The automotive industry in India is one of the most hotly contested spaces. This is because per capita vehicle ownership in India is still very low, leaving a substantial gap between the potential demand for automotive products and their supply. The Indian passenger car market alone is expected to reach US$ 60 billion by 2027. To thrive in this sector, a typical automotive company must meet three primary needs: <ul><li>Continuously launch newer variants or updates of its current models with high frequency.</li><li>Frequently introduce completely new platforms or brands to address new consumer segments. Interestingly, each of these new platforms or brands will also require their own variants in due course after launch.</li><li>Comply with new regulatory requirements. Undertaking these regulatory projects quickly and promptly is a significant challenge for any automaker since failure to meet them could result in halted production, lost sales, and diminished market share.</li></ul> Meeting all these demands on time without significantly increasing resource investments is the primary challenge for any automotive NPD (New Product Development). This requires consistently high success rates in meeting timelines across various project categories, including regulatory, upgrades, and new platforms.<h5> </h5><h5>The current way</h5>Currently, companies in the automotive industry typically follow a conventional approach to ensure timely project completion. They set the project deadline and then work backwards to determine the start date. Historically, the more delays a company has experienced in previous projects, the earlier it tends to initiate work on new projects. This is done in the hope of providing themselves a buffer against future setbacks. Additionally, firms often believe that frequent reviews and proactive monitoring of timelines will help them maintain better control over projects. However, these strategies may exacerbate the problem. Project delays often increase, and companies may compromise on project scope to meet deadlines or face both issues simultaneously.  <h5>The flawed approach to meeting project timelines</h5>A common misconception is that starting projects earlier leads to faster completion, especially in delayed environments. However, this approach can be counterproductive. To illustrate the problem with this approach, let's consider an environment where projects are habitually delayed, and completion rates could be better, indicating that, on average, projects spend more time in the system. In this context, if we adopt the solution of starting newer projects earlier (to buffer against likely delays), we see a faster influx of new projects into the system while older ones remain stuck. These new projects, in turn, divert the attention and capacity of resources away from existing projects, further slowing down progress. This is especially true in NPD environments where resources are shared across multiple teams. As a result, the slowdown further reduces completion rates and increases the build-up of WIP, perpetuating the cycle. Therefore, the so-called solution becomes counterproductive to the system output. In many organizations, capacity is typically planned by determining the number of skilled personnel or machines required based on the anticipated project load. While this method may work in repetitive production environments, it is not suitable for New Product Development (NPD) environments. The work in NPD is mainly non-repetitive, and each project differs from the others. Output is challenging to predict due to varying project complexity, the expertise of assigned resources, and the level of collaboration among team members. As a result, capacity planning based on predicted output often leads to either overestimating or underestimating resources. When resources are underestimated, they are forced to handle too many projects simultaneously. This leads to resource switching, poor collaboration, delayed issue resolution, and reduced project output. On the other hand, overestimation leads to too few projects, underutilization of resources and a drop in output. <h5>The way out</h5>The failure mode in the flawed approach mentioned earlier—where projects are pushed into the system faster to compensate for chronic delays—teaches us an important lesson. It shows that the fundamental determinant of a project's speed isn't how frequently it's reviewed but rather the number of other projects competing for the attention of the same resources at that moment in time. When too many projects are handled simultaneously, the "per-capita" time each resource can dedicate to a project decreases, leading to a drop in project speed. Therefore, a better approach to capacity management in project environments, especially within the automotive industry, is to use the number of ongoing projects to measure capacity. Capacity is the maximum number of projects that can be executed simultaneously without losing speed. Adding more projects beyond this point will slow down the system and reduce output. To maintain system stability, it is essential to keep this number under control. Determining the optimal number of projects to undertake at any given time hinges on the capacity of expert resources to manage multiple projects simultaneously. These experts are often in short supply, and their involvement directly impacts a project's progress and quality. Although identifying the ideal number of concurrent projects may be challenging initially, adjustments can be made over time. In most environments, we typically reduce work-in-progress (WIP) by 70 to 80 percent and maintain it at that level. For instance, the results were remarkable when this approach was implemented at a two-wheeler manufacturing company. Over two years, the number of projects launched annually surged by 500%, and lead times were cut in half. Moreover, the company consistently met regulatory requirements on time, significantly reducing the substantial write-off costs that had previously been a common issue. In the highly competitive Indian automotive industry, balancing innovation, regulatory compliance, and resource management is critical for long-term success. Companies that can effectively manage their New Product Development processes better will be well-positioned to capitalize on the growing demand and navigate the complex challenges that lie ahead.

Key Takeaways

Explore the transformative approach to automotive NPD with a focus on strategic capacity management. Discover how optimizing project loads can significantly accelerate development times and increase efficiency in the highly competitive automotive industry.

Beyond conventional auto NPD: a smarter approach to managing capacity and timelines

The automotive industry in India is one of the most hotly contested spaces. This is because per capita vehicle ownership in India is still very low, leaving a substantial gap between the potential demand for automotive products and their supply. The Indian passenger car market alone is expected to reach US$ 60 billion by 2027. To thrive in this sector, a typical automotive company must meet three primary needs: <ul><li>Continuously launch newer variants or updates of its current models with high frequency.</li><li>Frequently introduce completely new platforms or brands to address new consumer segments. Interestingly, each of these new platforms or brands will also require their own variants in due course after launch.</li><li>Comply with new regulatory requirements. Undertaking these regulatory projects quickly and promptly is a significant challenge for any automaker since failure to meet them could result in halted production, lost sales, and diminished market share.</li></ul> Meeting all these demands on time without significantly increasing resource investments is the primary challenge for any automotive NPD (New Product Development). This requires consistently high success rates in meeting timelines across various project categories, including regulatory, upgrades, and new platforms.<h5> </h5><h5>The current way</h5>Currently, companies in the automotive industry typically follow a conventional approach to ensure timely project completion. They set the project deadline and then work backwards to determine the start date. Historically, the more delays a company has experienced in previous projects, the earlier it tends to initiate work on new projects. This is done in the hope of providing themselves a buffer against future setbacks. Additionally, firms often believe that frequent reviews and proactive monitoring of timelines will help them maintain better control over projects. However, these strategies may exacerbate the problem. Project delays often increase, and companies may compromise on project scope to meet deadlines or face both issues simultaneously.  <h5>The flawed approach to meeting project timelines</h5>A common misconception is that starting projects earlier leads to faster completion, especially in delayed environments. However, this approach can be counterproductive. To illustrate the problem with this approach, let's consider an environment where projects are habitually delayed, and completion rates could be better, indicating that, on average, projects spend more time in the system. In this context, if we adopt the solution of starting newer projects earlier (to buffer against likely delays), we see a faster influx of new projects into the system while older ones remain stuck. These new projects, in turn, divert the attention and capacity of resources away from existing projects, further slowing down progress. This is especially true in NPD environments where resources are shared across multiple teams. As a result, the slowdown further reduces completion rates and increases the build-up of WIP, perpetuating the cycle. Therefore, the so-called solution becomes counterproductive to the system output. In many organizations, capacity is typically planned by determining the number of skilled personnel or machines required based on the anticipated project load. While this method may work in repetitive production environments, it is not suitable for New Product Development (NPD) environments. The work in NPD is mainly non-repetitive, and each project differs from the others. Output is challenging to predict due to varying project complexity, the expertise of assigned resources, and the level of collaboration among team members. As a result, capacity planning based on predicted output often leads to either overestimating or underestimating resources. When resources are underestimated, they are forced to handle too many projects simultaneously. This leads to resource switching, poor collaboration, delayed issue resolution, and reduced project output. On the other hand, overestimation leads to too few projects, underutilization of resources and a drop in output. <h5>The way out</h5>The failure mode in the flawed approach mentioned earlier—where projects are pushed into the system faster to compensate for chronic delays—teaches us an important lesson. It shows that the fundamental determinant of a project's speed isn't how frequently it's reviewed but rather the number of other projects competing for the attention of the same resources at that moment in time. When too many projects are handled simultaneously, the "per-capita" time each resource can dedicate to a project decreases, leading to a drop in project speed. Therefore, a better approach to capacity management in project environments, especially within the automotive industry, is to use the number of ongoing projects to measure capacity. Capacity is the maximum number of projects that can be executed simultaneously without losing speed. Adding more projects beyond this point will slow down the system and reduce output. To maintain system stability, it is essential to keep this number under control. Determining the optimal number of projects to undertake at any given time hinges on the capacity of expert resources to manage multiple projects simultaneously. These experts are often in short supply, and their involvement directly impacts a project's progress and quality. Although identifying the ideal number of concurrent projects may be challenging initially, adjustments can be made over time. In most environments, we typically reduce work-in-progress (WIP) by 70 to 80 percent and maintain it at that level. For instance, the results were remarkable when this approach was implemented at a two-wheeler manufacturing company. Over two years, the number of projects launched annually surged by 500%, and lead times were cut in half. Moreover, the company consistently met regulatory requirements on time, significantly reducing the substantial write-off costs that had previously been a common issue. In the highly competitive Indian automotive industry, balancing innovation, regulatory compliance, and resource management is critical for long-term success. Companies that can effectively manage their New Product Development processes better will be well-positioned to capitalize on the growing demand and navigate the complex challenges that lie ahead.

Discover a more efficient way to manage capacity & timelines in automobile NPD. Insights and strategies by Vector Consulting Group. Read the blog here.

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