Accelerating New Product Introductions (NPI)
A recent study by IBM’s Global Business Services group describes the current business environment as “the era of innovation”:
We are definitely entering the era of innovation. It is pervasive. It is influencing the way in which companies think about virtually every aspect of research, marketing product development, supplier and materials management, manufacturing, distribution, warranty and defect management, maintenance repair and overhaul, and product end-of-life and disposal. Innovation is global. Innovation knows no boundaries.
In such an era, new product introductions (NPI) take on an increasingly critical role. NPI can make or break a company in these times, and the ability to accelerate NPI is a significant competitive advantage.
There are three principal challenges to successful NPI:
- Time to market
- Total product cost
- Product lifecycle management
The graph below shows the value of time-to-market, which translates to the value of accelerating NPI.
The idea is to maximize the curve above the timeline that separates profit from loss. Many things are in motion as this curve goes through its cycle, and a company’s ability to execute on them will determine its success in bringing product to market:
- Develop product that fits the market.
- Get it to market faster.
- Ramp to volume, hitting your target costs.
- Mitigate risk with regulatory and compliance practices throughout the process.
- Reduce service and warranty costs.
- Do it all over again.
Throughout the NPI cycle, interaction is intense, fast-paced, and ongoing. Collaboration is key. Strong NPI practice exercises the entire value chain: suppliers, brand owners, and customers. Customer involvement is particularly important, and often lost when thinking about formal NPI. Customers can be leveraged to verify the value of a new product’s features and functions, as well as provide the strongest indication of the existence of a market for the product.
In the IBM study, the impact of various elements on reducing product development time to market was measured. Not surprisingly, collaboration was ranked number one at 40 percent, followed by the formal product and service development process at 29 percent, and reallocation of resources to key products at 24 percent.
NPI Demands Traceability
It is clear that effective NPI demands traceability, as compatibility and performance of product components and subsystems must be examined thoroughly and on an ongoing basis. (This is, of course, a large departmental operational expense.) Fifty percent of NPI problems relate to components: their availability, reliability, and quality. Somewhere between 60 and 90 percent of overall product development cost is in raw material, tooling, and data systems.It is critical to collaborate with component suppliers and contract manufacturers to understand and correct issues before components leave the factory.
“Companies often overlook data systems when considering NPI, but they’re needed to capture everything and provide a holistic view of the process across the complete value chain,” says Sam Jonaidi, an executive consultant who has specialized in NPI for decades. “In my opinion, they’re the most important investment a company makes to accelerate NPI and ensure its success.”
This is particularly cogent as the costs of defects escalate over time, and it’s extremely important to get to the bottom of issues, especially NPI ones, before volume production commences.
The message here, as elsewhere in today’s global manufacturing market: do it right the first time. That will speed up the process as much as anything else.