1. COPYRIGHT © 2008 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. 1 Chapter 2: New Product Development – Creating Order Winners Process Management: Creating Value Along the Supply Chain (1 st edition) Wisner and Stanley

2. COPYRIGHT © 2008 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. 2 Chapter Outline Introduction The New Product Development Process Reducing New Product Development Cycle Time New Product Development across the Supply Chain

3. COPYRIGHT © 2008 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. 3 Chapter Outline (cont.) Process Selection New Product Breakeven Analysis Special Issues in Service Design Effective Product and Service Design Summary

4. COPYRIGHT © 2008 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. 4 Learning Objectives After completing this chapter, you should be able to: Describe the product development process Understand the quality function deployment process Define integrated product development and concurrent engineering Describe technology advances in new product development Understand the role of suppliers in new product development

5. COPYRIGHT © 2008 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. 5 Learning Objectives (cont.) After completing this chapter, you should be able to: Describe the fit between product development and process development Know the basic four process designs Understand mass customization Perform a break-even analysis Describe the trends in service design Understand the enablers of good product and service design

6. COPYRIGHT © 2008 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. 6 Introduction The essence of any organization is the products or services it offers. There is an obvious link between the design of those products or services and the success of the organization. Organizations that have well-designed products or services are more likely to realize their goals than those with poorly designed products or services. Hence, organizations have a vital stake in achieving good product and service design.

7. COPYRIGHT © 2008 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. 7 The New Product Development Process Generate ideas Basic research: Research and development teams find ways to increase the number of product innovations Skunkworks: Teams that develop new products in a short timeframe, outside the normal rules of organization. Kaizen investigative teams: Cross-functional teams that visit customer sites, observing the customer using its products and asking lots of questions.

8. COPYRIGHT © 2008 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. 8 The New Product Development Process Developing the concept: If an idea fits with company’s strategy, mission, objectives, and financial capabilities, it is further developed. Quality function deployment (QFD) is a structured approach for integrating the “voice of the customer” into the product or service development process. The purpose is to ensure that customer requirements are factored into every aspect of the process. House of quality: A graphic tool used by QFD. It's called the House of Quality because of the correlation matrix that is roof shaped and sits on top of the main body of the matrix. The correlation matrix evaluates how the defined product specifications optimize or sub-optimize each other. Benefits: Improved products, processes, services Provides direction for the design process and keeps teams focused Can be used for further improvements

9. COPYRIGHT © 2008 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. 9 The New Product Development Process (cont.) House of Quality Example

10. COPYRIGHT © 2008 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. 10 The New Product Development Process (cont.) Product screening: during this stage company needs to gather information and perform analysis to assess the feasibility or develop the business case for a new product. Business case: a written justification for approving the new product/service idea. Design phase: design engineers make up detailed drawings of the new product and develop prototypes. Service blueprinting: the standard tool for service process design Product introduction: the product is produced on a limited basis. Once pilot production is complete, production is ramped up slowly, then volumes are increased to a full-scale launch of the product.

11. COPYRIGHT © 2008 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. 11 The New Product Development Process (cont.) Figure 2.4 Customer Arrives Greet Customer Take order Customer pays bill Customer waits Order transferred to kitchen Order Prepared Server bags order Server delivers order Customer receives order Customer departs Line of Visibility Sales tracked Service Blueprint Example

12. COPYRIGHT © 2008 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. 12 Reducing New Product Development Cycle Time Integrated product development Concurrent engineering: bringing design, manufacturing, engineering, and marketing people together early in the design phase to simultaneously develop the product and the processes for creating the product. The purpose is to achieve product designs that reflect customer wants as well as manufacturing capabilities. Three-dimensional concurrent engineering (3- DCE): design of the product, process, and supply chain are considered simultaneously.

13. COPYRIGHT © 2008 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. 13 Reducing New Product Development Cycle Time (cont.) Design for manufacture and assembly (DFMA): The DFMA process optimizes the product design early in the concept design phase in order to ensure that the product can be easily manufactured Modularity: the reduction in the number of parts used per product Advances in technology Computer-aided design (CAD): CAD uses computer graphics for product design. DFMA software: a software that can be used anytime during the product development cycle to analyze and understand the cost effects of design decisions and to improve product design. can quickly analyze and manipulate different design approaches. the resulting lean design will contain fewer parts and be easier to manufacture. can explore alternatives in processes and materials, and immediately see the cost impact of various decisions. allows company to look critically at an existing design, and uncover opportunities for cost savings--primarily through the reduction of parts in the design. engineers who use DFMA reduce or even eliminate costly, back-and-forth tweaking exercises which normally plague the product development process.

14. COPYRIGHT © 2008 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. 14 New Product Development across the Supply Chain Customer focus: customer drives all strategic marketing decisions. Product focus: customer does not necessarily know what he or she wants. Early supplier involvement: suppliers are involved in planning, design, and production stages of new product development. Heightened degree of integration and collaboration Determining the extent of supplier integration / involvement

15. COPYRIGHT © 2008 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. 15 Process Selection Necessary fit between product development and process development Considerations: volume, variety, equipment flexibility, employee skills Four types of production processes: Job shop Batch processes Assembly line Continuous production

16. COPYRIGHT © 2008 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. 16 Process Selection (cont.) Mass customization: a strategy of producing standardized goods or services, but incorporating some degree of customization in the final product or service. Mass customization tactics: 1. Postponement : the process of producing, but not quite completing, a product or service, postponing completion until customer preferences or specifications are known. 2. Modular design: A form of standardization in which component parts are grouped into modules that are easily replaced or interchanged.

17. COPYRIGHT © 2008 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. 17 Special Issues in Service Design Characteristics of services : More difficult to design Combination of goods & services Customer plays a direct role May take place in a matter of minutes or last over an extended period of time Variability Innovation and changes in service delivery

18. COPYRIGHT © 2008 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. 18 Effective Product and Service Design Senior management support Market research Information technology Customer relationship management systems (CRMs) Data and web mining Spyware Dedicated cross-functional teams Formalized, adaptable processes Appropriate resources