for the most of good product development companies. Small companies and general public generally pick few names from internet and follow their heart.
Although we can not provide you with a tip how to select right company you can at least record your impressions and compare quotes. Success of your product highly depends on knowledge and motivation of your consulting company. You are looking for the product development house which will provide the best or at least very good design, on time and meet your expectations. During the process you would like to be involved or at least informed of the progress on regular basis, and since you will be changing your mind or have different ideas you would probably like to exchange them with your consultant. What you don't want to happen is to find busy line, leave a message and spend days waiting for reply.
Some large product development companies are so busy they do not have time to address every call, particularly when another larger project is in jeopardy. It is understandable. Although it will not be vital for your project any shift in the resources or departure of key engineers as often case with large consulting companies, will affect your project.
Unlike large consulting companies small product development companies usually work on two or three projects only, usually they have small design team where communication is not a problem, where working hours are flexible and often accommodated to the customer, and where success of the product is taken personally.
Quality of Work is quality of the designs and engineering provided by the consultant. The major factor in providing high quality of the work is knowledge and experience. Wrong attitude and lack of attention to detail can result in poor and low quality of the product, we believe that former, if present will affect Quality of Services as well, and therefore can be easily recognized and detected.
Quality of Services is reflection of personal attitudes and corporate culture of the company. If company employees do not express interest and motivation for the project the most likely you will not be happy with the ultimate results. Holding on the telephone or waiting for weeks before quotation is sent can be early sign of poor customer orientation.
Although the same engineer does not necessarily have to carry out the whole project activities it is often beneficial for the project if the same person is responsible for all parts and phases of the project. Needles to say how much easier is to communicate with one person.
Short-List No More Than Three Product Development Consultants
Hopefully now you can short list few firms or individuals that you feel have the appropriate qualifications and experience for the whole project and who you feel you can work with comfortably. Once you short list not more than three product development consultants prepare appropriate RFP (Requests for Proposal) and submit to them with the request to provide written proposal / quotation for the project.
Make sure you ask consultants to quote only for the work you plan them to perform. It is consultant's discretion and responsibility to prepare the proposal that they would consider the most effective for your project. They should have freedom to plan strategies and project phases, which in turn will result with quite different deliverables and related costs. Therefore you should compare proposals up to the certain (the same) level of development. (ready for prototype and ready for manufacturing are not the same). Also, many companies will misuse terminology. (E.g. some call prototype what is barely visual appearance model). The easiest way to compare proposals is when the design and engineering is complete. That is when the design is ready for manufacturing and you can take it to ANY manufacturing facility for mass production.
Ask for quote for "Ready for Manufacturing" level .
Even then you may receive inexpensive quote for the design of the product which is going to be very expensive to produce or assemble. (labour intensive assembly) Naturally it takes less time to design poorly -- so inexpensive design services may ultimately provide you with the product you can not sell.
The most of the Product development companies use flat rate schedule based on:
- Time required to finish the project (Length Of Assignment - LoA)
- Level of knowledge and qualifications required (skill level)
- Difficulty and scope of the work
- Responsibility that engineers must assume - potential liability
- Urgency with which work must be finished (additional personnel and overtime)
Companies that employ more technical people with different level of qualifications may either determine average hourly rate or calculate final costs based on time sheets. Generally smaller companies do not employ people that would do additional paper work. Final cost will be based on estimated number of hours and cost to design / build agreed parts and prototypes.
In our view the amount of money you will invest into the design and engineering of your future product is the least compared to material, tooling or production, while the return is the highest and the most sensitive. If divided over the total production volume the cost of engineering and design services usually does not amount up to the cost of raw material. Exception may be very small volume production. For additional information on selection of Engineering services provider or Consulting Rates please consult Association of Professional Engineers of Ontario.
GENERAL PUBLIC AND SMALL COMPANIES
M any consulting companies provide services mostly to the large corporation. Large projects and secure payments have influenced providers of professional services to target such large corporations and specialize in particular fields aligning themselves with the needs of large corporations. Although most of the large corporations do employ engineers and designers there is number of reasons why outsourcing is better solution for them: Such large corporations usually specialize in particular segment of industry where core business is not the product development itself. (E.g. core business of manufacturers of cellular telephones is electronics while telephones are designed by experts in product development. Providing help for particular projects in peak times freeing corporate resources for core business. Small consulting companies provide much more flexibility and less red tape in comparison to large corporation Product development companies provide knowledge of market-related issues and current design trends. Product development companies usually provide consulting services in very specific engineering fields.
Large corporations often outsource old products to consulting companies for refinement while in-house designers work on brand new products. Redesigned old products with new look and fresh ideas are usually reintroduced to the market in the same time as brand new product creating definite market advantage. While number of consulting companies are targeting large corporations, in last several years it has been increasing trend for large corporations to outsource projects to product development companies, which generally left general public and small companies to develop their products with their own resources. This has created impression that only large corporations can have nice and award winning products. Hopefully consulting companies will shift more towards general public and small companies, which will result in more great products.
CONFIDENTIALITY AGREEMENTS (NON DISCLOSURE AGREEMENT)
W hether your invention it is a brand new product idea or product improvement you want to have you interests protected. Since you will not be able to apply for Patent or Provisional Patent, before you have tangible and practical embodiment of your idea, discussions with you products development consultant will the most likely be the first time you are disclosing your ideas. Therefore you should sign and date CONFIDENTIALITLY AGREEMENT (Non Disclosure Agreement or NDA), which you can obtain either from your legal advisor, search internet, or you can expect that your potential consultant has template ready.
Ask your legal advisor, consultant or even search the web for the sample.
Licensed engineering companies will treat any information received from a client with same care as they treat their own confidential information, just like your dentist will. But in the same time professional engineers prefer to have properly signed documents before they enter discussions. Do ask for one, if nothing else your consultant will know you are serious and value your ideas.