New Product Cycle Time
Reduction
Bart Gourley
Supply Chain Fall 2005
Introduction
• Products follow a life cycle
– products can be manufactured goods or services
• Competition in the market is forcing a decrease
in new product time-to-market
• The time between the inception of product idea
and its instantiation is the new product
development (NPD) cycle time (CT).
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Introduction (cont.)
• Benefits of a shorter NDP CTs
– Increased competitive advantage from faster
response time to market demands
– Increased profits from premium product prices
– Increased organization effectiveness and
productivity from improved cross functional
communication
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Introduction (cont.)
• Challenges to NDP CT
reduction
– Process and organization
strategy alignment
– Organization acceptance of
new NDP processes
– Present organization skill sets
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Outline
• Tool-Defined
• Tool Use-What NPD organization
problems can this tool help solve?
• Tool Applied-Nuts and Bolts
• Tool-Why the tool works
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Outline (cont.)
• Tool Example- Real World Example
• Tool-Exercise
• Summary
• Research Sources
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Tool-Defined
• Nine NPD CT reduction approaches
1.
2.
3.
4.
5.
6.
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Supplier involvement
Lead user involvement
Speeding up activities & tasks
Reduction of parts and components
Training and rewarding employees
Implementation of support systems and
technique
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Tool-Defined (cont.)
• Nine NPD CT reduction approaches (cont.)
7. Stimulating inter-functional cooperation
8. Emphasis on customer
9. Simplification of organizational structure
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Tool-Defined (cont.)
• Two benefits linked to the
application of NPD CT reduction
approaches are:
1. Increased product development
speed
2. Increased product profitability
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Tool Use- What NPD organization
problems can this tool help solve?
•
•
•
•
NPD is slowed by difficulty in creating product
designs that suppliers can produce
New products are meeting target profit margins
New products are meeting target profit margins
NPD is slowed by excessive development steps
administration overhead, and production
controls
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Tool Applied
• The systematic steps to applying a NPD CT
reduction approach are as follows:
1. Identify current problems affecting NPD CT
2. Identify which NPD CT reduction
approach(es) best address(es) the step 1
problems
3. Develop a tactical plan to improve the
problems based on the NPD CT reduction
approach(es)
4. Monitor the results of the effort
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Tool- Why the Tool Works
• Primary reason
– Addresses communication
– Addresses coordination
– Affects development speed and
cost
• Secondary reason
– Can be used to meet organization
strategic goals
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Tool-Real World Example
• Armstrong World Industries
• Global leader in the design and
manufacturing of floor ceilings
and cabinets
• Business units located
worldwide that include 30+
project teams and 42 plants
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Tool-Real World Example (cont.)
• In terms of NPD process, Armstrong’s
management faced three major challenges:
– Enforcing a standardized process,
– Managing resources, and
– Streamlining the current NPD process.
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Tool-Real World Example (cont.)
• Armstrong chose the following
NPD CT reduction approaches:
– Implement a support system
– Stimulate inter-functional
cooperation
– Simplify the organization
structure
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Tool-Real World Example (cont.)
• Tactical plan for NPD CT reduction
approaches
– Implement Clarity
• A repository where NPD information could
be stored and shared
• A standard process methodology across the
various business units
• A resource management tool among all firm
activities
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Tool-Real World Example (cont.)
• Results of the tactical plan for NPD CT
reduction approaches
– Reduced is NPD Cycle time by half
– Standardized and streamlined its NPD process
– Increase the available information on resource
usage and thereby management’s ability to
management resources
– Increased Armstrong’s responsiveness to
customer demand
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Tool-Exercise
X5 is a global accounting firm. X5 has 40,000
employees spread across 90 business units. Each
business unit is responsible for a geographic area.
The work of each business unit is consistent across
all units and consists of financial audits. When a
global client is audited, many different business
units are involved in the audit of sites located in
their geographic region.
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Tool-Exercise (cont.)
• X5 management faces several problems,
some of which are:
1. Coordinating cross-business unit efforts
2. Communicating audit finding to the multibusiness unit audit engagement team
3. Determining the total audit cost
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Tool-Exercise (cont.)
•
The executive management of X5 would like to
improve business unit cooperation and better track
cross-business unit audit costs.
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Tool-Exercise (cont.)
• Using the NPD CT reduction approaches,
answer the following questions:
1. What approaches can be used to address X5’s
problems?
2. How can the approaches be applied?
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Summary
• NDP CT reduction efforts often involve
more than one approach.
• Any approach alone will not necessarily
reduce CT. Instead, an approach with a
tactical plan to address a NPD problem will
reduce CT.
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Summary (cont.)
• NPD CT reduction approaches can be
applied to both manufacturing and service
firm environments.
• The key to any approach’s success is
determined by how well the tactical plan
addresses the identified problem and the
end reduction in CT.
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Research Sources
Datar, Srikant; Jordan, Clark; Kekre, Sunder; Rajiv,
Surendra; Srinivasan, Kannan. New Product Developm
Strutures and Time-to-Market, Management Science, Vol.
43, No.4, Frontier Research in Manufacturing and
Logistics (Apr., 1997), 452-464.
Ittner, Christopher D. Product Development Cycle Time and
Organizational Performance, Journal of Marketing
Research, Vol. 34, No.1, Special Issue on Innovation and
New Products (Feb., 1997), 13-23
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Research Sources (cont.)
Langerak, Fred and Hultink, Erick Jan. The
Impact of New Product Development Acceleration
Approaches on Speed and Profitability: Lessons
for Pioneers and Fast Followers, IEEE
Transactions on Engineering Management, Vol.
52, No.1 February 2005
Montgomery, Frank Hull. A Composite Model of
Product Development Effectiveness: Application
to Services, IEEE Transactions on Engineering
Management, Vol. 51, No.2 May 2004
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Research Sources (cont.)
Young, Mark. Case Study: Turning “Ideas into
Reality”, Chief Project Officer,
http://www.chiefprojectofficer.com/article/144
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