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Product life cycles are getting shorter, your development times too?

Product variants are increasing and product life cycles are becoming shorter and shorter. The media is rife with reports on these developments, such as articles published in the Tagesspiegel or PC Magazin, which focus on the increasing pace with which new smartphones and electronic devices are launched. But the speed is also accelerating in mechanical and plant engineering. This is also shown by a study of the Scientific Services of the Bundestag:

This development is putting the industry under enormous innovation and time pressures that are significantly amplified by the introduction of electronics in almost all products across all industries.

Increasing pressure on the industry

The trend to shorter intervals between product variants and generations make it increasingly difficult to implement traditional product development processes, which often include several prototypes and small series for continuous elimination of defects. This development is particularly critical in the electronic product segment.

According to Moore's law, the number of transistors on an integrated circuit doubles every 18 months; manufacturers incorporate the more powerful processors and electronic components into their new products.  The progressive introduction of electronics and digitization in previously analog products is also accelerating developments in traditional industries such as mechanical and plant engineering.

Reduction of development time while offered variety increases

The shortening of cycles inevitably leads to a faster sequence of development projects. As a result, R&D departments have to reduce the development time for individual product variants and product generations. The upshot is that a larger number of variants have to be developed in a given time frame.

Alongside the increasing variant diversity and accelerating pace, portfolios are being diversified to offer more and more customers in different markets tailor-made solutions for their specific applications. The current report of the VDMA (German Engineering Federation), Future Perspective Mechanical Engineering, sees increasing demand for customer-specific solutions and the opening up of new international markets as two major trends in German mechanical and plant engineering.

High pressure on development costs

Alongside increasing competition from new market participants and the associated cost pressure, the relative share of development costs correlates with the service life of a product. It is well known that the longer a product is on the market, the lower the relative share of development costs.

Conversely, this means that the relative share of development costs increases with a shortened product life cycle. R&D departments are therefore faced with the challenge of constantly reducing the costs of developing a product variant.

Increasing variety and ever shorter development cycles exemplified by the automotive industry

The example of the VW Golf shows how new models are being launched at increasingly shorter intervals. From the introduction of the first generation of the VW Golf in 1974 to the market withdrawal of the Golf V in 2008, product life cycles have been shortened from 9 to 5 years, a reduction of 45%. The cumulative sales of a product generation have developed in the opposite direction. The Golf I was sold a total of 6.8 million times, while the Golf V sold only 2.6 million vehicles.

While intervals between generations are getting shorter and shorter, variant diversity has developed in the opposite direction - the range of variants on the market has skyrocketed. In the 1980s, the Mercedes-Benz range comprised only 5 models. Today, Mercedes has 28 vehicle models on the market. What's more, customers can choose from an increasing number of options and configurations. There are 18,800 door trim variants for the Audi A6, while the BMW X3 is offered with 90,000 headliner variants…

The challenge in mechanical engineering - Faster, more versatile, less expensive...

The example of the automotive industry clearly shows the scale of the challenge. The same development is now seen in many areas of mechanical and plant engineering. For example, a study by Smart Variant.Con, a leading trade conference on variant management, shows that shorter development times are a key driver for process optimization in 52% of the companies surveyed. Another 48% cite more customer-specific products as a major driver.

Modularization - Optimize the diversity of variants while offering maximum choice for customers

The modularization of products makes it possible to reduce development time and cost by reducing technical variants. The VDMA study identifies modularization as one of the most important approaches for mechanical and plant engineering in order to be prepared for the opportunities and risks of the coming years:

Standardization and modularization aim at a portfolio with less variance and complexity at an overall lower cost level, without compromising the width and individuality of the product range.

Furthermore, the development of modular systems was identified as a prerequisite for the challenges and potentials of Industry 4.0. This is shown by the corresponding study on behalf of the Federal Ministry of Economics and Development, "Exploiting the potential of the application of Industry 4.0".

More than ever, a modular system of products, processes, machines and also software has to be driven forward, as modularization is an essential prerequisite on the way to Industry 4.0.

Increasing variety, shortened development times – A challenge companies must face

In more or less every industry R&D departments are struggling with the opposing objectives of developing more and developing faster. It is becoming clear that companies who want to stay competitive have to find an answer to this challenge.

Learn here how to meet these challenges with modularization and how to reduce development times and reduce costs with a modular system.

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Implement customer requirements with an intelligent modular product structure, reduce costs and drastically reduce product configuration. VDMA reports about an average improvement potential of up to 10% in relation to the overall business result and speaks of potential engineering savings of 15% in plant construction, as well as a drastic reduction in development times.

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