.....contd.
PD resources fall into two basic categories: facilities, intellectual capital, funds and personnel on the one hand and competences, capabilities, skills and knowledge at individual and organisational levels on the other. It is not enough to focus only on the use of resources. They also have to be generated and created. Coming up with hit products from time to time is the key to the latter. Multi product companies like 3M have a target by which 30 percent of revenues have to be generated from products less than, say, four years old. Resources have also to be conserved, e.g., by utilising few basic platforms or aggregates (e.g., car underbodies and power trains) for generating the required variety. In this way, the firm realises economies of both scale (in the aggregates) and scope (in the end products).
At the core of the PD processes is the very simple sequence of designing the product, building prototypes, conducting trials, evaluating the results and finalising the design. But in practice it iterates repeatedly and pervasively until the final product emerges making its management a major organisational challenge - and a key corporate characteristic. Hence the PD process is judged by its speed to market, (output) quality and resource efficiency (or productivity). A crucial point about the PD process is that product cost to the extent of about 80 percent is irreducible at the end of it and only the balance may be amenable to Kaizen style improvements during manufacturing. Hence low unit cost has to be designed in ex ante and not sliced out ex post.