510 IEEE TRANSACTIONS ONENGINEERING MANAGEMENT, VOL. 58, NO. 3, AUGUST 2011 Organizing Global Product Development for Complex Engineered Systems Anshuman Tripathy and Steven D. Eppinger, Member, IEEE Abstract—Recent advances in engineering collaboration tools and internet technology have enabled firms to distribute their prod- uct development (PD) tasks to offshore sites and global outsourc- ing partners while still maintaining a tightly connected process. In this paper, we explore such global PD structures from process flow and system architecture perspectives, employing the design structure matrix method. Through five case studies, spanning elec- tronics, equipment, and aerospace industries, we observe the in- teraction complexity inherent in various global work distributions, the product and process structures, and their interplay with the specific strategy used by the firm. Our observations lead to im- plications for organization forms and architecture decompositions for firms pursuing offshoring of engineering activities. Based on these implications, we propose a process for firms to follow as they pursue GPD, while recognizing that: first, modularity in design and development and modularity in manufacturing need not be the same, specially in complex engineered systems (CESs); and second, system architecture development is a core competence of the firm designing and developing CESs, and this activity should be retained at the home location. We conclude with potential research directions on the subject of global PD. Index Terms—Global issues in technology management, global organizations, new product development (PD) process, organiza- tion design, R&D management. I. INTRODUCTION T HE SUBJECT of global product development (GPD) is generating a lot of interest. GPD has been defined [1] as combining certain centralized functions with some engineer- ing and related product development (PD) functions that are distributed to other sites or regions of the world—the practice may involve outsourced engineering work along with captive offshore engineering facilities. On similar lines, distributed PD (DPD) is defined [2] as the use of organizational arrangements involving multiple organizations that are separated by firm, geo- graphical, or other boundaries, that are used for PD. From these definitions, we infer that GPD is an organization arrangement, which identifies the location and ownership of the PD activi- ties. Thus, the GPD activity, besides involving offshoring, can be performed either through captive engineering/development centers, outsourcing (see Fig. 1) [1], [3], or hybrid forms. Manuscript received October 28, 2009; revised August 24, 2010; accepted October 28, 2010. Date of publication April 5, 2011; date of current version July 20, 2011. This work was supported by a grant from PTC. Review of this manuscript was arranged by Department Editor C. Tucci. A. Tripathy is with the Indian Institute of Management, Bangalore, India (e-mail: atripathy@iimb.ernet.in). S. D. Eppinger is with the Operations Management Group, Sloan School of Management, Massachusetts Institute of Technology, Cambridge, MA 02139 USA (e-mail: eppinger@mit.edu). Digital Object Identifier 10.1109/TEM.2010.2093531 Fig. 1. Sourcing-location matrix. Fig. 2. PD process for complex systems. Firms pursue GPD either to meet global market needs (loca- tions other than home location) or to seek efficiencies [4]. The drive toward GPD has been influenced by competitive pressures (pricing targets driving aggressive cost targets), availability of exceptional talent overseas, advances in communication that facilitate seamless information flow, intellectual property pro- tection, and growing external markets [1]. However, develop- ing products across geographical boundaries present associated challenges in coordination, communication, differences in cul- ture, different time zones, etc. [2], [5], [6]. This requires a careful selection of the PD tasks that are to be offshored. The selection of such PD tasks is further complicated in the case of complex engineered systems (CES). CES comprises a number of components and processes with interdependencies during development. Development of CES involves decomposi- tion followed by integration of the system. Typically, this would comprise system architecture development, followed by compo- nent development, and finally system integration (see Fig. 2) [7]. During system architecture development, the constituents of the system and their respective interdependencies are planned, and their respective performance requirements specified. 0018-9391/$26.00 © 2011 IEEE