The Manufacturing Value Chain

The Manufacturing Value Chain Report: New Product Development

The Benefits Of Disruption

It's important to note that the new product development challenges cited by respondents apply primarily to satisfying existing customers with product enhancements and platform extensions. The respondents do not consider new product development challenges from the point of view of Harvard professor Clayton M. Christensen, author of The Innovator's Dilemma (1997, Harvard Business School Press). His theme is the challenge of disruptive innovation. Essentially, Christensen says well-run firms primarily support the profitable evolution of their past technological successes. Their challenge begins when they encounter technological innovation that disrupts their market leadership. To survive, Christensen recommends a parallel disruptive path.


See the full report: The Manufacturing Value Chain Report: The Ties That Bind


 

New Product Development Challenges

Correct Identification Of Customer Needs 60.8%
Remaining Competitive 50.0%
Increasing Product Innovation 32.2%
Reducing Time-To-Market 30.4%
Managing Overall Costs 29.5%
Proper Allocation of Project Resources 28.6%

New Products Faster

Manufacturers are succeeding in shortening their product development cycle times. Three years ago 26% of operations report that it took them 300 days or more to bring a product to market from the start of the design process until the new product was ready for sale. Today only 19% need that much time.

Average Time To Market, Days

Average In Days Today Three Years Ago
0-100 Days 37.7% 36.5%
100.1-200 Days 32.5% 27.1%
200.1-300 Days 11.3% 10.2%
Over 300 Days 18.5% 26.3%

 

Essential Input

Tradition has it that R&D drives new product development, but the real drivers of success are the innovations that the entire organization brings to meeting or exceeding customer requirements. And the innovation process extends beyond corporate boundaries to include customers and suppliers. For example, 51% of survey respondents report extensive participation by customers; 15% by suppliers. Supplier participation is becoming more significant as outsourcing increases.

Functional Participation In New Product Development

  Extensive Participation
Marketing and/or Sales 74.9%
Research & Development/Engineering 72.8%
Manufacturing 44.0%
Finance 18.0%
Procurement/Purchasing 17.2%
Logistics 8.2%

Key Performance Indicators Bottom 25% Median Top 25%
Percentage of sales from products launched in the previous year 10% 15% 25%
Time to market today, days 258 150 60
Products launched on budget 50% 75% 90%
Products launched on time 30% 60% 86%
Percent of R&D cost for new projects* 3% 25% 50%

*not including extensions and improvements

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