Florence Charue-Duboc

Christophe Midler

How Concurrent Engineering Reconfigures Process Engineering Activity. The case of the chemical industry

We will illustrate this using an analysis of changes in process engineering in the chemical industry. This professional discipline, which forms a pivotal interface between upstream expertise (strategic marketing and research) and downstream players (manufacturers), has been particularly affected by the current changes. We will describe on three levels the features of the evolution initiated by the deployment of such projects. In the first section we describe the setting of the contributions of process engineers. In the second we focus on the content of their work. In the third part we deal with the implications for human resources management and the types of evaluation and contractualisation relationship existing between projects and departments.

The case studied here is that of Rhône-Poulenc, a major French chemicals group which has been undergoing strategic reorientation and a thoroughgoing review of its project management procedures since 1992. The data used have been built up in two ways. The first has involved the writing of monographs on recent projects (either now under way or just completed) based on semi-structured interviews with the main project players. Seven projects were examined in this way. The second is a real-time study of a project through attendance at committee meetings.

An Evolution of the Setting in which Engineering

Take Part

During the 1980s, the chemicals company under consideration adopted project management methods on the conventional PMI model for the implementation of production plant construction projects, following a strategy directed at the development of production capacity and economies of scale. In the early 1990's the company changed its strategic direction. It began to withdraw from industrial chemicals markets and to turn toward the market for products offering high performance, high value-added and high innovation content, these being pharmaceuticals, agrochemical and specialist chemicals.

The projects coherent with this kind of business have specific characteristics. This was to lead to a modification of project management practices to match the characteristics of this type of projects, which combine areas of technical uncertainty with doubt as to commercial outlets. A concurrent project management model emerged and was gradually deployed throughout the group (Charue-Duboc 97). This new model has led to radical changes at four levels inthe contribution of engineering to projects.

The Overlap Paradox: Longer Involvement for Shorter Projects

The first change is a significant lengthening of the time-span of the project involvement of engineering departments. This is the direct consequence of three principles underlying the new models. Firstly, the development of anticipation: the formation of a multifunctional team must make it possible to raise issues of manufacturability early in the design of the product and to incorporate into the definition of the product the views of customers trying it. Next, maximum postponement of the moment at which highly irreversible choices are made (precise technical specifications, volume, etc.) in order to avoid being caught unprepared by rapid market evolution. Finally, ensuring overlap between the various project contributions so that the handover from design to production takes place in the best possible conditions and that all personnel involved are ready to react if problems arise at product launch.

A paradox affecting several project tasks is evident here for contributors such as engineering departments. In order to shorten overall development times, the engineering phase is lengthened. The engineers' contribution begins earlier, at a point when the research work is not yet complete, and ends later, during plant start-up.

From a Stable Context to Flexible Work Situation

The second change to engineering work environment relates to uncertainty. The engineering is done at a time when numerous unknowns remain in the project. Conventional engineering organisation runs counter to this insofar as the work environment of each participant is clearly defined and contractualised at the outset when the project is broken down into distinct lots with associated detailed technical specifications.

From

Sequential Processes to Interdependent Contributions

The third consequence is the interdependence of the contributions of the various participants. The goal of the new model is to find the best overall compromise by encouraging dialogue and mutual adjustments between project contributors. Their roles are not defined solely by the technical parameters of their respective disciplines, but also by the needs or constraints of the others, which will have determining importance for the collective outcome.

From Multiple Experts interventionsto Dedicated People to a Project

Finally, these novel approaches underscore the importance of continuity in project teams. The permanent presence of given individuals allows the formation of a project memory for decisions taken, directions chosen and ways forward looked at and abandoned. Such continuity is also a precondition for management founded on responsibility for results: the same players drawing up the projections will be responsible for achieving them.

Whereas engineering departments have reasoned up to now in terms of specialist workloads to meet a given need, they are now asked to assign individuals to take charge of all the issues related to a project throughout the duration of the engineering work.

Change in the Content of Work

These changes in the setting in which engineering department take part changein profound ways the actual activity of engineers. We deal below first with the impact of the overlapping of early project phases. We then go on to describe in detail the novel constraints stemming from the nesting of engineering and start-up planning.

From a Problem-Solving Approach to a Progressive Reduction of Uncertainty Balancing a Solution-driven Approach and the Analysis of Needs in a Limited Time-Span

In the sequential model, the process engineer uses detailed hypotheses provided by the project client (product specifications, volume, unit location, etc.) and research departments (defined process parameters and conditions). Using this data, gathered together under the heading of "base studies", he goes on to specify the equipment (sizing, materials, etc.) and the operational parameters, grouped under the heading "detailed engineering". The work of a process engineer is essentially of a problem-solving type (Simon 1969) and terminates once the installation has passed its acceptance inspection.

Under the concurrent scheme, the engineer begins his work, as we have seen, in a context which is considerably less clear and stable: the precise characteristics of the future product have not all been validated and a range of industrial scenarios and process constraints are not yet known. The work of the process engineer must then be built on and around such uncertainties.

His first step is to seek to define the areas of uncertainty and the status of the information handled by the project team. It is essential here to build up as soon as possible a common knowledge within the project on its principal areas of uncertainty and their potential impact. In order to isolate these, the process engineer begins to investigate and to test the proposals with the various players : research, marketing and strategy. It is in fact the latter who possess the information on the project components furthest from complete validation. It is they who can define the degree of confidence which the various hypotheses merit. Generally speaking, the documents given to engineering design personnel refer very little to such considerations. This task of exploring, qualifying and validating basic data is far removed from the work of process engineer in the sequential model, in which he usually feels that the status of the data given to him is not his concern: "if the hypotheses are wrong, that is not my problem but management's".

The second step is to select the small number of parameters for which the preservation of maximum room for manoeuvre is valuable, the others being frozen. A contribution from process engineering is also essential at this point. By building the scenarios for the various hypotheses, engineers can give the team as a whole a feel for what is at stake in the gradual freezing of project parameters. For example, if the optimum temperature range is not defined, engineering can make a distinction between different temperature ranges associated with various types of material and equipment and set out the costs and lead-times for each. These conclusions can then be compared and contrasted with those of the researchers, who have their own goals and choices, as shown in Table 1 below. Each team participant is the possessor of information on these two alternatives. Through his personal expertise, he has information on price and quality impact, in addition to evaluation criteria intrinsic to his professional discipline. The choice comes up by consolidating available knowledge and contrasting/-comparing evaluation criteria. Adler (1995) refers to joint team co-ordination. This means that a researcher's explorations may be halted because the consequences of delaying the freezing of the parameter in question would penalise the project too much. Or the equipment may be over-sized in order to retain the possibility of later process selection in the light of gains expected by researchers.

For the process engineer, the approach is no longer here one of "problem solving", in which answers are sought for clearly defined questions (questions and constraints give the solution), but one which is, in a sense, the opposite: accepting or rejecting constraints, freezing hypotheses or keeping options open in view of the consequences that such choices will have on subsequent development. This means that the problem is formulated in the light of anticipated possible solutions (hypothesis and solution A or hypotheses and solution B). This ability to formulate around a question a set of hypotheses, each with its own area of validity and implications, requires competence which goes beyond that required to answer a clear question. Schön (1983) highlights remarkably in his "conversation with the situation" metaphor that design activity cannot be reduced to "problem solving". Modern concurrent engineering approaches assign considerably more importance to the definition of problems and the building of working situations on constraint-based frameworks. Such methods therefore require even greater professional expertise in the relevant field.

The third step is to ensure the control of convergence on the parameters for which delayed specification has been chosen: milestones, control and vigilance. It is essential that process engineering should have responsibility to channel such convergence, given that it will have the task of assessing the required duration for the various sequential stages. It will also be process engineering's task to define the schedules by building back from the latest possible decision milestones, the dates at which design studies must be complete and item availability likely to influence choices. This department is therefore well placed to co-ordinate interactions within the project team by obtaining from the other players the information needed at a given date.

The description of design activity which we give above, on the basis of the analysis of the deployment of the concurrent model in a chemical company, has similarities with set-based design as conceptualised by Ward et al. (1995) using Toyota's design methods. The first step highlighted by us relates to the identification of areas of uncertainty and the small number of parameters which can effectively be considered to be fixed. The "impose minimum constraint" principle associated with setbased design fits this same logic. The second stage is to define hypothesis/solution pairings, starting out from the various solutions and reserving the option of late freezing of certain parameters. This procedure is similar to the following principles defined by Sobek and Ward (1996): definition of the feasible region, communication of sets of possibilities, exploration of tradeoffs by designing multiple alternatives, seeking a solution robust to the physical market and design variation, and smooth narrowing down of the sets. Finally, the last stage, the control of uncertainty, corresponds precisely to their "control by managing uncertainty at process gates".

How to Organise Engineering Activity with Downstream Rationale ?

We now come to the downstream part of the design process: the finalisation of engineering studies and their interfacing with the needs of plant operators. One of the first effects of the concurrent model for engineering is the systematic validation by downstream project players -plant operators -during the design work. The purpose of this is to reveal as soon as possible any problems which could otherwise arise in later phases. An example of this would be the inspection of installation scale models. The views of plant representatives are sought at this point in order to avoid demands arising at the final acceptance inspection stage. Modifications are obviously less costly (only the drawing needs to be redone) when problems are identified on a scale model, both financially and in terms of lost time, than if they are spotted when the unit has been built and the installations need to be physically altered.

For the design engineer, the aim is to bring out constraints stemming from operational management at a stage when their incorporation in the project will be less onerous. This leads to behaviour which, to some extent, goes against nature in that it involves going out to look for problems, and even to encourage their appearance. But beyond this, it involves understanding the needs of the plant and modifying project implementation to meet those needs.

A second consequence relates to planning logic. In the traditional model, the sequential unfolding of the various stages allowed each trade a high degree of planning autonomy within its own sphere, since its constraints were placed at its initial and final milestones. In the concurrent model, in which project schedules are nested, engineering, in planning its activities, is obliged to take account of logic totally foreign to its own preoccupations. An example of this is the planning of the construction and hand-over of the installations. The plant schedules acceptance inspections by line of piping, commencing with the utilities (i.e. air, water, etc.) and continuing by process step, with the objective of verifying compliance with process diagrams before sending in water and then product. Engineering plans plant construction and acceptance inspections by contract lot (electricity, piping, thermal lagging, etc.) and by supplier, since the need is to coordinate specialist contractors and to initiate payment once their respective tasks have been completed. We therefore have here two types of planning logic which are completely different, but equally relevant given the objectives of the two players.

Interfacing two sets of logic to accelerate the speed of startup leads to extra and major constraints on construction planning. The task of the process engineer is to make enquiries to determine the priorities of the plant operators and their planning logic. He must then negotiate compromises since each player' preferences generally do not match spontaneously.

A third consequence of the implementation of the principles of concurrent engineering is that maximum advantage must be derived from each project stage to ensure maximum progress across the board. An example of this is the acceptance inspection phase. Its main purpose is to verify the compliance of the installations with the drawings, but it can also serve the purposes of operational training. It does in fact provide a marvellous opportunity to learn to operate installations in the field. Seizing the opportunity provided by acceptance inspections to further such skill acquisition enables this to be done earlier, saving time at start-up.

Such extraction of every possible advantage from each phase requires that each contributing trade must be highly transparent for the rest of the project. All players must be made aware of opportunities which can be exploited to good effect. For example, if the installations are not ready as planned for acceptance inspections, to what tasks can the teams be assigned? Conversely, if the teams are not ready for work, acceptance inspections will be delayed.

A fourth change relates to the ways in which the expertise of each discipline can be put to use for the project as a whole. Thus, players on the engineering side may be asked to contribute, on the basis of their skills, in activities which do not fit the standard profile of their professional tasks. For example, they may be asked to involve themselves personally in the training of the future operators of the plant, which enables direct transfer of expertise but is not always perceived as being part of the professional duties of engineers.

Toward New Organisational Artefacts for Knowledge Management and Staffing

These changes in the setting in which process engineers take part require a new look at the ways in which process engineering departments are organised both internally and in their relationship with projects

Skills and Careers Management

For many years now, engineering sectors have been subject to a powerful movement toward specialisation and standardisation of design activities. The outcome of this for design is a narrow compartmentalisation of skills and a formalism described by Mintzberg as "mechanistic bureaucracy" (1979), a model classically adopted in manufacturing industry. This type of organisation is obviously ill-suited to the new forms of activity described above, making it impossible to respond to the requirement of continuity in project contributions given the fragmentation of the expertise required between dozens of different players needed by several different projects. Furthermore, the implementation of standardised procedures is incompatible with the new activities involving exploration during the early project phases.

While it seems clear that this situation will see profound evolution, the alternative organisational models meeting the needs of concurrent engineering are considerably less evident.

Another typical configuration which could offer an interesting point of reference is "professional bureaucracy" (Mintzberg 1979). In this structure, which can be observed in hospitals and universities, the responsibilities and autonomy of the operational personnel (doctors, teachers, etc.) are much more highly developed than in the preceding model. Such a configuration is certainly better suited to certain requirements of concurrent engineering, particularly its ability to provide indepth diagnostics and initiative, but it also possesses more problematic aspects which relate to the roles described above. These centre on three issues.

The first relates to the interfacing of the different fields of expertise. The definitions of these are undoubtedly less narrow than in the first configuration, but professional bureaucracy remains based in principle on a compartmentalisation of expert domains: the expert worker's contribution stops at the boundary of his allotted field. That contribution presupposes initial "sorting" (a patient is steered towards a given department or different disciplines are balanced in drawing up a course of study) and the expert has little interest in integrating his contribution into a greater whole (e.g. the complete itinerary of a patient during hospital treatment (Minvielle 1996, or the student's overall study programme). Assessment and evaluation of individuals are based on their field of action (peer judgement) and their careers are marked out within that same territory. In this type of system, the overall success of a project is determined by negotiation of interdisciplinary compromises and solidarity between different contributors is not promoted. One then observes the appearance in engineering departments of personnel management systems using several assessment and incentive schemes: for the short term a system of incentives encouraging involvement in projects (assessment of the experts by project management, bonuses linked to successful completion of key development milestones); for the medium term, career management building on the contributions made by the employee to the department (in addition to evaluation by the department head, career paths alternating between project and technical management posts).

The second relates to co-ordination with the other project players. In a professional bureaucracy, skills remain essentially unarticulated. Experts contribute on a basis of trust and lack of transparency, which is difficult to reconcile with the processes of negotiation and control of uncertainty described above. Given this fact, the most advanced management methods demand the explicit definition and formalisation of individual expertise. This is a difficult approach to implement since it is frequently perceived in this social context as a loss of trust and the imposition of management control over the expert.

Finally, capitalisation and transfer of skills. Learning processes in professional bureaucracies are based on processes of socialisation and tacit transfer of knowledge by long and poorly formalised interaction between "senior" and "junior" staff. This type of transmission is undermined by the fragmentation of the professional group between projects, as it is by the assignment of experts to immediate project objectives rather than to the transmission of their skills within their discipline. There is here a long-term risk for the very existence of the department if it cannot maintain its expertise and renew it to match on-going scientific and technological advances. But it also holds a risk for projects when chance and priorities result in the assignment of relatively inexperienced workers. The role of hierarchical structures is an essential one if the process of exchange and dialogue between experts is to be rebuilt and revived: the allocation to projects of pairings of part-time senior staff members and full-time junior staff, management of interproject skill networks, and so on.

It can be seen that the search for answers to the problems raised by concurrent engineering for engineering departments demands the invention of new organisational configurations which are hybrids compared with the ideal forms described above. Over and above the difficulty of the development of new organisational schemes in itself, the management of the dynamics of the individual disciplines must take account of the vitality of models to which the institutionalisation of past years has given great coherence and legitimacy.

Resource Allocation Rules and Contracts Between Project and Department

In the company under consideration here, engineering departments are financed by a system of internal billing. Profit centres (or "Strategic Business Units") pay for services provided to projects according to a contractual scheme similar to that used for outside engineering firms. But do such financial relationships, based on the PMI contractual model for major civil engineering projects and the construction industry (Midler 1997), provide a good system of incentives for the adoption of the new professional practices involved in concurrent engineering?

As we have seen, the new methods owe their effectiveness particularly to anticipation and continuity of project contributions. This is reflected in a relative increase in the cost of engineering studies, which is theoretically more than offset by gains in net sales (reduction of lead-times to market) and the elimination of extra costs arising from system malfunctions (fewer project changes, reduction of losses during start-up), these being far less numerous and onerous than in the traditional sequential approach.

In the light of the above, the first risk arising from the conventional contractual approach is that it is too tightly focused on maximising the reduction in the initial projections of overall engineering costs. The engineering service provider responds by limiting his contribution. The outcome of this is a tendency to concentrate engineering contributions over as short a time-span as possible to enable staff to be reassigned to other projects, the purpose being to make maximum use of expert resources. This leads to a situation which runs counter to the principles of anticipation and project player continuity. Effective implementation of the concurrent model therefore presupposes that the billing-based approach is, in a sense, reversed: rather than starting out from "necessary" tasks and deducing from them the resources which are "indispensable", the aim must be to define the resources to finance the retention of key expert personnel throughout the relevant period. The various financially viable tasks which can be given to the process engineer can then be sought, with a view to providing him with a workload spread over the entire duration of the project. This makes it possible to avoid reassigning him to another project between the end of the design phase and startup.

Unless such thought is given to the boundaries of engineering's contribution in concurrent projects, there is a major risk that projects will be subject to the ebb and flow of supply and demand in the engineering market. During periods of work overload, it will be very difficult to negotiate the retention of a contributor's services throughout the duration of the project or his participation in activities judged to be marginal by his department (participation in training for example). Conversely, when the engineering department is under-employed, the project will be in a much better position in such negotiations, on condition that it can finance this continuity.

The other problematic aspect of the traditional contractual scheme relates to the initial formulation of project objectives. The contractual model lays down a straightforward division of responsibilities between the project client, who must set out in detail the targeted objective, and the project builders, who undertake to achieve that objective. A precise and detailed set of contractual specifications is the cornerstone of the economic relationship binding the parties.

This type of relationship acts as a brake on the implementation of the concurrent engineering model, in which, on the contrary, the aim is to fix as late as possible technical and operational features surrounded initially by considerable uncertainty. Traditional contractualisation in fact encourages engineering departments to avoid starting any design work until the contractual specifications have been finalised in every -15 -detail, and to bill heavily for any changes made thereafter. If, on the contrary, anticipation and interactive exploration of problems and possible solutions are to be encouraged, the need is to invent new contractual modes which incorporate the acquisition of project knowledge and the gradual freezing of the details of the contractual specifications. This type of system should offer financial encouragement to engineering departments to develop the design procedures described in the second part and it can also commit the project director, as project client, to clarification and acceptance of the risks associated with areas of uncertainty in the project. The reader is referred to Chapters 12of the present volume for novel approaches to contractualisation on the above lines.

While the literature on contracts is developing extensively at the present time, it remains focused on inter-company relationships. It can be seen that similar issues relating to internal billing arise within companies. Contractual structures designed to underpin alliances between companies can also provide a starting point for the adaptation of internal contracts.

The 1990s are witnessto a revolution in design organisation as radical and wide-ranging as that experienced by production departments in the 1980s. The first phase of that revolution essentially affected the co-ordination of the various disciplines contributing to projects and the role which embodied such coordination: that of the project manager. Today, a second phase has begun which involves a thorough review of the various departments involved in product design. We have seen in this chapter, with the example of process engineering, that such a review extends from individual practice through to overall departmental organisation and financial relationships with projects. Similar observations could be made for other professional domains such as research and marketingdeveloped in the following chapters.

Table 1 :

 1 A example of comparison between two development scenarios from different professional perspectives.

	Strategies for action \	Specify temperature without having all results	Do not specify temperature. Wait for further information.
	Project players
	Research	Impact of a wrong decision:	Ability to deliver results by defined
		product quality, efficiency	deadline
	Project	Financial impact on the	Acceptability of uncertainty
	Manager	project of poor production	for investment
		efficiency at this stage
	Customers	Acceptability of product	Ability to validate product by
		at lower quality level	defined deadline.
	Engineering	Extra capital outlay if	Latest date by which this parameter
		temperature ends up having	must be specified. Extra cost
		to be changed	involved in studies for several
			scenarios


Gilles Garel
email: garel@mlv-univ.fr

Christophe Midler
email: .midler@poly.polytechnique.fr

Mars

Front-Loading Problem-Solving in Co-Development: Managing the Contractual, Organisational and Cognitive dimensions 1

Keywords: concurrent engineering, co-development, contracts, learning, die design construction, electronics, chemistry, pharmaceutics

Front-loading " problem-solving is one of the major strategies to reduce development costs and development lead time. In co-development situations, the implementation of such methodologies rises specific questions, due to the difficult partition in responsabilities and skills between the car manufacturer and the supplier, especially when customer and supplier contributions cannot be clearly interfaced in a " black-box sourcing " relation.

This results in a difficult and permanent debate about design modifications.

The article analyses such a co-development situation in the case of a car manufacturer and its die design and engineering suppliers. The case illustrate how to combine organizational integration (i.e. co-localization, shared development methodologies) with new economic contracting rules which create front-loading problem-solving incentives for the two partners. We compare the economic outcomes of a traditional process with a co-developped project, from the viewpoint of both the customer and the suppliers.

The study demonstrates how co-development played a major role in reducing the number and cost of modifications for the customer. The benefits which suppliers can earn depend on their ability to involve in the project in terms of design and engineering capacity at an early stage. These results generate theoretical outputs which bridge the gap between incentive and contract theories on one side, and cognitive and learning fields on the other.

Introduction

" Front-loading " problem-solving [START_REF] Thomke | The Effect of 'Front-Loading' Problem-Solving on Product Development Performance[END_REF] is one of the major strategies to reduce development costs and development lead time (Midler, 1995, p 369). In co-development situations, the implementation of such methodologies rises specific questions, due to the difficult partitions in responsabilities and skills between the car manufacturer and the supplier. The problem is particularly important when customer and supplier contributions cannot be clearly interfaced in a " black-box sourcing " relation. The result is a difficult and permanent debate about design modifications.

The article analyses such a co-development situation in the case of a car manufacturer and its die design and engineering suppliers. For the car manufacturer, the target is to reduce the number of dies modifications number and thereby the budget, which has a major impact on the global performance of the projects. But on the other side, in the traditional relationship, modifications appear for the supplier as a important complementary revenue. Therefore, the codevelopment efficiency depends on the capacity to combine organisational integration (i.e. co-localization, communication, ...) and adapted shared frontloading methodologies with new economic contracting rules which create frontloading problem-solving incentives for the two partners. This article analyses a case experimenting such a combination of new organizational and contracting co-development practices. It is based on interactive research conducted with an European auto-maker, and of a representative sample of the company's stamping-tool suppliers [START_REF] Garel | Analyse d'un codéveloppement[END_REF]. Following the outsourcing of stamping operations in the early 1990s, this auto-maker, which we will refer to as "X," wished to evaluate its new partnerships with suppliers. In the context of a study conducted over a period of two years, we were able to cross-analyse the viewpoints of both the customer and its suppliers. In order to assess the profits and losses generated by co-development, we did a comparative study of two successive automotive projects: a TR (Traditional) project, conducted without co-development from the late 1980s to the early 1990s, and the following4 , a CD (Co-Development) project, pioneered jointly with the toolmakers in the early-mid 1990s. We analysed the performance of four European tool-makers (A, B, C, D) participating in both the TR and CD projects. The field study was conducted from December 1995 to July 1997. We drew on internal data collected from Auto-Maker X and its suppliers (files, reports, notes, etc.); on reassessments made at our request (submitted by the firms); on interviews (over thirty); and on regular cross-checking carried out by the steering committee of the interactive research.

In the first part of this article, we will analyse the differences in the two studied development processes, by refering to our characterization of the co-development concept. In the second, we present our comparison of co-development performance with traditional design process one. The research was targeted on the development and investment costs. An important characteristic of our methodology is that it reflected not only the car manufacturers viewpoint, but also the suppliers economic vision (the methodology was validated both by the automaker and the suppliers). We present the results of this analysis in section 2 .2.

As will become apparent, these results substantiate the hypothesis of a "win-win" situation between customer and supplier, although not all suppliers reaped the same benefits. In the third and final section, we discuss our results through an analysis of the advantages accruing from co-development in terms of two variables: supplier engineering skills; and long-term stability of the automaker/supplier relationship. This analysis supports the need for systematic integration into the theoretical design-performance model of organizational, incentive and cognitive factors.

Comparison of TR and CD processes on organizational and contract variables.

Many authors have contributed to define the partnership and co-development notions. Consistently with those of those [START_REF] Lamming | Beyond Partnership: Strategies for Innovation and Lean Supply[END_REF] and [START_REF] Liker | Engineered in Japan, Japanese Technology Management Practices[END_REF], we will characterize co-development processes in terms of five conditioning factors [START_REF] Midler | Le co-développement: définition, enjeux et problèmes[END_REF]. The idea being that codevelopment efficiency is the result of a global coherency of this set of variables.

-The early selection of a supplier, based on strategic criteria, for a cooperative endeavor lasting throughout the duration of the development process.

The die tools development includes two phases (see figure 1): phase 1 is a design period and ends in a technical specification freeze of the tool. Phase two is a production period of the tools. For project TR, Phase 1 lasted for 4 months, compared to 18 months for Project CD. Phase 2, on the contrary, was shorter for Project CD. It has been further extended for more recent projects5 .

For CD Project, the customer-supplier relationship was formed at the beginning of phase one, the selection being made on the basis of positive previous experience with the suppliers, and on the customer's long-term strategic objectives. For TR project, this relationship was established only after the technical definition of the new product had been completed, at the end of phase 1, on the result of the cost bidding process. -Supplier involvement affecting a broader operational perimeter.

Co-development implies a shift from basic-component supply to transactions involving complete vehicle sub-systems. In the metal-stamping field, assignments to tool-makers are today made by the total lot, and are based on the physical perimeters defining an entire system (for example, all the stamped pieces for a door); whereas, formerly, assignments were made component-by-component and awarded to the lowest bidder. This way, interface problems between individual components (the geometric fit and visual appeal of the body as a whole) are all handled by the same supplier. Figure 2 gives the difference between TR and CD projects concerning components in a lot assigned to major supplier. A design process inevitably implies unforeseen problems and modifications not included in the original specifications. The skills which need to be mobilized for a design operation are hard to define and coordinate [START_REF] Schön | The Reflective Practitioner, How Professionals Think in Action[END_REF][START_REF] Nonaka | A Dynamic Theory of Organizational Knowledge-Creation[END_REF].

It is therefore more important to learn quickly together than to initially agree on a detailled (but rapidly obsolete) definition of the future product. In this perspective, the agreement between two firms must be consistent in terms of joint work procedures and the means for dealing with unexpected problems or revised objectives.

The comparison of TR and CD project is typical of such a transition. In TR project, the machine tools suppliers did not participate in the design phase.

Consensus was reached on a basis of theoretical initial technical specifications that had not been validated by those (the suppliers) who were supposed to implement them. In CD project on the contrary, the machine tool suppliers were involved in the colocated project through residential engineers from the beginning of the design. Common methodologies were negociated to identify problems quickly, to jointly formulate possible solutions, evaluate their economic impact, implement them, and finally optimize the elimination of decision-making inertia when effecting the required modifications. Those methodologies implied development of mock up, problem solving data base, sharing of the CAD specifications… During the course of the project, the proposals made by the various players in the design process were open for discussion and revision.

Typically, suppliers were supposed to alert and ask for design changes when they anticipated feasability problems. They were supposed to adopt such a proactive alerting role, as opposed to a passive reaction to customer inspections.

-The supplier's commitment to an overall result, measured in terms of quality, cost, and time.

In co-development, the supplier's commitment covers the total design / testing / production / delivery process. The customer must be certain that the supplier will use its significant margin of manoeuvre to carry out the co-development project in the direction initially planned.

Due to this principle, the initial contract in project CD fixes globally the remuneration with special clauses dealing with modifications, as described in the following §. The shift to co-development transforms negotiated pricing into effective remuneration for suppliers; whereas budget overruns were usual under the traditional system.

-The integration of economic and technical imperatives : the contracting rules about modifications

In traditional projects the economic relation is ruled between purchasing and commercial agents who are largely cut off from the engineering arena of manufacturer and supplier. The dissociation is also temporal : first there are the technical decisions within the auto-maker, then the bidding and the economic negotiation, then the technical achievement, and lastly, the negotiation about the modifications. Under co-development, economic negotiation becomes a process of building value through the design process (during which technical variants are costed, the effects of modifications evaluated, etc.). Suppliers' remuneration is the result of specific achievement benchmarks, rather than solely made on the basis of accounting considerations formulated by the customer's purchasing department.

The contracting rules about design modification experimented on the CD project is typical in that perspective. Modifications are a classical problem in the auto industry. They can vary in importance: from the shift of an opening on a component, to a change in the overall style of the product. Budget overruns caused by modifications could previously reach 20% to 30% in the studied firm on a given project. For the auto-maker, a major advantage of the shift to codevelopment is that modifications tend to be reduced in number. Modifications carried out during Phase 2 are the most costly. To embark on Phase 2 is to embark on the stage of project irreversibility, or project reversibility only at an extremely high cost. Tardy discovery of the need for modifications involves heavy additional costs, since at this stage, the modifications must be made on the finished tools rather than on the preliminary designs. In other words, modifications can be very valuable during Phase 1, but are extremely costly during Phase 2.

Under the sub-contracting system, each modification becomes the subject of an amendment to the initial contract. Suppliers are free to negotiate a low initial price, since they know they will have an opportunity to "hike it up" during the life of the project. In order to persuade suppliers to play the game of early modification identification, the co-development contract includes (importantly) a clause specifying that no additional costs will be paid for late identification of the need for modifications. A comparison between the traditional and the codevelopment systems is quite illuminating in this regard. Under the sub-contracting system, Auto-Maker X is wholly responsible for modifications. In Phase 1, since suppliers do not participate in the design phase of the project under this system, modifications cannot originate with suppliers.

During Phase 2, if the tool-makers suggest modifications, Auto-Maker X must pay the costs, since he bears sole responsibility for the design. style changes, modifications in the safety system, etc.). This compensation, which reflects an improvement in tool design, leads to a reduction in tool costs (e.g.:

reduction in the number of tools per vehicle-model from five to three). This clause motivates suppliers to provide any expertise not possessed by the auto-maker at the earliest possible opportunity. The converse of this argument runs as follows: if the auto-maker were to pay for all the modifications originating with it, toolmakers would not be motivated to compensate for them and would thus become less involved in the planning stages.6 This incentive system has already been observed at firm J by [START_REF] Aoki | Sur certains aspects des conventions dans l'entreprise[END_REF], who maintains that the more auto-makers protect sub-contractors from risk, i.e. the more responsibility auto-makers assume for cost overruns resulting from modifications, the less incentive suppliers will have to pursue innovation on their own.

(2) When suppliers pay the costs for Phase 1 modifications, they are encouraged to propose only those improvements that will result in lower tool costs. This is because, when suppliers lower the cost for tools during Phase 1, they improve their own profit margin, since they are contractually guaranteed payment at the price fixed during initial negotiation. Improvements originating with suppliers "go straight into the suppliers' own pockets".

(3) Auto-makers have an incentive to identify themselves needed modifications during Phase 1, since they will have to pay unanticipated modifications during Phase 2 themselves. This is the only exception to the fixed-price nature of the contract.

(4) When assuming total responsibility for tool design under co-development systems, suppliers pay the costs for all modifications originating with them. The high cost of Phase 2 modifications, acts as an incentive for identifying the need for modifications during Phase 1.

To sum up: since all Phase 2 modifications represent increased costs for the party identifying the need for them, this acts as an incentive for early identification.

During Phase 1, suppliers are motivated to reduce the costs of the tools for which they are responsible by improving their design.

EVALUATION OF CO-DEVELOPMENT COST PERFORMANCE

Methodology.

Our study is comparative, evaluating the respective results of two projects: one carried out according to the traditional sub-contracting approach (TR project), and the other according to the conditioning factors described above (CD project). Our approach is differential: we have measured the performance differentials between TR and CD projects. Hypothetically, the profit/loss differential observed between the two projects can be attributed to the shift (in one case) to the co-development method. Both projects studied were very similar in terms of vehicle-model, year of launching (less than two years of difference); also economic assessments were made in constant French francs (base: year of TR project). Furthermore, the basis of comparison for aggregating data was the same.

Our comparison is based on the analysis of three cost indicators: the estimated cost, the negotiated price and the value of modifications.

-In order to evaluate Phase 1 performance, we measured, for all tools on Projects TR and CD, the differential between tool cost at the beginning of Phase 1 (or estimated cost) and cost of the same tools at the conclusion of Phase 1. The first cost corresponds to the initial technical evaluation of the tools. We call this "estimated cost," and it serves as the basis for all of our measurements. Initial specifications for the tools are provided by the systems-engineers of Auto-Maker X: the customer knows how to specify the type of tools it wants to receive from the supplier. The same method of calculation-a widely recognized one, employed by suppliers-was used to determine the two costs on both projects.

Calculations that do not appear were made for research purposes by the methods department at Auto-Maker X.

-In order to evaluate the impact of co-development on the auto-maker-supplier negociation, we have measured the differentials between estimated tool costs and costs negotiated with suppliers for TR and CD Projects.

-Finally, we have measured the value of Phase 2 modifications as a percentage of estimated tool costs for TR and CD projects.

The above indicators could be documented with the auto-makers data. The access to suppliers data was more difficult. These suppliers were competing with each other and were conducting negotiations with Auto-Maker X at the time of the research. The problems were solved due to both the credibility previously established by the field researcher [START_REF] Garel | Réduction du temps de conception, concourance et savoirs professionnels: le cas de l'emboutissage dans les projets automobiles[END_REF], and to lengthy discussions undertaken with each supplier. A questionnaire and survey agreement enabled each supplier to understand our study objectives, and to prepare for each of our visits. Our investigation sought to evaluate the effects of co-development on the strategy, organization, and resources (human, design, plant, etc.) of these firms;

and on the customer/supplier relationship from the viewpoint of the suppliers (commercial negotiation, contract signing, work at the planning stage, etc.). Two studies devoted to modifications for TR and CD projects and to the economic performances of these firms were also conducted.

Results of the co-development performance measurement

-A reduction in tool costs. Co-development generated a 7% reduction in tool costs at the end of Phase 1, whereas the traditional sub-contracting system posted a cost overrun of 11%. A tool-by-tool study shows that the reduction for the CD project reflects improvement in tool design during Phase 1, i.e. during participation of suppliers at the planning stage. For example, Supplier A succeeded in improving the process for one lot of tools under the CD project by reducing the number of tools from 12 to 4, representing a cost reduction of 48%.

By contrast, the TR project registered an increase in the complexity of the tooling process during Phase 1 due to problems with delivering pertinent expertise in a logical sequence during the planning stage, to the lack of an improvementincentive clause, and to the absence of the suppliers' own experts. We concluded that, under co-development, the Auto-Maker achieves savings equal to the cost overruns on the TR project (11%), and that suppliers will increase their profit margins if they can reduce tool costs (7%).

-An increase in the negotiated price. For the two partners, what effect does codevelopment have on the negotiated tool price? It is clear that under co-development the auto-maker pays more for tools during the initial negotiation, since the suppliers must anticipate modifications and profit margins during a single negotiation, with no hope of renegotiation. In fact, under the CD project, negotiated tool prices averaged at 23% higher than initial costing or cost estimates. Under the TR project, the differential was 16% (discrepancy = 7%, which is a benefit for the suppliers and a loss for the auto-maker). For suppliers, this differential measures the cost of future risks. Auto-Maker X did not, however, "push" the negotiation too hard for this initial co-development experiment under the CD project.

-A sharply reduced investment in modifications. The number of Phase 2 modifications was significantly reduced. They accounted for 49% of estimated tool cost under the TR project, compared to only 15% under the CD project (delta = 34%). In other words, investment in modifications under co-development were divided by almost 3.5, the result of a major reduction in modification volume.

This observation is unique in the history of the automotive industry. The 34% reduction of modifications cost is clearly a profit for the auto-maker. We agree with the suppliers in considering that the reduction in modifications constituted a net loss in revenues, compensated by advantages obtained in production management (plant-flow equalization during Phase 2 was much easier, and production-times were shortened), and by the possibility of doing other business (income-generating business) during the time-period freed by modification reduction. Therefore, as a working figure, we have entered 0.

The figure 5 presents these results as a profit-loss balance sheet for auto-maker and suppliers. There is a clear differential in these results: between profits and losses, between profit levels, between customer and suppliers, and among the various suppliers.

How can these be explained?

EARNING PROFITS FROM THE CO-DEVELOPMENT SITUATION

Co-development is advantageous to those suppliers capable of developing their design expertise on a long term.

Supplier expertise

Tool-maker profitability is heavily on engineering expertise. We have noted and verified a strong positive correlation between supplier performance and supplier design-capacity as measured in a given supplier's (1) human resources [START_REF] Kay | Foundations of Corporate Success: How Business Strategies Add Value[END_REF][START_REF] Grant | The Resource-based Theory of Competitive Advantage: Implications for strategy formulation[END_REF] The Supplier B and D age-pyramids are relatively older than those of Suppliers A and C, a difference explained by the fact that design-department employees tend to be younger than those in other departments. It also reflects the considerable investment made by Suppliers A and C in a youthful and highly-qualified work force.8 These young recruits also reflect heavy technological investment in digitalization and simulation-investments9 enabling these suppliers to reduce design time and improve the management of unforeseen Phase 1 modifications.

7 N.B. for reasons of confidentiality, we decided to express the data relative to Suppliers B, C, and D in a percentage of the base 100 corresponding to Supplier A, and to mask data on sub-contracting rates for design studies (average rate = approximately 50%).

Tool-Maker D has not developed a design department or planning facilities and, in the absence of a project team, this firm-small in size and European in scopecannot offer co-development expertise to its customers. Its design department has not been significantly modernized. Studies are not digital, and investments in CAD are low. Despite a large design staff in terms of percentage of total work force, Supplier D sub-contracts much of its design-study work. However, this sub-contracting is poorly handled and creates a dependency situation for the toolmaker in relation to his own design-study suppliers. 10 The lack of project structure has created coordination problems between customer and supplier.

Supplier D is the only one which did not reap any advantages from participation in Phase 1, and modification reduction was negligible. In contrast to the operations carried out with Suppliers A, B, and C, the auto-maker's engineers were forced to make trips during Phase 2 to the premises of tool-maker D more often under the CD project than under the TR project, in order to compensate for this lack of skills (Figure 8). Co-development revealed the structural weaknesses of this supplier. Tool-Maker A is positioned as a complete service-provider from the design of auto-body components to their final assembly. This supplier earned a substantial profit from co-development in the pre-production planning stage (profit of 35%).

The firm developed its digital design and R&D departments extensively, and five years ago implemented a "heavyweight" project structure [START_REF] Clark | Organizing and leading 'heavyweight' development teams[END_REF]. Within the firm, organization according to project is a factor which promotes consistency. The project structure "holds together" all the investments and reorganizations by linking them to one another within a coherent system. It is also an attempt to duplicate the auto-maker's own organization, thus facilitating the customer/supplier interface. Supplier C, like Supplier A, has been developing its engineering skills for many years.

The ability to earn profits from a co-development situation is thus strongly dependent on skills provided by the supplier. A skill-based approach puts the interpretation of performance in terms of incentives and design processes into perspective. Front-loading design processes and project collocalisation, even when associated with economic incentives are not in themselves sufficient to mobilize suppliers at the inception of a project. Although they positively affect both the early identification of required modifications and tool-cost reduction, profits are largely generated by tool-makers' skills, and not merely by these economic incentives. Shifting economic responsibility onto the shoulders of the tool-maker is not enough; the means through which the tool-maker can assume this responsibility must also be provided by developing new engineering capacities, through human and technical investment within the supplier on one hand, and through participation of successive projects with the auto-maker on the other hand.

The long-term stability of the co-development relationship

Skills acquisition and investment by suppliers implies the extension of the intercorporate relationship beyond a single project. Duration over time builds trust and develops learning. It also represents a guarantee of revenues, i.e. profit expectations are increased if the contract is renewed without subterfuge on either side. Suppliers will not undermine the interests of a customer that can guarantee steady revenues. Under the system of joint participation described by [START_REF] Imaï | Interpenetration of Organization and Market: Japan's firms and market in comparison with the US[END_REF], the two parties agree to renew their cooperative venture if each one has fulfilled its obligations. Game theory demonstrates that the duration of the relationship constitutes an incentive to cooperate. In a survey dealing with the American and Japanese car industries, [START_REF] Cusumano | Supplier relations and management: a survey of Japanese, Japanese-transplant, and US-auto plants[END_REF] note that the relationship between contractors and auto-makers lasts for over ten years.

Further, [START_REF] Donada | International Survey of Automotive Suppliers[END_REF] note that customer and supplier involvment in co-development relationships today lasts for an average of 23 years. Codevelopment is conceived as a game that is continuously replayed, but its total lifespan is determined by results. Although co-development reflects a strategic change for Auto-Maker X, and although it involves a longer-lasting relationship than the traditional one for design sub-contracting, the customer still does not guarantee the supplier that it will be systematically selected for each new development. Behind this uncertainty, suppliers perceive a contradiction between, on one side, a coherent and motivating proposition from the Auto-Maker X management on partnerships with suppliers; and, on the other, organized debate within the firm on the desirability of an alternate method ("what if, ultimately, selection of the lowest bidder turned out to be the least costly solution?"). This vacillation worries suppliers. Co-development-and the commitment to long-term organization and investment it involves-requires a degree of stability in the organizational choices made by each of the partners. "Our investment strategies are strongly dependent on the continuation of a sustained volume of stable operations in the future" (all suppliers). In today's context of drastic reduction in design costs by auto-makers, the pressure on suppliers at the time of negotiation is very strong. The cost factor, as a determinant in the selection of suppliers, is indeed an integral part of the inter-corporate cooperation system. The estimated/negotiated cost differential observed between TR and CD projects (+7%) is sharply reduced for projects after the initial CD project. This pressure on prices reduces revenues, affects supplier profit margins adversely, and over time raises the question of how long co-development can be sustained: "like other auto-makers, X requests a 20% reduction for each new project; the problem with a 20% reduction is how to maintain profit margins" (all suppliers).

Duration does not depend solely on the amount of time allowed by the customer for the co-development relationship. It is also a function of the co-development strategy of management and suppliers. What is the "strategic intention" [START_REF] Hamel | Strategic Intent[END_REF]) of these managers in terms of co-development? "Strategy" is understood in this context as the fit an organization achieves between its own resources/skills and the opportunities/risks created by its external environment [START_REF] Hofer | Strategy Formulation: Analytical Concepts[END_REF]. The formulation of medium-term strategy is the only way to give coherence to the investment and organizational choices implemented by suppliers in the context of co-development. The tool-makers' strategies are closely linked to the proportion of their revenues accounted for by Auto-Maker X.

As it happens, Auto-Maker X is a major customer for the suppliers we studied.

The only supplier-managers who failed to offer a strategic vision were those of Supplier D. They consider that the implementation of co-development is "unnatural" since firms are not intended to cooperate, but to organize their relationship via the market. This supplier's lack of project structure and investment in design skills reflects its lack of strategic perspective. By contrast, the investment of tens of millions of French francs in an ultra-modern plant, the development of engineering skills, the implementation of data systems, and the modernization of organizational systems at Supplier C reflect a strong strategic vision.

Conclusion

How to implement front-loading problem-solving strategies through codevelopment ? This article explored this question on the case of a relation between a auto-maker and its die-tools suppliers, a typical situation where product and process design are tightly associated in making the development performance.

Our analysis showed that to be efficient in that perspective, the relations have to meet three kinds of conditions. On the organizational level, co-design and frontloading methodologies ; on the contractual level, incentives for upfront learning and problem solving ; on the cognitive level, engineering capacities and multiprojects cooperation learning. With this complex of conditions, co-development appears as a win-win situation, which is generally not the case if one of these conditions fails. The above table was drawn up for both the CD and TR projects. The data on tables 3 and 4 in the body of the article show the differentials between the results obtained for each one of the projects (double-framed box in the above table).

Figure

  Figure 1: Co-development and the extended supplier time involvement

Figure 2 :

 2 Figure 2 : comparison of component assignment to TR and CD suppliers.

Figure 3 :

 3 Figure 3: Payment of modification costs in sub-contracting system

Figure 4 :

 4 Figure 4: Payment of modification costs in co-development system

Figure

  Figure 5: Overall Co-Development Balance Sheet

Figure 8 :

 8 Figure 8: Number of monthly visits to suppliers by Auto-Maker X representative during Phase 2

Figure 9 :

 9 Figure 9: the determinant factors on codevelopment front-loading efficiency.

Adoption of joint development methodologies focused on front-loading and learning.

	Number of components	1	2	3	4	5	6	Mean
	assigned to major supplier /
	total number of components
	in the lot							(en %)
	Projet TR	3/5	8/50	4/7	6/23	10/12 5/14	46%
	Projet CD	5/5 23/32 7/7 12/12	6/8	8/12	85%
	-

The launching of the second project was two years after the first one

Time to-market strategies focus on reduction of leadtime between specifications freeze and market introduction.

Suppliers can, however, contest the pertinence of a modification required by Auto-Maker X by referring it to a panel of peer assessors that meets at the conclusion of the project.

It is nevertheless the most highly-qualified suppliers, and often those of longest-standing, who participated in the auto-maker's Phase 1 planning stage. It should also be noted that metal-stamping as a field has historically had a long tradition of apprenticeship.

For example, apart from training costs, a fully-equipped 3-D CAD workstation costs approximately FF 300,000.

The field covered by these design consultancies is industrial design in general and not machine-tools in particular. This non-specificity is reflected in the tardy identification of problems, since Supplier D does not possess the means for verifying all sub-contracted design work. Here we see that in order to sub-contract effectively, knowledge of how the job should be done must already be possessed internally. Tardy identification of errors creates tensions in the relationships between the design consultancy and the toolmaker's plant and are costly in terms of wasted time.