Launching a new product is a complex process that incorporates numerous components and subassemblies involving extensive collaborations across an organization. Today, higher levels of global competition make it critical for businesses to get to market faster than ever before.
While there is no shortage of articles on making and marketing new products, most of the suggested improvement and methodologies tend to cover specific engineering challenges in the new product introduction (NPI) flow such as project management, design for manufacturing, quality assurance and compliance. Very little has been said about designing for sourcing, or scaling production levels seamlessly following a successful prototyping phase.
The reality is, only a fraction of new products get successfully introduced to the market. American research firm Booz, Allen and Hamilton estimates that the chance of failure of a new product introduction on the consumer market is as high as 80%. In another study, they found that for every seven new product ideas, about four enter development, one and a half are launched, and only one succeeds. In addition, Michael Keer, CEO of PRG, a consortium of Silicon Valley experts, believes that “most companies’ NPI processes fail due to a few common mistakes”.
Initial product designs often overlook several product aspects that can cause real-world problems, such as obsolete, unavailable or risky components, and unrealistic costs.
This series will explore some of the sourcing and procurement challenges embedded in the NPI process, and solutions to identify bottlenecks to avoid common pitfalls on the road to a successful product launch.
Need for Speed
“Getting new products to market faster is a priority for 52% of companies.” – LNS Research & Cisco
Speed to market has become a mandatory condition for world class manufacturing operations. To launch a new product in today’s aggressive markets, companies need to make the most of every advantage they can get to stay ahead of schedule, as well as their competition. This makes the early stage of NPI a tremendously important phase with numerous opportunities to save spending, accelerate timelines, and mitigate supply chain risk.
A crucial step that is often neglected during this fuzzy front end phase is ensuring bill of materials (BOM) integrity. Having a list of components as early as the design stage that has been reviewed to eliminate Do Not Use or Phase Out suppliers, or only include suppliers with established relationships, adequate quality systems, and the right inventory can make all the difference when the project eventually moves forward to quoting and prototyping.
This is a weakness for many organizations since accessing critical early stage sourcing data and supplier information has traditionally been an obstacle. As a result, the first round of sourcing is rarely strategic, often defaulting to familiar suppliers or the first result on a parts search page.
Typically, the initial focus during the NPI process is set on designing a functional prototype. However, if this prototype cannot be sourced or contains risky parts, it may need to go back to engineering and require a redesign before it can even be tested.
To truly drive improvement during the NPI process, a solid database of suppliers, components, competencies, and performance is needed to make informative decisions from the start. This ensures that real-world factors such as inventory stock levels and system planning are determined in advance, mitigating supply chain risk down the line when production needs to scale.
Establishing a bill of material with allocated volumes and multiple sourceable suppliers is a foundational step that should not be delayed. Putting the NPI process on hold for a few days at the prototyping stage when only a few dozen printed circuit boards (PCBs) are needed is very counterproductive. Engineers and sourcing professionals need to be able to immediately identify which suppliers have their components available and procure the prototyping BOM overnight.
In the next post, we’ll cover some of the most common challenges that come into play when implementing modern NPI sourcing methods as well as reliable tools and methodologies to make the whole job easier.
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