Design for market systems

From DDL Wiki

Revision as of 10:28, 23 July 2008

A new set of Design for X tools is emerging to help engineers avoid the old “throw-it-over-the-wall” approach to product development. Engineering researchers studying design for market systems aim to integrate market and production models into the optimization of engineered products by measuring and accounting for the downstream market consequences of design choices.

“Some products can be launched with scant knowledge of engineering details, but when high-tech products are involved, engineering analysis is critical to making good business decisions,” says Jeremy J. Michalek, Assistant Professor in the Department of Mechanical Engineering and the Department of Engineering and Public Policy at Carnegie Mellon University.

Mechanical engineers learn fundamental physical principles that allow them to design products for technical objectives like minimum weight or maximum efficiency. But when it comes to understanding what these technical tradeoffs mean in the marketplace, suddenly science turns into black magic. “Mechanical engineering students are often surprised to learn that quantitative tools based on fundamental principals can also be used to understand and predict the market consequences of design choices,” says Michalek.

A group of researchers around the world is working to integrate engineering and market analysis to support interdisciplinary decision-making and train the next generation of engineers to proactively support the firm’s strategic goals, advise policymaking, and drive innovation. Design for market systems research, some of which originated with the decision-based design program supported by the National Science Foundation, emphasizes predicting the market implications of design choices and making informed, intentional tradeoffs in design toward achieving market objectives. “We talk of market systems because we are looking into issues like the influence that competitive reactions, strategic retailer behavior, changes in public policy, and diverse dynamic consumer preferences have on engineering design. We are looking at systems-level economic interactions and the role they play in detailed engineering design decision-making.”

Michalek’s efforts have included the creation of a new course called Decision Tools for Engineering Design and Entrepreneurship, co-taught this past spring with Erica Fuchs, Assistant Professor of Engineering and Public Policy. Students in the course learned methods for developing manufacturing cost plans, including the implications of design choices on yield rates, labor, capital costs and ultimately the net present value of future cash flows. They also learned to build consumer choice models based on past purchase data and design-of-experiments-based survey data that allow students to predict how competitive a new product or technology is likely to be. Students formed teams and applied their tools to study several new technologies, including LEDs for stage lighting, a new surfboard design, lithium-ion laptop batteries, electrical power transmission components, and a patented dosimeter invention. One team even traveled to China to study manufacturing operations at the sponsor’s facility.

Michalek also received the National Science Foundation’s prestigious CAREER award to examine the effect that public policies, such as the new fuel economy standards passed by Congress last December, and market forces, such as rising gas prices, changing consumer preferences, and competitive pressures, will have on automotive design. “With all of the technical tradeoffs involved in designing automobiles and selecting among technologies like hybrids, plug-ins, and alternative fuel vehicles, it’s hard to understand the market and get policy right without some understanding of what’s physically possible to produce – and at what cost. Engineers have this experience and intuition, and they know how to build these models. Engineers need to have a stronger role in market planning and policymaking.”