New Product Development

Operation Management
New Product Development

       New product and service development, and process selection:

        Why the emphasis on new goods and services: Organizations today are under more pressure than ever before to develop new goods and services and the processes necessary to produce and deliver them. Two of the major causes for this increased emphasis on developing new products are (a) increased competition and (b) advances in the technology.

a)      Increased competition: The reasons for this increase in foreign competition  are many, including

•          Advances in IT

•          A trend to lower trade barriers and the creation of trade organization.

•          The faster speed at which goods can be transported. 

b)       Advances in technology: Rapid advances in technology are causing many products to become obsolete more quickly. Computers are good example of products that have been significantly impacted by advances in technology.

                The benefits of introducing new product faster:

1. Greater Market Share: That firm with the ability to bring new products to market quickly has several advantages over their slower competitors.
2. Price premiums: When a firm is the first to bring a new product to market, it has little or no competition, and can therefore charge premium prices.
3. Quick reaction to competition: To bring new products to market quickly is also in a much better position to respond quickly to a competitor’s surprise announcement of the introduction of a new product.
4. Set industry standards: For revolutionary products, the first firm into the market often has the luxury of setting the standards for that industry.

Categories of New Products

New products can be grouped according to the degree of innovation associated with them in comparison to existing products. Within this framework, we define 3 broad categories of new products

1. Incremental or derivative products are those products that have least amount of innovation and are typically hybrids or enhancements of existing products. These products are often cost-reduced versions of existing products or simply similar products with added features or functions.

Companies usually can bring incremental products to market quickly. However, this does not occur automatically. A minor design change in a product sometimes can significantly impact a firm’s production process. Decision on proceeding with such changes in a product therefore must be made with careful considerations.

2. Next generation or platform products are the middle of these three categories of new products which often represent new ‘system’ solutions for the customer. They provide broad base for a product family that can be leveraged over several years and, therefore, require significantly more resources than do derivative or incremental products. Pentium, Pentium II, Pentium III, and Pentium 4 microprocessors an excellent example of products that fall into this category.
3. Breakthrough or Radical Products are those products that are defined as new products. The development of these products typically requires substantial product design and process change. When successfully introduced, this type of product often creates an entirely new product category, which becomes a new core business for the firm. In so doing, it creates an opportunity for it to be the first to enter an entirely new market.

The New Product Development (NPD) Process

With the trend toward shorter product life cycles, the successful company must be able to

1. Continuously generate new product ideas
2. Convert these ideas into reliable functional designs that are user-friendly
3. Ensure that these designs are readily producible, and
4. Select the proper processes that are most compatible with the needs of the customer.

        Designing new products and delivering them to the market quickly are the challenges facing manufacturers in every industry. As a result, the more successful firms are focusing their resources on reducing the new product development process to a fraction of what it once was.

The trend toward shorter product development times

The NPD process includes most of the functions within an organization which play the most prominent roles, like;

•          Marketing (which identifies the target market and forecasts demand for the product);

•          Research and development (which develops the technology and subsequently designs the product); and

•          Operations (which involves supplier selection and designing the manufacturing process).

In order to shorten the NPD process, many of these activities are now done in parallel or concurrently. This coordinated effort from all of the functional areas is known as concurrent engineering / concurrent design/ simultaneous engineering.

 

Steps of New Product Development process

1. Idea Generation: The NPD process begins with an idea for a new product, which can come from one of several sources. Most often it comes from marketing, which developed the idea through its transaction with customers and is often referred to as the voice of the customer (customer feedback used in quality functional development process to determine product specification).

When a new product is identified in this manner, it is often called market pull, which refers to the primary force driving its development. In other words, the customer’s identified need for the product in the market is ‘pulling’ it from the firm.

The other major method for generating new products is called technology push. It is developed by the company’s R&D function and ‘pushed’ through the company to the market place.

2. Concept development: Once a new product idea has been generated, it needs to be further developed and tested. This includes an initial design of the product (which is conducted by R&D) along with a detailed analysis of the market and the customers’ requirements (which is conducted by marketing). Businesses today recognize the need to involve their customers in all aspects of the design, production, and delivery of the goods and services that they offer. There are many approaches for obtaining information from customers, such as surveys and focus groups etc.
3. Quality function development: The QFD process is a rigorous method and begins with the studying and listening to customers to determine the characteristics of a superior product. This approach, which uses inter - functional teams from marketing, design engineering, and  manufacturing, has been created by Toyota for the costs on its cars by more than 60 percent by significantly shortening design times.

4. Design for manufacturability (DFM): In translating the functional product design into a manufacturable product, designers must consider many aspects

•          They can use a variety of methods and alternative materials to make a product

•          Material choices can be ferrous (iron and steel), aluminum, copper, brass, magnesium, zinc, tin, nickel, titanium, or several other metals.

•          The non-metals include plastic, wood, leather, rubber, carbon, ceramics, glass, gypsum, concrete, as well as several others

•          Further, all of these materials can be formed, cut, and shaped in many ways. There are extrusions, stampings, rolling, powder-metal, forgings, castings, injection molding along with a very large selection of machining processes.

•             The output of the product design activity is the product’s specifications. These specifications provide the basis for production related  decisions such as the purchase of materials, selection of equipment, assignment of workers, and the size and layout of the production facility.

•              Product specifications, while commonly thought of as blueprints or engineering drawings, often take other forms ranging from precise quantitative  and qualitative statements to rather fluid guidelines

•              While designing for manufacturability, we must still remember to design for the consumer. A basic rule in design is to –

•              Be obvious. Design a product so that a user can look at it, and figure out how to use it – quickly, and without an instruction manual.

Process selection in manufacturing
Types of processes:

       Manufacturing operations are categorized into 3 broad types of process structures, each category depending to a large extent on the volume of item (s) to be produced. These 3 categories are often referred to as project processes, intermittent processes, and line-flow processes.

1. Project process: A project-oriented process usually involves the manufacture of a single, one-of-a-kind product. Examples here include the production of a movie etc.
2. Intermittent process: Intermittent – type processes can be further subdivided into job shop  and batch processes.

1. Job-shop, where a specific quantity of a product is produced only once. Example, numbered prints from a printing, programs for concerts.

2. Batch process: A batch process produces the same item again and again, usually in specific lot sizes. McDonald’s is a good example of a batch process where hamburgers are cooked throughout the day in lot sizes of 12.

3. Line-flow process: As with intermittent processes, line –flow processes also are frequently subdivided into two processes;

1. Assembly line processes manufacture individual, discrete products, like, cars, electronic products, kitchen appliances etc.
2. Continuous processes are exactly what their name implies –continuous producing product that are not discrete, like,

                Line-flows are characterized by high fixed costs and low variable costs, and are often viewed as the most efficient of the 3 types of processes. Moreover, it is inflexible.

Md Aminul Islam |  maihbd@gmail.com