New Product Introduction

The What and Why of an Engineering Change Order

May 4, 2021

Explore what an engineering change order is, the stages involved, and the business benefits that come along with it.

In an increasingly competitive global economy, manufacturers must take every opportunity to improve their overall performance and increase competitive advantages. Engineering change orders provide a comprehensive means of changing existing products to help organizations better meet these goals. 

What is an Engineering Change Order (ECO)?

An engineering change order (ECO) is a document used to implement modifications in the design of a particular product. ECOs play a crucial role in new product development (NPD) and can be used to specify new product designs during the initial stages of development. They provide a comprehensive summary of changes, indicating all of the affected assemblies, components, and documents associated with them. 

Assemblies are produced items crucial to manufactured products, such as the frame of a car. Components are the raw materials used in the manufacture of a product, typically purchased from external vendors. This makes it critical to include supply chain partners in ECO communications. This will help prevent costly miscommunications that lead to production delays.

Best Practice: Ensure all stakeholders buy into the change by demonstrating a low implementation cost and the potential for increased revenues in the future.

Why use an ECO?

ECOs are typically used to solve problems that arise during manufacturing. Most commonly, they function to make repairs or improvements. This has the effect of optimizing a design while ensuring functionality. The exact action taken as a result of an ECO is usually a corrective measure related to at least one of the following: 

  • Production costs exceeding the budget 
  • Significant rise in defects from quality control and/or warranty claims from customers
  • Obsolete components, which are often determined by external factors such as resource availability
  • Compliance violations 

Read on to see the benefits of implementing engineering change orders. 

Engineering Change Order Benefits

ECOs are an efficient way of solving manufacturing problems with the input of multidisciplinary teams. As an evaluative mechanism, they can provide a basis for quantifying the impact of engineering changes, which in turn pushes the decision making process forward. These orders can affect either individual items being manufactured or the manufacturing process as a whole. Some of the benefits associated with ECOs include:

  • Improves your competitive advantage, especially in regard to cost, quality, and/or marketing 
  • Expedites future problem solving by organizing documentation of product changes
  • Enables efficient communication with both internal teams and external suppliers 
  • Reduces design, manufacturing, and inventory errors 
  • Increases accountability by involving key stakeholders from all departments 
  • Keeps product development on budget and on schedule 

Stages of the Engineering Change Process

Request 

This process begins when someone identifies an issue with a product or manufacturing process. Next, the impact of the issue is further evaluated at the departmental level. An engineering change request (ECR) is then drafted which includes a suggested fix, affected parts, and an estimate of costs. 

Review

Key stakeholders receive the ECR, including but not limited to engineers, supply chain partners, and management. After modifications and careful consideration, the ECR is either denied or agreed to. If agreed on, discussion of a solution may also begin at this time. If the suggested change is a crucial repair, the organization may have no choice but to move forward with an ECO. Even if the repair is costly and could cause production to be shut down, management is obligated to issue an ECO if the product is unsafe for customers. 

Order Creation

With the change being deemed feasible, an engineering change order is drafted to summarize what modifications have been made. At this stage, unilateral updates may be made across diagrams, computer aided design (CAD) files, and standard operating procedures (SOPs). Final approval from key stakeholders is necessary before moving on to ensure all departments are on the same page. 

Implementation

Now that the suggested change has been agreed upon, it can be put into practice. Those immediately affected are notified, making the change based directly on information found in the ECO documentation. 

What is the difference between an ECO and an ECR?

An engineering change request (ECR) differs from an engineering change order (ECO) in that these requests serve as prerequisites for putting an ECO in motion. ECRs determine the necessity and viability of a change by providing an estimate of the resources it will require. After review by key stakeholders, an ECO will be processed if necessary. 

Conclusion

Engineering change orders promote collaboration while preventing design errors to keep product development on track. Keeping accurate, up to date documentation of any and all changes made to your product plays a significant role in maintaining a competitive advantage. Document change orders (DCOs) and manufacturing change orders (MCOs) play a similar role in the ongoing optimization of a manufacturing process. Modifications inevitably happen all the time over the course of a product’s development, so having a defined process for their review is essential. In an ever competitive global business environment, it is essential for organizations to act proactively and be well prepared for shifts in the market which may require rapid adaptation. ECOs deliver the best possible outcome over the course of a product’s lifecycle by providing a universal methodology for making design changes. 

Engineering change management is a critical component of modern manufacturing. Want insights into the biggest factors that will impact manufacturing for the next decade? Download our 2021 Modern Manufacturing Report.


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Author

Kathryn Kosmides

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