Succeeding with concurrent engineering: while the current trend in concurrent engineering heavily favors casting buyers, by abiding by a new set of rules, metalcasters can tip the scales more in their favor.

In the past, only sales personnel interfaced with the customer, who provided product designs and casting drawings. Metalcasting facilities, in turn, bid on the manufacture of the casting. Customers would then choose a casting supplier based mainly on price, time to delivery and sometimes quality. Overall, limited contact occurred between the customer and manufacturing engineers and/or casting designers. Usually this interaction occurred after contracts were formally secured. To succeed today, this has to change.

The emphasis to reduce product life cycles through concurrent engineering has changed the role of the design community. In many cases, casting suppliers are expected to develop designs and perform machining and other secondary operations. As a result, casting engineers and designers assume a significant role in the sales process.

OEMs have used this trend in concurrent engineering to their commercial advantage. Very few engineers have the necessary skills for surviving in the sales arena. Often, metalcasting firms would attempt initial design before purchase orders were awarded or letters of intent were written. As a result, casting suppliers would be busy working on projects that never came to fruition. Casting engineers would often design a component, only to lose both the business and the design to a competitor. When a supply agreement is made between the casting supplier and customer, the customer often has intimate knowledge of the product cost structure. Now is the time for casting engineers and their firms to take control of the situation. Casting suppliers have power and must begin to wield it to ensure their success.

Typical Concurrent Engineering

In order to survive in this environment, casting engineers and designers must understand the concurrent engineering/sales environment. The current system is illustrated in Fig. 1.

[FIGURE 1 OMITTED]

Typically, an OEM informs a casting supplier of a new project and requests that the supplier begins working on a design. Although a general concept is defined with design targets and specifications, many details are left open. Thus, the metalcasting facility invests resources and time to develop a design for the OEM. After a rough design is developed, the proposal is refined with input from the customer. Several design iterations occur. In some cases, dozens of designs can be created before one is accepted.

With an accepted design, the customer begins negotiating with the casting source for the business. After working with the metalcasting facility for months to produce multiple designs, the customer has developed in-depth knowledge of the product and the casting source's capabilities. The customer leverages this information when negotiating the price. After investing so much time into such a project, casting suppliers have a tendency to give in to many customer demands. During negotiations, customers may threaten to give the business to competitors, including the design. Since no formal contract exists, this can be done without recourse.

Today's concurrent engineering system favors the OEM. Casting suppliers often find themselves engaged in unpaid consulting and developing designs that are nothing more than curiosities for the customer. In negotiations, the customer is in complete control. By understanding these flaws in the current system, casting suppliers can develop skills to survive and prosper in this aggressive environment.

An Alternative Approach

Casting engineers and casting suppliers must accept today's concurrent engineering environment and realize that the customer will take as much free information and work as a supplier is willing to give and ask for more. Although OEM's will claim that castings are a commodity, they will demand specialized services and optimized designs. In short, they want custom products at standard off-the-shelf prices. Placed in this situation, one must abide by the following rules:

* when in the presence of the customer, one is always selling;

* no unpaid consulting. Educate the customer after the business is secured;

* customers must pay for information with a commitment to make a decision;

* gather information from the customer when possible;

* be willing to tell the customer "no."

By following these rules, a casting supplier may shift the concurrent engineering/sales process to the method presented in Fig. 2.

[FIGURE 2 OMITTED]

The first four steps in this modified process focus on listening to the customer and learning about his/her needs.

Establish Rapport--When meeting with the customer, one must develop rapport. In order to do this, the customer must feel secure. Many people will jump at the chance to talk about their in-depth knowledge in their area of expertise. In many cases, this erodes the customer's sense of security by making him/her look uninformed and ignorant. A better way to build rapport is to illustrate one's expertise by asking specific, detailed questions. Only an expert has the knowledge to bring up such questions. This builds respect without making the customer feel stupid.

Find the Problem--Rarely does the customer ask a casting supplier outright to solve the problem at hand. One should look to find the real issues behind what the customer is requesting. By identifying the real problems the customer faces up-front, several design iterations often can be avoided.

Establish the Priority--Customers often ask their casting suppliers to undertake projects because it costs nothing to do so. When working with a customer, determine if a project supports an upcoming program or if the project is for benchmarking and research.

Determine Investment--Customers set budgets and target prices early in the life cycle of a product. Casting suppliers should ask for an estimated price. In doing so, both parties can determine upfront if the approach is feasible. Customers also can openly give ballpark estimates without jeopardizing their position when negotiating price.

Set a Contract--With a clear understanding of the customer's problem, priority and budget, a contract should be set to develop a design and deliver a product that will meet the needs. The contract must be in writing and grant the casting supplier rights to the design. In many cases, contracts are written that allow the customer to buy the design from the supplier. Customers must pay for information and commit to making a final decision. Customers who are serious about awarding business should not oppose such a contract.

Develop a Design--Only after a formal contract is established with the customer should a design be developed. If care were taken to capture all of the customer's problems in the previous steps of the process, only one design iteration should be required.

Negotiate Terms--By establishing a contract with the customer before design, negotiations for finalizing the business should be straightforward. Both the customer and casting source should have an idea as to what each is willing to accept. Furthermore, one should be able to walk away with minimal losses if the customer's demands are unreasonable.

Deliver & Follow-up--With a formal contract established and terms for business finalized, one must deliver. Follow-up is critical to maintain rapport with the customer.

Know the System

Most casting product engineers and designers have little to no sales skills. But armed with knowledge of the current system, such professionals can survive in today's aggressive concurrent engineering environment. Contracts must be set with customers up-front to avoid free consulting. However, in order for such techniques to work, one must have the courage to walk away from a potential sale if the customer's demands are unreasonable.

For More Information

"Concurrent Engineering: An Overview," J. Logan, Proceedings from the 8th World Conference on Investment Casting, 1993.

Edward Vinarcik, Product Engineer, Fort Wayne, Indiana 

Edward Vinarcik is a product engineer for a major automotive tier one supplier.