There are massive economic and political pressures for manufacturing companies (such as in the G8 countries) to which they are forced to respond. The combined pressures and responses are radically transforming the industry. The pressures include high-cost labor pools, and costly raw materials (e.g. steel and petroleum). The responses include internal consolidation, outsourcing to global product development, and assembly flexibility. The companies must change their operations to suit these.

Certain studies were performed on manufacturing product development providing an idea of the situation now in the industry including a 5-year forecast. These studies cover crucial sections among them business philosophy, product design tools, communication types and engineering efficiency. One of the features identified in the study is a clear rise in outsourcing to global suppliers, otherwise known as Global Product Development (GPD).

Global Product Development is defined as maximizing the financial and operational productivity of the product development process by spreading product development activities across multiple regions of the world in order to better match value-add to cost. In this context, the definition of “product development” covers marketing activities that identify and document customer needs.

Along with this it includes engineering activities that conceptualize, design, analyze and refine new product ideas; to activities that plan and document manufacturing, operation, and maintenance processes; to sustaining activities that make ongoing product changes and refinements.

The studies done clearly demonstrate that companies deploying GPD strategies gain considerable financial and operational benefits. Direct financial savings near 0.5% of company revenue and 10% of the product development budget can be achieved. Indirect savings are achieved by ther operational enhancements featuring 24×7 engineering and the formation of additional specialized skill capacity by reinvesting cost savings.

Several OEM’s have taken up this GPD model leading to restructured global design and operations for optimal utilization of trans-world resources, speed up product development thereby reducing expenses. Proceeding with the implementation of a GPD strategy requires the analysis of product development activities. A company must look at segregation of the high value-addition and the low value-addition activities and then determine the degree of portability of these activities.

The global product development service model is increasingly utilized in the current manufacturing world to maximize efficiencies and minimize costs.

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