INGENIEUR
and engineering offices. However, there are times
when predictability is sometimes difficult and
unplanned resource requests will suddenly come
into the picture due to programme pressure, and
the engineering service provider that can provide
the response in an expedient manner will be in an
advantageous position.
As aircraft manufacturers continue to
increase the rate of aircraft production and
decrease aircraft development time-scales,
the total demand for outsourced engineering
services is expected to increase. Aircraft prime
manufacturers are putting increasing pressure
on their suppliers to take more ownership of
the product lifecycle 7 . This will be in the form of
design and build packages which will expose the
engineering service providers to increased costs,
risk and warranty issues. As a result, engineering
service providers will struggle to overcome
challenges such as shortages of skilled and
experienced engineers, fierce price competition
among existing service providers and increased
cost pressure from their customers that will
inevitably begin to impact the bottom line.
With increasing cost and ownership pressure,
there is an increased incentive for engineering
service companies to go beyond the traditional
service-oriented business model and embrace
innovation as part of their new core capabilities.
However, there are still challenges for engineering
service providers to embrace innovation as part
of their capabilities. Among issues that they will
face are 7 :
• Intellectual Property – The majority of
the completed work done is for their
customers’ products, thus they do not own
the product’s Intellectual Property rights
and they cannot leverage on the developed
product as a solution for other customers;
• Capability – They lack product knowledge;
for the most part they lack the conceptual
data and early development experience of
the product and innovation that requires
a fair amount of product and domain
knowledge; and
• Funding – They are already operating on
tight margins and have no access to funds
to convert operations into research and
development activities which are required
to create new innovative products.
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20
VOL
2019
VOL 80
55 OCTOBER-DECEMBER
JUNE 2013
How Engineering Service Companies can
Use Innovation to Remain Competitive
In order to call an idea an innovation, it must
be replicable, economically viable and satisfy a
specific customer need. Innovation requires the
application of information, creativity and initiative
to derive value from resources and produce useful
products and services that the market wants.
A summary of the findings on innovation in the
IT/Business Process Outsourcing (BPO) industry
refers to three types of innovation 7 :
a) New products/services/solutions ,
b) New processes, and
c) New business models.
Engineering service organisations should
consider introducing the important and necessary
steps discussed below to rise up the value chain
through innovation.
New products and services can be produced
utilising the experience already gained on existing
or past products or services. The constraint with
Intellectual Property can be dealt with by having
joint ownership of the product development and
patents of the product or solutions. Joint ownership
also requires joint funding and as such, the
organisation will have to initially fund a portion of
the research and development activities for the
product in order for it to be attractive to private
investors or Government investment entities to
jointly fund it. The product development strategy
must be based on good intelligence of future
market requirements and in areas that their current
or prospective customers will have an interest in.
New processes that improve productivity and
efficiency and have continuous improvement
elements embedded in their business processes
will help them reduce the cost of services and
improve profitability. Some process improvement
initiatives are suggested below:
a) Tool Automation
Engineering service organisations with their
highly skilled engineers should be able to develop
in-house automation tools to expedite their
engineering processes. The key to automation
is to reduce repeated or time consuming tasks
by automating the process with the help of
macro scripts (example: Excel macros) or small