New Product Development

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New Product Development

• New Product Development Process
• Designing for the Customer
• Designing for Manufacturability
• Economic Analysis of Development Projects
• Measuring Product Development Performance

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What is a Product?

• Need-satisfying
• A restaurant
• A university
• A computer manufacturer
• Customers buy satisfaction, not parts
• May be a good or a service

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Product Components
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Some Hard Facts
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Why Do So Many New Product Ideas Fail?

• What the Customer Wants
• What the firm can manufacture
• What the customer can afford
• What the firm wants to produce

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Product Design
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New Product Development Process
(NPD)http//www.npd-solutions.com/
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Generation of NP Opportunities

• Economic change
• Sociological and demographic change
• Technological change
• Political/legal change
• Changes in
• market practice
• professional standards
• suppliers and distributors

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Strategies for NP Introduction

• Market Pull (We Make What We Can Sell)
• food industry
• Technology Push (We Sell What We Can Make)
• electronics
• Interfunctional View
• personal computers

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Typical NPD Process

• Planning
• Concept Development
• System-Level design
• Design Detail
• Testing and Refinement
• Production Ramp-up

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New Product Design Process
Pilot production/testing
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New Product Design Process

• To be ISO 9000 certified, an organization must
  define and follow a new product design process.
• ISO International Organization for Standards.

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Cross Functional Product Design
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• 2. Designing for the Customer

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Gap Theory
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Why Dont Different Areas Cooperate?

• They dont speak the same language.
• They have different performance measures.
• They tend to have different personality types,
  i.e. they dont think alike.
• They are defensive about their own turfs.
• They are in different physical locations.
• They dont have time.

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Designing for the Customer
House of Quality
Ideal Customer Product
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Quality Function Deployment (QFD)

• Also known as House of Quality
• Developed in Japan in 1972.
• Tool for concurrent design of products
• Customer Attributes (Voice of the Customer)
• Engineering Characteristics (Voice of the
  Engineer)
• Tradeoffs
• Competitors Comparison

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The House of Quality
Customer requirements information forms the basis
for this matrix, used to translate them into
operating or engineering goals.
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Value Analysis/Value Engineering

• Achieve equivalent or better performance at a
  lower cost while maintaining all functional
  requirements defined by the customer
• Does the item have any design features that are
  not necessary?
• Can two or more parts be combined into one?
• How can we cut down the weight?
• Are there nonstandard parts that can be
  eliminated?

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3.Design for Manufacturability

• Value Analysis (or engineering)
• Modular Design

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Design for Manufacturability
Concurrent Engineering
Traditional Approach
Design Ensure Effective Production
Process Meet design requirements
Lets work together simultaneously
We design it, You build it
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Design for Manufacturing and Assembly

• Greatest improvements related to DFMA arise from
  simplification of the product by reducing the
  number of separate parts
• During the operation of the product, does the
  part move relative to all other parts already
  assembled?
• Must the part be of a different material or be
  isolated from other parts already assembled?
• Must the part be separate from all other parts to
  allow the disassembly of the product for
  adjustment or maintenance?

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Value Analysis (or Engineering)

• Simplifications of products and processes
• Terms in Value Analysis
• Objective primary purpose of the product
• Basic Function Makes the objective possible
• Secondary Function How to perform the basic
  function
• Value analysis seeks to improve the secondary
  function, e.g. how to open a can or make a tool
  box.

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Objectives of Value Analysis

• Enhance the design of a good or service to
  provide higher quality at the same price, or the
  same quality at a lower price.
• Modify the design of production process to lower
  the cost of a good or service while maintaining
  or improving quality.
• In other words, improve the ratio of usefulness
  (quality) to cost.

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DFM An Example
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DFM An Example (contd)

• Original Design
• 24 different parts to assemble
• 7 unique parts to manage in inventory
• Revised Design
• 4 different parts to assemble
• 3 unique parts to manage in inventory
• Final Design
• 2 parts to assemble and manage

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Modular Design

• Allows greater variety through mixing and
  matching of modules
• Develops a series of basic product components
  (modules) for later assembly into multiple
  products
• Reduces complexity and costs associated with
  large number of product variations
• Easy to subcontract production of modules

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Danas Rolling Chassis
A module they make for Chrysler.
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4. Economic Analysis

• Product Life cycle
• Financial Analysis

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Economic Analysis

• Using measurable factors to help determine
• Operational design and development decisions
• Go/no-go milestones
• Building a Base-Case Financial Model
• A financial model consisting of major cash flows
• Sensitivity Analysis for what if questions

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Product Life Cycle, Sales, Cost and Profit
Cost of Development Manufacture
Sales Revenue
Net Revenue
Loss
Time
Introduction
Maturity
Decline
Growth
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Products in Various Stages of Life Cycle
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Basis Financial Analysis

• Assess the (life-time) profit (in net present
  value) of a new product
• Cost Structure
• Development cost
• Ramp-up cost
• Marketing and support cost
• Production cost, etc.
• Sales projection

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Financial Analysis an Example

• Cost data and sales project
• Cash flow
• Net present value
• Sensitivity analysis

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5. Measuring Product Development Performance

• Time to market
• Productivity, Quality, Profit, etc

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Time to Market

• Frequency of new products introduced
• Time to market introduction
• Number stated and number completed
• Actual versus plan
• Percentage of sales from new products

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Percent of Sales From New Product
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New Product Development Cycle

• Development CycleTime from concept development
  to commercial production

19th century 70 years
WWI WWII 40years
After WWII to 60s 20 years
After 70s 5-10 years
Now Less than 3 years
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Productivity, Quality, and Others
Measures
Performance Dimension

• Engineering hours per project
• Cost of materials and tooling per project
• Actual versus plan
• Profit

Productivity

• Conformance-reliability in use
• Design-performance and customer satisfaction

Quality
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End Q A