Product Development Management

As stated in the Code of Conduct, CNH Industrial is committed to producing and selling, in full compliance with legal and regulatory requirements, products of the highest standard in terms of environmental and safety performance
As evidenced by the materiality analysis, the issues central to both CNH Industrial and its stakeholders are those concerning the products themselves, especially user safety, product quality, and environmental impact. Indeed, customers use CNH Industrial products for work purposes, and their safety and efficiency of use increases productivity and brand loyalty.
Many of the targets related to materiality aspects are set out in the Sustainability Plan (see also pages 40-43) and are included as individual goals in the Performance and Leadership Management system (see also page 83).
The highest responsibility for initiatives regarding all aspects of CNH Industrial products lies with the Global Product Committee (GPC), which is made up of all members of the Group Executive Council (GEC) and reports directly to the Chief Executive Officer.
All aspects related to safe use and lower environmental impact, as evidenced by the materiality analysis, are accounted for during product design, which is overseen by Product Development and Engineering. The process of designing a new product is set out during the Global Product Development (GPD) process, common to all brands, which guides and monitors all stages of the design process and evaluates their effectiveness.

In terms of product safety, CNH Industrial adopts design standards pursuant to international standards such as ISO 12100 for all products and parts distributed. The Product Safety Management procedures set forth a risk assessment methodology for the evaluation of all products and components over their complete life cycle.
The potential impact of products throughout their life cycle is evaluated during the GPD process, through the application of appropriate models such as Life Cycle Assessment (LCA) and Total Cost of Ownership (TCO), among others. In fact, many of the research activities aim at improving product performance during use, which is when their impact on the environment is highest.
For this reason, during the design phase, CNH Industrial endorses solutions that promote the creation of more eco-friendly products by:

  • aiming at higher efficiency during use, with fewer intervals between maintenance cycles 
  • using materials and components that are easily recoverable or recyclable 
  • selecting easy-to-disassemble components that can be regenerated 
  • eliminating the presence of hazardous substances 
  • reducing weight (off road vehicles) 
  • reducing noise emissions.

CNH Industrial’s production activities do not comprise the direct procurement of raw materials. However, when designing the components for new products, which is done in close collaboration with suppliers, priority is given to the use of easily recyclable materials, especially recoverable metals such as aluminum and cast iron, thermoplastics, and paints with low solvent content.
Component composition information is available in the online International Material Data System (IMDS) database (see also page 161), which also specifies the substances listed in the European regulation on Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH), and flags the presence of Substances of Very High Concern (SVHC). The database monitors the data entered by suppliers in real time, generating an alert if an SVHC is detected and enabling the search for a substitute.
Component remanufacturing, or regeneration, allows reducing landfill waste, reusing recoverable components, and recycling worn-out materials, hence creating savings in terms of energy and raw material costs (see also page 227).
Furthermore, improved product performance in terms of fuel consumption, durability, and length of intervals between maintenance cycles, helps reduce the Total Cost of Ownership (TCO) and the environmental impact of the product.

LIFE CYCLE ASSESSMENT
In 2014, the Company completed the Life Cycle Assessment (LCA) focusing on the carbon footprint of the 3l F1C diesel engine for light commercial vehicles. The analysis allowed quantifying the energy and environmental load of the engine, as well as its potential impacts, from raw material acquisition to product disposal.
An LCA analysis involves an innovative approach to design and production that integrates environmental variables. It therefore falls within the scope of FPT Industrial's sustainability strategies, aimed at the continuous improvement of the environmental compatibility of its range of products. The analysis revealed that 98% of the total greenhouse gas emissions are related to the F1C engine's use phase, whereas the production and supply chain for the engine’s components contributes less than 2%. The improvements identified by the analysis, and already endorsed by the plant, are related to higher levels both of production process efficiency and of energy from renewable sources.
The analysis complies with ISO14040, ISO14044 and ISO / TS14067 international standards specific to carbon footprint studies, based on which the F1C engine was certified.
The Iveco Astra brand, with support from the CRF, a research center, began researching an eco-friendly design for a Heavy Duty Truck. The project is intended to meet Green Public Procurement requirements enforced by some European municipalities in accordance with EC Directive 2004/18/EC. Iveco Astra outlined the vehicle's environmental impact in a document, analyzing: manufacturing processes, materials, and resources used. An LCA was conducted, in line with the ISO 14040 standard, on the product's main environmental impacts during two key phases: production and use. The LCA comprised the following steps:
- Goal and Scope Definition - establishing the scope of assessment, objectives, and functional unit (i.e., the vehicle in question) Life Cycle Inventory (LCI) - in which data were collected on consumption of energy and materials, emissions, and waste during the manufacturing phase of the vehicle in question within the scope of assessment; the use phase involved an assessment of vehicle fuel consumption, emissions, and weight
- Life Cycle Impact Assessment (LCIA) - in which the Global Warming Potential (kilos of CO2 eq) and the Primary Energy Demand (MJ) were calculated, i.e., the vehicle's main environmental impacts, and conclusions drawn.
In collaboration with the Politecnico di Torino and Politecnico di Milano, CNH Industrial will further evaluate the effectiveness of the LCA approach, by launching a new pilot project in 2015 called Environmental and economic life-cycle assessment and scenario analysis of the Value Chain for a fully electric van: the NEW DAILY ELECTRIC case

PRODUCT DEVELOPMENT PROCESS

At CNH Industrial, the development and launch of new products is managed through dedicated platform teams for each product class. Coordinated by the Product Development and Engineering department, platform teams are responsible for the management of the entire product life cycle, from the development of new products to the maintenance of existing ones.

Each team is composed of representatives from the following functions:

  • Brand – definition of market requirements, including regional variations
  • Product Engineering – product design and fulfillment of technical requirements
  • Product Validation – product validation and certification
  • Manufacturing – planning and preparation for production
  • Supplier Quality Engineering (SQE) as part of Purchasing – procurement of parts and materials from external suppliers (time, cost, and quality)
  • Parts and Service – management of spare parts
  • Product Quality and Technical Support – monitoring correct implementation of processes to ensure quality of final product
  • Finance – monitoring budget and investment, analyzing profitability of new product programs and related activities.

Platform teams follow the standardized Global Product Development (GPD) process, which itself is subject to continuous monitoring and revision. Although its application is standardized across geographic regions, the process allows for variations in product specifications to meet local requirements, including those specific to Emerging Markets.

The GPD process consists of six phases, each consisting of a set of activities and deliverables, and each assigned to one function. At the end of each phase, reviews are carried out to determine if objectives have been met.

Once these objectives, or milestones, are achieved, the decision is made to continue to the next phase. This approach optimizes resource planning, it facilitates investment allocation and the definition of clear objectives, and it improves the ability to forecast and manage risk and, ultimately, to develop a quality product.

PRODUCT SAFETY DESIGN
In terms of product safety most CNH Industrial products are designed according to applicable government or industry standards on road safety, functional safety, occupational safety, and environmental safety (noise and engine emissions).
The design phase takes into account several aspects of operational functionality with respect to safety, including:
- operating instructions and information (operating manual, if available)
- applicable regulations and/or standards
- limits of intended use
- operator experience
- operator training
- working conditions
- physical properties of the machine.
An essential step in any indexed safety risk assessment is the systematic identification of potential hazards and hazardous events for all types and phases of use, such as assembly and set-up, preparation for use, installation and removal of tools and accessories, on-road use, in-field use, and during transportation, blockage clearing, cleaning, service, and maintenance. CNH Industrial rigorously applies Design Failure Modes and Effects Analysis (DFMEA) to identify potential failures and associated hazards.
The individual components crucial for safety are identified right from the design phase in the technical drawings, and subjected to specific detailed assessments (e.g., dynamic calculations, structural analysis, laboratory tests, static and dynamic vehicle testing, and type approval testing). In accordance with the Quality Policy and additional internal procedures, workstations handling safety components during production are clearly marked, and the personnel responsible for working on, or inspecting, safety components are suitably trained. Safety components are also labelled to ensure traceability in the event of intervention or recall campaigns (see also page 216).
Noise emissions are evaluated during the product design phase through procedures pursuant to international standards such as ISO 2204 and EN 60118/4, and to specific homologation requirements for each market.

GLOBAL PRODUCT DEVELOPMENT PROCESS

The start of the GPD process is preceded by Pre Program Activity, which includes an evaluation of customer requirements and a preliminary estimate of time and cost.

During this phase, the Market Research department manages all market projects worldwide relevant to the fields of agriculture, construction, and precision farming solutions. The objectives of each assignment are defined with internal customers (mainly Marketing and Product Development) and, in order to reach them, the department applies dedicated methodologies to collect customer feedback and suggestions. In-depth interviews, focus groups, Computer-Assisted Telephone Interviewing (CATI), and web surveys, as well as product tests, are some of the approaches used.

All results are fully integrated into the Company’s processes in order to build brand strategies in line with customer needs, and to provide them with the best-in-class products and services required for the growth of their businesses.

The Customer-Driven Product Definition process (CDPD) - which analyzes the needs of, and feedback from, the brands’ customers - also plays a major role in this phase (see also page 224). At the Product Change Request (PCR) milestone, the first in the process, the product profile is formalized and a research and design budget established.

The approval of the PCR is followed by the Program Planning phase. The deliverables for this phase include an indepth market analysis (customer segmentation, volumes, price and content offered by competitors), development of a risk assessment matrix, an initial cost estimate (for both R&D and launch), and an analysis of expected financial returns. The changes to the commercial product offering at the system key level (BoM level) are identified.

The deliverables for this phase are designed to enable the early identification and resolution of the majority of potential future issues, thereby providing a solid base for the best possible project outcome and a quality final product. The milestone achieved at the end of this phase is Program Initiation (PI).

Once PI is approved, the Develop Concept phase begins. Deliverables for this phase include the creation of a first virtual prototype, for the validation of technical content, and review/identification of patent requirements.

During the development process, the Chief Engineer is responsible for the Patent Review deliverable, i.e., ensuring that no competitor patents are infringed (Freedom to Operate), and determining whether the product incorporates patentable ideas. Where applicable, new ideas are submitted for review and approval via the Innovation Portal (see also page 140). A list of critical parts is prepared, and an analysis is performed to identify and evaluate potential supply constraints and the need to involve suppliers in the design process. At this point, the Manufacturing department begins planning all actions required to configure the production line. The achievement and completion of all deliverables in this phase is verified as part of the Concept Review (CR) milestone, which marks and represents the definition of the key technical solutions regarding the vehicle’s main systems.

The next step in the process, the Prove Feasibility phase, consists of more than 40 deliverables, including virtual and physical validation activities to confirm concept feasibility, finalization and release of the parts plan, style/design freeze, and definition of the manufacturing project plan. The Program Approval (PA) milestone, which completes this phase, is particularly important because it represents the decision point for proceeding with the full program investments and for setting the targets (time, cost, and quality) that will be used as benchmarks for final project evaluation.

The next phase is Optimization, which includes deliverables regarding sub-system and component testing, and software validation, as well as the identification of the service parts that must be available at OK to Ship. During this phase, Product Validation verifies the design on full prototypes called Development Builds. The design details are then released by Product Engineering so that other functions (primarily Purchasing, Manufacturing, and Parts and Service) may complete sourcing, production planning, and parts stocking based on the validated final design. With regard to intellectual property, upon completion of both the Program Approval and Design Release milestones, an analysis is performed to determine whether or not the project has changed from the Concept Review milestone.

In any case, at Design Release, all patent applications relating to new design features must have been filed before the project can progress to the next step.

The next step, the Verification phase, consists of more than 20 deliverables covering areas such as product safety, training of plant personnel, drafting of owner and maintenance manuals (see also page 220), and product certification. This phase includes the Production Change-Over (PCO) milestone, which formalizes the production phase-out of existing components and the production phase-in of components for replacement products. This milestone is also critical because the production phase-out of components pertaining to an existing product could result in a suspension in production and supply to the sales network should the launch of the new product experience a delay. Other activities during this phase include the evaluation of sales network training needs and customer product trials. The phase is completed when the OK to Build (OKTB) milestone is achieved, which occurs upon verification that the plant, including equipment and employees, is ready for production launch.

The Implementation phase can then begin, with deliverables including final safety validation, product certification, and quality and availability of spare parts. This phase is completed when the OK to Ship (OKTS) milestone is achieved, which authorizes shipment to dealers and customers.

The length of the product development process varies depending on the business line and amount of new content, and can range between 18 and 36 months. If necessary, further product improvement activities (i.e., cost reductions or resolution of critical issues arising post-launch) may continue after product launch until targets are met. The platform teams maintain responsibility for the improvement of current products, establishing action plans to achieve quality and cost reduction targets, and implementing schedules and timing.

Products are typically considered as current six months after launch. The platform teams are responsible for introducing enhancements on current products (see also page 215) by implementing action plans to achieve warranty targets (set by the Quality team) and cost reduction targets, while managing and setting deadlines. Specific quality and reliability targets are set for each product/project, and assigned to the relevant teams of each respective development platform. The Quality department makes use of a scorecard to evaluate effective target achievement at each milestone and review phase.

 

 

 

 

 

GRI: 
G4-DMA; G4-PR1;