New Product Cycle Time Reduction

1. New Product Cycle Time Reduction Bart Gourley Supply Chain Fall 2005

2. 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). NP CT Reduction

3. 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 NP CT Reduction

4. Introduction (cont.) • Challenges to NDP CT reduction • Process and organization strategy alignment • Organization acceptance of new NDP processes • Present organization skill sets NP CT Reduction

5. Outline • Tool-Defined • Tool Use-What NPD organization problems can this tool help solve? • Tool Applied-Nuts and Bolts • Tool-Why the tool works NP CT Reduction

6. Outline (cont.) • Tool Example- Real World Example • Tool-Exercise • Summary • Research Sources NP CT Reduction

7. Tool-Defined • Nine NPD CT reduction approaches • Supplier involvement • Lead user involvement • Speeding up activities & tasks • Reduction of parts and components • Training and rewarding employees • Implementation of support systems and technique NP CT Reduction

8. Tool-Defined (cont.) • Nine NPD CT reduction approaches (cont.) • Stimulating inter-functional cooperation • Emphasis on customer • Simplification of organizational structure NP CT Reduction

9. Tool-Defined (cont.) • Two benefits linked to the application of NPD CT reduction approaches are: • Increased product development speed • Increased product profitability NP CT Reduction

10. 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 NP CT Reduction

11. Tool Applied • The systematic steps to applying a NPD CT reduction approach are as follows: • Identify current problems affecting NPD CT • Identify which NPD CT reduction approach(es) best address(es) the step 1 problems • Develop a tactical plan to improve the problems based on the NPD CT reduction approach(es) • Monitor the results of the effort NP CT Reduction

12. 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 NP CT Reduction

13. 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 Tool-Real World Example NP CT Reduction

14. 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. NP CT Reduction

15. 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 NP CT Reduction

16. 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 NP CT Reduction

17. 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 NP CT Reduction

18. 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. NP CT Reduction

19. Tool-Exercise (cont.) • X5 management faces several problems, some of which are: • Coordinating cross-business unit efforts • Communicating audit finding to the multi-business unit audit engagement team • Determining the total audit cost NP CT Reduction

20. The executive management of X5 would like to improve business unit cooperation and better track cross-business unit audit costs. Tool-Exercise (cont.) NP CT Reduction

21. Tool-Exercise (cont.) • Using the NPD CT reduction approaches, answer the following questions: • What approaches can be used to address X5’s problems? • How can the approaches be applied? NP CT Reduction

22. 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. NP CT Reduction

23. 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. NP CT Reduction

24. 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 NP CT Reduction

25. 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 NP CT Reduction

26. Research Sources (cont.) Young, Mark.Case Study: Turning “Ideas into Reality”, Chief Project Officer, http://www.chiefprojectofficer.com/article/144 NP CT Reduction