1 Chapter 1: Product Development in the Changing World Introduction New technologies are changing the world we live in. How can a company succeed in this rapidly changing environment? Yes, it can if the company focuses product development efforts not only on a product’s function, project schedules and deadlines, and cost, but also in other life cycle issues such as customization, technical risk, simplicity, producibility, quality, innovation and service.

2 1.1 New Business Models and Practices Today’s customer wants value. It can be measured by a series of marketing parameters such as innovation, styling, performance, cost, quality, reliability, service and availability. Successful companies can responds to today’s rapidly changing business and technology changes more quickly and effectively than their competitors. Often technology has been used to replace an existing practice. For example, CAD has replaced drawing tables. Projectors has replaced the overhead transparency. The technology’s true benefit is to realize how these new methods are used in innovative ways that change traditional business practices.

3 1.1 New Business Models and Practices (cont.) Importance of the role of specialists in today’s complex and rapidly changing high-tech environment. –Multi-disciplinary design teams. A team, for example, may consists of experts in the areas of mechanical component design, circuit design, programming, materials, manufacturing, quality control, financial markets, supply chain management, sales, and service. –Often a company may have to go outside of the company to look for those specialists. The key is to insure effective collaboration among these many different experts. 24/7 business based on today’s information technology such as on-line real time buying and selling.

4 1.2 Global Business Perspective Modern IT and transportation methods (cars, trains, airplanes, etc.) make information/material flows possible in the global scale. Products must be customized for needs of customers including culture, language and environment. Global companies must become flexible responding to these customer needs. They must focus on their “core competencies” and outsource items that they are not proficient in. Anticipate future market demands: It may be too late if you just wait customers to tell what they want. Companies must anticipate how customer expectations will change as technologies advance.

5 1.2 Global Business Perspective (cont.) Managing global relationships: Companies must produce products of world-class quality. This means that companies must understand different customs/cultures/regulations to produce products which can compete in an open global market. Reduce time to market: A product must be developed in a short lead time or its market is lost. Excel in customer service: Customer requests come in many ways including s, fax and on-line forms. Companies must develop effective customer response management (CRM) systems to respond and take actions reacting to these requests.

6 1.3 Trends Affecting Product Development Rate of Innovation: Customers want exciting, unique, colorful, and interesting products now. Many product developments must be started even before some key technologies are ready. Companies must often take technical risks for such product developments to be competitive in a “winner take all” market. Software Tools, Rapid Prototyping, and Virtual Reality: These modern tools help product development participants realize a product in very realistic ways. These also help companies shorten their product development times.

7 1.3 Trends Affecting Product Development (cont.) Mass Customization and Customized “On-Demand” (or “Build-to-Order”) Production: Customer wants unique products. Companies must often produce product only after these unique orders are placed. (JIT manufacturing will be studied later in this semester.) Core competency, Partnerships and Outsourcing: Today, each company tends to develop its own unique expertise areas that the company considers strategic to being competitive (core competencies). Therefore, it is necessary to establish partnerships for other technology areas and also necessary to outsource necessary parts and service to build a product.

8 1.3 Trends Affecting Product Development (cont.) Internet and Electric Commerce (E-Commerce): Internet technologies help today’s business world to overcome geographic barriers. E-commerce is paperless data exchange though modern information technologies. E-Commerce encompasses marketing, purchasing, re-order schedule, supply chain management, and design tasks. Flexibility and Agility: Manufacturing today must produce a wide variety of products quickly. Manufacturing flexibility includes product mix, design changes, and volume level. Agile manufacturing is the manufacturing for “mass-customization” and not “mass-production.” Global Manufacturing: Products are collaboratively developed in many different locations all over the world.

9 1.3 Trends Affecting Product Development (cont.) Automation: Advantages of automation include producing a consistent product, and performing complicated tasks with relatively easy operations (Although, it takes high programming and maintenance skills.) Environmental Consciousness: Companies are “responsible” for protecting our living environment. Activities focuses on minimizing process wastes, minimizing energy use, developing manufacturing process alternatives, using environmentally friendly materials, and integrating pollution control and abatement into their facilities.

Best Practices for Product Development Best Manufacturing Practice (BMP) program sponsored by the Office of Naval Research. See the BMP web site: