"With larger companies, missing revenue or budgetary goals translates into missed quarterly performance projections and ultimately impacts shareholder value. Larger manufacturers often have a better chance to recover due to their larger cash reserves and ability to take on larger debt," according to a recent Aberdeen Group report entitled Nimble Product Design: CAD/CAM/CAE for the Small to Mid-Sized Enterprise, which noted:

For small to midsized manufacturers (SMEs) that operate on thin profits, however, missing these same fiscal objectives can result in shutting down the company. These performance differences directly translate into the ability to stay in business.

Based on a survey of more than 290 enterprises' design and implementation strategies, the Aberdeen study revealed the strategies and technologies empowering best-in-class SMEs to hit business goals on an average of 80 percent or better.

Released in June, the survey's findings concluded the following mean business-goal performance for best-in-class SMEs:

• Achieve target product cost 88 percent of the time;
• Hit or beat development budgets 80 percent of the time; and
• Reach goals for product revenue 91 percent of the time.

Pretty good. Yet with a redonkulous number of CAD, CAM and CAE products and tools flooding the market and adding to confusion over what options are needed most by SMEs to compete with larger manufacturers, it's increasingly difficult to determine what will provide the most value to SMEs specifically.

As such, based on the best in class achievements, Aberdeen offers the following strategy tips for small and midsize enterprises to achieve higher performance:

According to Chad Jackson, research director of Product Innovation and Engineering at Aberdeen and author of the report, the following are the shared characteristics of best-in-class SMEs:

• More likely to execute formalized design processes with the support of data management life-cycle state and work-flow technology;

• More likely to provide combined CAD and CAE tools to engineers and combined CAD and CAM applications to machinists; and

• More likely to capture and reuse design, simulation and manufacturing knowledge in CAD, CAM and CAE templates and wizards.

Proficiency in these methods isn't a silver bullet, of course. After all, the inability to manage engineering changes efficiently is a massive problem in itself, causing costly delays in design and production. But the Aberdeen report did find certain adopted strategies that the best in class have proven for success, including the following:

1) Increase supply chain collaboration — The best in class are almost three times as likely to focus on increasing the ability to collaborate within the supply chain, according to Jackson. More interestingly, according to Aberdeen, 60 percent of SME respondents to the survey were Original Equipment Manufacturers (OEMs) "whose objective undertaking this strategy is to increase the efficiency of the supply chain below them as opposed to above them."

2) Pursue lean product development principles — SME products may be just as complex as those of large manufacturers, but because they simply do not have the infrastructure to support product development, "employing lean product development principles allows the product development stakeholders to eliminate wasteful activities, activities they can ill afford to support."

3) Capture and redeploy best practices — SMEs are capturing engineers and machinists' knowledge and best practices to increase efficiency "as a means to mitigate the risks of an aging workforce in the same manner as larger manufacturers." What is interesting, however, is that while laggards are twice as likely to be engaged in this activity currently, best-in-class SMEs have already pursued this strategy and have it in place.

"At the most fundamental level, it comes down to laser-like focus — determining what is core to your business and creating an effective network of strategic partnerships to manage what is non-core," Doug Britt, executive VP at electronics manufacturing services provider Solectron, recently wrote of competitive advantage at Supply & Demand-Chain Executive. "To create differentiation, companies are pursuing product innovation to enhance brands while building strong customer relationships by delivering improved service."

"It is always a cost battle," the Aberdeen report quoted one engineer as having responded. "The customer doesn't want to spend and our management is looking for cost reductions. With the price of steel going up and fuel surcharges on deliveries, it is hard to find ways to cut cost and keep quality where everyone wants it."

Sound familiar? All signs point to the agility — not only in design but also in process — as determining the market leaders of tomorrow.

Resources

Nimble Product Design: CAD/CAM/CAE for the Small to Mid-Sized Enterprise (Report)
by Chad Jackson
Aberdeen Group, June 2007

Nimble Product Design: CAD/CAM/CAE for the Small to Mid-Sized Enterprise (Executive Summary)
by Chad Jackson
Aberdeen Group, June 2007

Impact of Globalization in Creating Sustainable Competitive Advantage
by Doug Britt
Supply & Demand-Chain Executive, Sept. 17, 2007