Authored by Vector Consulting Group
New Product Development (NPD) is the process adopted by companies to develop new products/models to cater to evolving customer needs. Most products move from the initial hype to maturity phase, and finally to obsolescence during their lifetimes. The market conditions prevailing during the launch of a product keep changing with time and companies have to continuously evolve their offerings in order to manage demand through the life of a product. NPD organizations are responsible for launching:
• new products/models and
• upgraded versions of current models on an ongoing basis so as to sustain their market demand, till the time they are replaced
A typical NPD organization is a multi-project environment with multiple product development initiatives running simultaneously, some being upgrades of existing models while others are completely new products/models.
Any new product, on introduction is expected to sell in large enough volumes so as to make a substantial difference to the company’s topline and profits. High demand for a product may be a necessary but is certainly not a sufficient condition for higher sales. The company must not only be able to generate demand but also be able to capitalize on it:
• by providing superior availability in the market and
• by ensuring high reliability of product performance across volumes; else the initial euphoria about the product dies down.
Therefore, apart from developing the product, the scope of an NPD initiative also includes the design & development of a manufacturing process and operations infrastructure to achieve the following:
a) Capability to adaptively match the future product’s supply to its (often volatile) market demand and
b) Capability to ensure repeatability in production so that variability in product performance is minimized
Typical NPD Stages
Once a conceptual idea for a new product or an upgrade is generated, the NPD process helps the company resolve the following questions in sequence and at different points in the development cycle:
A) Does the product idea satisfy the significant needs of a large enough segment of the market? In other words, will it help the company make money now and in the future?
This is the primary question to be answered since nothing else matters if the response to this question is negative. Most companies have an initial “Idea generation & screening” stage where multiple market research techniques are employed to generate product ideas. The ideas then get compared amongst themselves to identify those that are the most promising.
B) Is the product idea viable i.e. is it capable of meeting the performance criteria that it has set out to achieve?
This question is resolved in the next stage related to Concept Development and Testing. During this stage, the viability of a product idea is assessed internally within the organization by the design and engineering teams of the company. Detailed product design is generated and multiple tests performed to validate the product performance against the critical targets defined in the ideation stage. Design revisions are made to meet targets and validated through repeat tests- the entire process is iterative in nature. On successful completion of this evaluation, the company decides to go ahead full steam with development of product by allotting a budget. Communication with external supply chain partners is initiated to jointly develop the product only after this stage is passed and budget allotted.
C) Can the product be produced repeatedly with minimum variability so as to achieve reliability in performance?
This question is resolved once the company begins partnering with its supply chain partners to develop the product parts. The partners and the originator company work together and make changes in the initial concept design to resolve problems arising out of variability in parts produced by suppliers, all the while performing multiple iterative tests to validate the changes.