 New Product Introduction (NPI), bringing a new idea to market, is often a much more complex process than expected. In previous blogs, I’ve talked about aspects of taking a product into production like writing a business plan, design for supply chain and design for assembly. The common thread is that this is a multi-disciplinary process. There are lots of stakeholders and to have a successful product, all of the stakeholders must be considered throughout.
The ultimate stakeholder of course, is the customer. This is something that many of us will forget, it’s natural that the engineers, designers, and craftsmen who developed an idea will take pride in their work. But, if customers aren’t willing to buy your product, you don’t have a product. Taking your product into production can often be the first point where the project becomes truly multi-disciplinary. And I don’t mean different types of engineering. NPI is the first time that all the groups in a company must be involved. It’s good practice to include all the stakeholders during ideation and design, that will allow a company to develop better products quicker. But when taking an idea into production, involving everyone in the company is critical. There are a lot of different stakeholders that have a wide array of skill sets (and opinions) and they all need to effectively contribute. finance, sales and marketing, purchasing, logistics, assembly, service, QA/QC all have input to a successful product and must be part of the development process. Managing all of the stakeholders means that the one key role in the NPI process will be the project manager. They may not have that title, but someone needs to consider the entire cross-functional scope of the project while balancing budget, timeline, as well as the needs and capabilities of all of the stakeholders. This is not a skill set that everyone has and randomly assigning the role to part of the team, or worse, dividing the project management responsibilities across the team, can severely jeopardize the project. Early stage companies may not have the multi-disciplinary staff or experience required for a NPI project. Engineers will rarely be good at sourcing, there may not be a purchasing department yet, or they may not have experience with negotiating longer term volume-based supply contracts. The list goes on. NPI is one point where a company should not try to learn by trying. NPI is time sensitive and expensive. It is also not a core function, most companies don’t continually develop products, NPI will be an occasional activity and not something that requires full time staff (and the associated long term cost). Finding external support for missing experience is not a failing, but often the best way to effectively get to the company’s real goal, to get that new product into production. An external firm may be the best option for project management where experienced NPI people can provide support just for the duration of the project. Providing guidance on requirements and timing they can also assist in building internal teams and processes to support production shortening the overall development time and helping to set the company up for success. NPI is all about getting your concept to market as quickly and effectively as possible. For most companies, NPI will be a periodic necessity, and not a core function. Therefore, it is important to consider the current team and establish if there is already a team member who can take on the critical role of project manager for this new product. If not, finding budget to bring on an external firm who can manage the NPI process and allow the team to focus on what they know best – the product and its potential customer – can save money, time, and get that product into production much more efficiently.  In part 3 of this series, I discussed the planning hierarchy and how it can be adapted and used to create both a model through which to structure a supply chain (from both a strategic and executional perspective) as well as how it can be used as a lens to prioritize supply chain activities. Its critically important to have a set of rules or standards around which to compare and contrast strategy and execution. It is the Bill of Materials (or BOM as it is commonly referred to) that sets these standards. Many early-stage companies believe that supply chain begins once the BOM has been established, but this is a critical error. This is because the BOM doesn’t exist on its own. While the BOM informs supply chain of required materials and specifications, it is the supply chain that informs the BOM itself about what it can viably include. Therefore the BOM serves as the bonding point between two iterative functions: supply chain and product design. However, it is important to remember that the BOM as a completed data set is merely the result, and a snapshot in the evolution of that data. It will continue to evolve with the product. The journey to get to a completed BOM is at least as important, if not more important, as the BOM itself. Avoiding unobtanium Throughout my career I have seen failed product launches due entirely to designs that have not been informed by critical factors such as: supply availability of specific parts, international trade considerations (logistics, regulations, customs, etc.), and even social/political/economic factors of either the regions of the materials supplied or the regions where the product is being shipped. That’s because a BOM can only represent what goes into something, it cannot represent why or how. It is in fact the journey of iterative exploration of different materials, parts, suppliers, manufacturing methods and supply regions that informs as to the viability of any design consideration, and invariably will influence design towards the lowest risk options while maintaining the overall functional requirements of the design. Sometimes functional requirements cannot be supported after supply chain research, and this is better to discover early on (as opposed to pre-production). Baking-in materials or processes into a design that are impossible to buy or support reliably (humorously referred to as “unobtanium”) is a recipe for failure. Often however, the design viability can be improved drastically with early iterative interactions between design and supply chain. Part specifications Perhaps the most important part of the process is the creation of specifications for each and every item which will eventually be included in a BOM. This is as equally important to supply chains as they are to product design. In Design, all the components must act together as a system, ultimately focused on the form, fit, and functional requirements of the end product as dictated by the business case. For every item in the BOM, specific requirements must be spelled out including not just dimensions, and tolerances, but also (for commercially available components) approved brands, models, and manufacturer specifications. Even more important still, is the understanding of why all those specifications are required, relative to the greater system in which they are to become a part of. It goes farther to support strategic management of materials and supply strategies, also referred to as “Plan for Every Part”. These specifications are always arrived at through continual trial and error, testing and refinement. In supply chain, its impossible to source products, evaluate potential suppliers, or manage inventories or demands, without specifications. It is those specifications which will measure what will be acceptable, and what will not. For this reason, sourcing is often executed after much or all the BOM has been established. However, this is far too late and ensures delays, and risks failure in the development process. Instead, supply chain must work hand-in-hand with engineering through the design process, considering possible sources, and manufacturers in concert with the engineering effort. Supply chain also needs to engage possible suppliers for advice (particularly for any item made to specification – but not exclusively since “off the shelf” products must also be fully specified and understood) to understand manufacturing limitations and opportunities for efficiency. All of this must be gathered and relayed back to engineering as meaningful data, and engineering can then reciprocate with design iterations that are viable from a supply chain point of view. The importance of revision control Of course, as the design is evolving a tremendous amount of time and effort will be lost if there is no mechanism in place to track the evolution as well as documenting every change and the specific reasons for the change. For engineering, this is the process where all the learning and intelligence (IP) around the product is developed and retained. So it is also true with supply chain, as supplier and component strategies depend on understanding the intimate details (and challenges) of every specific part. Supply chain is sometimes affected by revisions, and other times is the cause of revisions (supply problems OR possibilities of better items/technologies become available) but a complete knowledge of the evolution is required to strategize and optimize the supply chain as well as manage day-to-day operations once in production. Shared ownership is no ownership While the BOM is the connective tissue between engineering and supply chain, responsibility for the BOM, its revisions and specifications lie squarely with engineering. Why? Because the BOM is the stated design intent of all components relative to the end product (or in other words, relative to the system they must work together in). Design intent cannot be shared jointly by supply chain and engineering, nor should it ever be. Likewise, responsibility for supplier relationships, strategies and sourcing methods lie squarely with supply chain and cannot be shared with engineering. These are, in effect the “design intent” elements of the supply chain system and production execution that must produce those specifications dictated by engineering. While both design intent and supply/execution strategy inform and influence each other, anything less than a clear delineation of ownership will make everything run amuck in short order. When creating a supply chain from scratch, the finished BOM is only a snapshot in time. The knowledge generation, supply strategies, and overall viability of the supply chain is made or broken by the journey to the BOM, not the BOM itself. Want to read more in the Creating a Supply Chain from Scratch Series? Click the links below:
Part 1 - Understanding What a Supply Chain is and When to Start Establishing Your Product's Supply Chain Part 2 - Understanding Chaos and How to Work With It Part 3 - The Planning Hierarchy: Unlocking the Path Forward Part 5 - Supplier Management |
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