An Unexplored Opportunity

April 12, 2011
Product development deserves as much attention from continuous improvement teams as any other manufacturing process.

Most of the organizations I have become acquainted with over my career are missing a tremendous opportunity for their continuous improvement (CI) teams, and that is in their new product development and introduction efforts. For many companies, new products are the lifeblood of their future, but sales of products introduced in the previous five years often are only a small fraction of their total sales. Many companies don't track sales by product age so they are not even aware of the portion of their sales coming from their recent product introductions.

In general, organizations that have embarked on a CI transformation journey have focused on their manufacturing operations and the quality, cost and delivery aspect of their value proposition. In some companies, their CI efforts have expanded into support operations such as accounting, order processing, sales, etc. but very few organizations have begun CI efforts in their new product development. This is a tremendous lost opportunity. New product development is an important function for manufacturing organizations. The ability to develop new products and get them to market quickly is a critical competitive advantage for many of them, but often not an area where the rigors of CI are deployed.

New product development and introduction is a business process that can be improved with teams using the tools and techniques of CI. Value stream mapping can be employed to identify the activities in your new product development process that don't add value from the customer's perspective and just require more resources and slow the process down. When you work to improve your new product development process, don't forget about the value of concurrent engineering with your manufacturing, marketing and procurement teams so you can get your manufacturing engineers, the voice of the customer and your suppliers involved in the development process. I have seen industry estimates that indicate that the final cost of a new product is determined in the first 10% of the design cycle. That's exactly where you need to get suppliers, manufacturing engineers and especially the customers involved to get the lowest procurement and manufacturing cost for the product. This also prevents design creep adding features and functionality that customers are not willing to pay for in the final product.

Lean transformations are all about speed and reducing lead times in your operations by eliminating the waste that customers are not willing to pay for. Your new product development process is no different. When you and your competitors are both working on getting new products out to market, the company with the most efficient process that can get into the marketplace first is usually the winner. When you get there first, you can usually get a premium for the new product. But that gets reduced when competitors hit the market with a competing product. That early window is when you can get the best margins, but it can close very quickly -- so speed counts in new product introduction.

There are many sources of information about how teams can employ CI tools and techniques in new product development and introduction that can help organizations improve this area of their business. In addition to a number of consultants that are experienced with applying CI tools to new product development, there are a number of professional associations that can help you learn about developing a CI process for your development team. One of them, the Product Development and Management Association (PDMA), offers training and certification for people engaged in new product development, but there are many others as well.

If you Google the topic, you'll get over 600,000 hits, so there is no shortage of information and help on how to get started. Just don't let the opportunity to improve your new product development process go unexplored. Get started now so your company can enjoy the higher margins that come from being the first to market with new products.

Ralph Keller is president of the AME Institute and former president of the Association for Manufacturing Excellence.

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