In 2003, Thomas Friedman wrote in The World is Flat how ten factors, which he called ‘Flatteners,’ have converged to create a more level playing field in terms of doing business, making it much easier for organizations in developing countries to compete with developed world companies in a number of industries. One of the flatteners is supply-chaining, which he describes as “a method of collaborating horizontally – among suppliers, retailers and customers – to create value.”
He predicted that in order for organizations to succeed in this flattened world, they need to learn to work closer and more collaboratively with their suppliers. He used Walmart’s inventory and supplier management system as an example. The key to Walmart’s success is the exchange of information between the retail stores, Walmart, and its suppliers. Walmart is able to monitor how many of a product is sold at each location, and instantly instruct suppliers to create more product to replace that sold, even when those suppliers are in China, India or the Mid-Western US. This interchange, in addition to optimizing transportation and storage, has enabled Walmart to cut costs to the point where it’s almost impossible for competitors to compete with them on price.
Product development today has evolved into a technology supply chain and functions similarly. Original Equipment Manufacturers (OEMs) manage a complex network of suppliers, sometimes several layers deep, in order to develop their products. A typical PC purchased at an electronics store may be assembled in a factory in Thailand from hardware components provided by suppliers in China, Taiwan, India, and Japan. An automobile today is an assembly of hundreds of pieces or systems, developed by multiple suppliers. Ford may source its brake system for a new model from one supplier, who in turn may source the anti-lock brake electronic control unit (ECU) from another company, and the brake disk from yet another.
These product development organizations face a challenge that Walmart doesn’t, however. Getting a product to a shelf in a Walmart store requires a relatively simple flow of information. The store indicates the sale, Walmart passes that information to the supplier, the supplier creates the new product, and then the shipping information is managed as the product is carried to the store or stores. When a company like Ford sources a brake assembly from a supplier, the development of the assembly requires regular collaboration across corporate boundaries. Design information is passed back and forth to define the exact needs of that assembly, which are changing as the design for the automobile evolves. If the specification for the automobile’s chassis changes, the automobile’s new weight may need to be sent to the brake assembly supplier and the suppliers developing the power train so they can input the information into their models for testing.
This is further complicated by the increasing amount of software included in products across the spectrum. Software requirements for a Blackberry phone can be in the thousands, and each telecommunication company and market across the world has different demands. These requirements change rapidly, and so there is a constant flow of requirement and design information between the product development organization, its customers, and its suppliers.
Friedman also predicted the solution. He wrote “the more these supply-chains proliferate, the more they force the adoption of common standards between companies.” The automobile industry was the first to recognize this need, and a collection of organizations put together the Requirement Interchange Format (RIF) standard, now called ReqIF, with the intention of
- improving the collaboration between partner companies through enabling organizations to apply requirements engineering methods across company boundaries
- providing organizations with the ability to use the requirements authoring tool of their choice, and eliminate the need for suppliers to implement multiple requirements management tools to collaborate with all of their customers
- enabling better collaboration within a company, as information can be exchanged even if different disciplines use different tools to author requirements
I’m going to add to Thomas Friedman’s predictions with some of my own. Everything from household appliances to medical devices are becoming smarter, more networked, and more sophisticated, and the components that make them up are becoming more specialized. As products become more complex, supply chains are going to continue to lengthen and broaden, and the inefficiencies in how organizations collaborate today, usually through email and monthly or quarterly meetings, will compound. The successful hardware, electronics and software providers of the future are going to be those who can collaborate and partner with multiple suppliers and customers in real-time, to produce working systems, and systems of systems, and they’re going to need to be able to demonstrate that these products are compliant to process standards and safety regulations. In this environment, supporting a standard such as ReqIF will become more than a competitive advantage, it will become a necessity.