Engineering change orders – ECOs, ECNs, ECRs – however you call them, are a key activity during design and volume ramp up stages, and usually continue throughout the product lifecycle. In many organizations, ECOs are the heartbeat of the product development process, indicating how well the organization defines and implements requirements, follows design guidelines, understands and implements manufacturability best practices, and meets quality standards. I have worked with manufacturing companies that even use the ongoing number of ECOs to measure design maturity, i.e. when it is ready to start transitioning to manufacturing. I disagree with this methodology, but that’s a subject for another blog post.
Fundamentally, ECOs reflect errors in requirements definition, design or manufacturing. They indicate waste. ECOs are disruptive and resource intensive, and mature organizations should make an effort to minimize the frequency and impact of ECOs.
Admittedly, with the time and resource pressures most manufacturing organizations face, some ECOs are perhaps inescapable, at least not in any business-practical way. On the other hand, research shows that many ECOs are the result in poor adherence to well-known best practices, overzealous engineering, and nonconformance with downstream guidelines and resources, all issues that should be easy to circumvent.
ECOs are Prevantable
I recently reviewed an analysis of more than 2,000 ECOs created over the course of three months at an industrial equipment manufacturing company. The chart shows the breakdown of ECOs believed to be preventable using reasonable process improvement efforts and those that are “inherent” to the process. The data suggests that nearly 70% of the ECOs fall under “preventable” categories.
This company has implemented some of the best practices described here and in my blog post on a related topic. The detailed financial analysis of potential savings goes beyond the scope of this blog post, but a conservative estimate suggests that this company is positioned to save approximately $15M annually. Process improvement and saving opportunities in your organization are going to be different, and you’d need to perform a similar analysis to estimate the potential savings that an improved process will yield, but I believe that 30-50% reduction in the number of ECOs is a practical target.
Join me to discuss the topic and the opportunities during an upcoming webinar.