"The New Practice of Global Product Development"
MIT Sloan Management Review
Summer 2006, pp. 22-30
The authors state that "the emerging best practices in PD (Product Development) today involve a highly distributed, networked development process, facilitated by a fully digital PD system. Global product development combines certain centralized functions with some engineering and related PD functions distributed to other sites or regions of the world."
Looking at the two dimensions of Outsourcing and Offshoring, four modes of Product Development are identified:
- Centralized—Here all product development resources are within the company and at onshore locations
- Local outsourcing—Nearby or on-site contractors are used for key product development activities
- Captive offshoring—The company decides to own a product development operation in a region where it has not done business before
- Global outsourcing—Outsourced staff are used at key steps in the process, without owning an operation in another region
Key success factors for Global Product Development that are identified in the article are:
- Management priority and commitment
- Process modularity for global distribution
- Product modularity to develop subsystems or components in different locations
- Core competence so the company does not become completely reliant on suppliers or contractors
- Intellectual property, which becomes more difficult to protect
- Data quality, which concerns availability, accessibility, and auditability
- Infrastructure (including networks and power supplies) to support activities in all locations
- Governance and product management is needed to coordinate and monitor the entire effort
- Collaborative culture is necessary and is helped by a consistent set of processes and standards
- Organization change management requires planning, training, and education of those in key roles for global Product Development
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