Product Development

Product Development:

A process to generate concepts, designs, and plans for services and goods that an organization can provide to its customer.

An Overview of Product Development in the Auto Industry

Number of parts in a car: 8,000 - 20,000

Cost: Ford Escort: $5 billion (1980s)

Dodge Neon: $1.3 billion (1990s)

Time-to-market: 3 - 5 years

New Product Development (NPD) Practices

1. Stage-Gate (Phased-Review) Systems

Stage: Where the work is done Gate: A set of criteria that the product must

pass before moving to the next stage

Gate keeper: senior management team

Users: Royal Bank of Canada, Polaroid, Kodak, etc.

Stage 0Idea Validation

* Asssessment Team* Economic and TechnicalFeasibility* Present Capabilities* Quantify Critical Succes Factors* Business Plan

Gate 0Go/No-Go

Stage 1Conceptual Design

* Team Selection* Customer Requirements* Technology Selection* Finalize Critical Succes Factors* Develop the Action Plan* Financial Projection

Gate 1

Stage 2Specificationand Design

Gate 2

Stage 3PrototypeTest andValidate

Gate 3

Stage 4VolumeManufacturing

FIGURE 1STAGES AND GATES

Source: Northern Telecom, Inc.

Flow of product

= Initial Assessment

= Idea Validation

= Fuzzy Front-End Activities

Stage 0

Expected Results of Front-End Activities (Stage 0)

Clear product concept (aligned with customer needs).

Clear product definition. Clear project plan (resource requirement, etc.)

Front-End Decision at Gate 0

Fund the product development project

OR

Discontinue/kill the product development project

Mortality Rate of New Products

Transparency 6.7 (Exhibit 6.3)

NPD Practices (Cont.)

2. Concurrent engineering

The practice of involving teams of functional disciplines to simultaneously plan product and process activities

Over-the-Wall vs. Team Approach to Product Development

(Exhibit 4.3)Transparency 4.6

Effect of Concurrent Work Scheduling on Completion Time

(Exhibit 4.4)Transparency 4.8

NPD Practices (cont.)

3. Platform products

The practice of planning multiple generations of products based on a core product and process design

Original concept:

Auto industry: platform = chassis

New Users: IBM, Toshiba, Sony (e.g. walkman) , etc.

NPD Practices (cont.)

4. Supplier involvement

The practice of developing on-going contact/interactions with suppliers to enhance their participation in product development efforts/decision making

NPD Practices (cont.)

5. Customer involvement

The practice of developing on-going contacts / interactions with customers to better understand their needs.

IPD Practices (cont.)

6. Information technology utilization

The practice of employing computer and communication technologies to plan and coordinate product development activities

CAD (Computer Aided Design)

2 Dimension CAD and 3 Dimension CAD Examples:

GM: EDS Unigraphics Chrysler: Dassault CATIA Ford: SDRC IDEAS

Question:

Is it possible to predict whether a new product will be a successful product in the market?

NewProd System:Tool for Predicting New Product Success

Inventor: Robert G. Cooper, Ph.D. Using historical data from hundreds of

product development successes and failures Using a regression analysis Users: Procter and Gambler, Exxon, etc.

NewProd Questionnaire

1. Product superiority/quality

2. Economic advantage to the user

3. Overall company/project fit

4. Technological compatibility

5. Familiarity to the company

6. Market growth & need

7. Competitive situation

8. Defined opportunity 9. Project definition

If you use NewProd, you will be able to predict the success of your product 68 - 85% of the

time

THANK YOU

VERY MUCH