Step 6.2

Estimate market needs and costs for production.

Primary findings

Models

Design manufacturing integration is positively associated with NPD project efficiency, if product design and manufacturing personnel act in truly cooperative ways, overall project efficiency should increase.
Survey of 137 completed NPD projects. The degree of design and manufacturing integration significantly differed across the project groups in the expected direction.
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Methods

By using templates, the time required for new product development is drastically reduced. At the same time incorporating computer-aided process planning into the system gives the designer a better understanding of the cost implications of the modified design with respect to manufacturing. The major challenge in implementing of such system is that any changes in the manufacturing facility have to be incorporated in the process plans stored. This can be a tedious job but can be overcome by using hybrid process planning approach instead of variant based approach.
Author experience
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Cost Estimation — A product's costs include development, manufacturing, advertising, selling warranties and replacements. Relevant cost definitions include: Capital Cost — cost of borrowing money to finance entire development, production, commercialization process. Direct Cost — costs clearly traceable to a unit of output in terms of device or service unit. Manufacturing Overhead Cost - all costs excluding direct materials and direct labor. Prime Cost — total of direct material and direct labor.
Authors experience in industrial engineering, physical medicine and rehabilitation, and as Editor-in-Chief of the International Journal of Industrial Engineering.
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Create and maintain high levels of integration between Marketing and Research & Development functions and product prototype development, product launch and cycle times will all have increased proficiency. Market forecast accuracy and technological core competency fit will also be improved with function integration. Be sure to implement integration at step 4.1.
Survey. A multiple regression analysis revealed significance between integration and: product prototype development proficiency (F=70.80); product launch proficiency (F=122.74); product development cycle time (F=13.84), market forecast accuracy (F=75.65); and technological core competency fit (F=39.64), all interactions significant at the p<.001 level.
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Exxon/Mobil lists a key lesson as: Properly resource roll-outs of NPD work processes to avoid false starts; otherwise there may be fits and starts of activity with gaps in between because of resource problems.
Industry experience.
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Organizations should have coherent administrative procedures, including information-gathering systems reviewing new opportunities; flexible capital budgets that extend beyond two years; up-to-date capital budgeting manuals; full time capital budgeting staff; regular reviews of hurdle rates; and a capital appropriation committee to vet projects.
Survey with significant findings
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Process planning task involves the development of a set of work instructions used for part transformation from its initial to final form. In the proposed system, the process plan module provides detailed information and description of manufacturing processes and machine tools required. The information includes: list of required machines; specific cutting energy for the work material; standard set-up and tear down times; number of tools required; and cost per hour of operation. A search heuristic is developed for the selection of appropriate process plan. If a process plan is not found in the database, a new process plan will be generated based on the defined design features, dimensions and required tolerance for finished product. The information from the developed process plan is used to calculate the manufacturing time and cost.
Author developed template
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Product Demand Forecasting — helps an organization effectively manage issues including: monthly/quarterly/annual sales targets; estimating inventory on hand to meet orders without an excessive backlog; estimating raw materials necessary to meet manufacturing targets and deadlines; projection of time line for acquiring and stocking materials inventory for manufacturing; estimating labor force (workers, managers, technicians) required to commence and complete production schedule detailed above; effects of monetary value of forecasted activity on company's operating capital and profitability.
Authors experience in industrial engineering, physical medicine and rehabilitation, and as Editor-in-Chief of the International Journal of Industrial Engineering.
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Sound evaluation methods are needed for new product success, including strategic screenings of new product proposals; utilization of market research; and primary and secondary valuation using a variety of methods such as net present value or Payback.
Survey with significant findings.
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Tips

Higher levels of sophistication in capital budgeting are associated with new product development success.
Survey with significant findings.
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If operating as a defender, a company who focuses on existing products and stable markets, pay close attention to lowering costs and price in order to improve new product development performance.
Survey. The cost/price driver for NPD performance improvement was found to be significantly greater for defenders than for prospectors.
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Secondary findings

Barriers

Financial evaluation dilemma — Flimsy data may result in the elimination of potentially successful projects. However, failure to evaluate at an early stage (using any and all available data) results in new product development failure.
Source: Hayes & Abernathy, 1980; Hayes & Garvin, 1982; Pearson, 1986. In: Neale, C.W. (1994)

Methods

Use of methods such as design for manufacturing (DFM) to encourage the integration of product and process design decisions has been associated with lower product costs and better conformance quality.
Source: Youssef (1994), Swink (2002), Sanchez and Perez, (2003). In: Swink, M., Talluri, S., & Pandejpong, T. (2006)

Develop production and capacity plan.

Primary findings

Barriers

Neglecting Risk Management: To speed development time and save money, the project skipped the pilot demonstration phase of a new manufacturing process, with production designs derived from bench demonstrations, and concepts based on computer simulations only.
Conclusions drawn from case studies and experience.
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Models

Design manufacturing integration is positively associated with NPD project efficiency, if product design and manufacturing personnel act in truly cooperative ways, overall project efficiency should increase.
Survey of 137 completed NPD projects. The degree of design and manufacturing integration significantly differed across the project groups in the expected direction.
(View full citation)

Methods

By using templates, the time required for new product development is drastically reduced. At the same time incorporating computer-aided process planning into the system gives the designer a better understanding of the cost implications of the modified design with respect to manufacturing. The major challenge in implementing of such system is that any changes in the manufacturing facility have to be incorporated in the process plans stored. This can be a tedious job but can be overcome by using hybrid process planning approach instead of variant based approach.
Author experience
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Manufacturing Facilities Design — buildings to house and equipment to conduct manufacturing process. The design includes the following considerations: — Type of equipment; — Power rating of equipment; — Number of machines required; — Manufacturing facilities layout.
Authors experience in industrial engineering, physical medicine and rehabilitation, and as Editor-in-Chief of the International Journal of Industrial Engineering.
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Manufacturing processes can be categorized into three classes: 1) Primary — the main shape generating processes (cast, forge, mold). 2) Secondary — refine the part's features or form (machine, grind, broach). 3) Tertiary — finishing processes such as surface and heat treatments that typically affect only one attribute of the product.
Authors experience in industrial engineering, physical medicine and rehabilitation, and as Editor-in-Chief of the International Journal of Industrial Engineering.
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Once the product design is finalized, its cost structure determined and future demand forecasted, production manufacturing needs must be planned and build. The size, selection of equipment, material routing characteristics etc., of these facilities are largely dictated by the demand forecast. Over production increases inventory carrying costs, while under production fails to fill orders.
Authors experience in industrial engineering, physical medicine and rehabilitation, and as Editor-in-Chief of the International Journal of Industrial Engineering.
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Process planning task involves the development of a set of work instructions used for part transformation from its initial to final form. In the proposed system, the process plan module provides detailed information and description of manufacturing processes and machine tools required. The information includes: list of required machines; specific cutting energy for the work material; standard set-up and tear down times; number of tools required; and cost per hour of operation. A search heuristic is developed for the selection of appropriate process plan. If a process plan is not found in the database, a new process plan will be generated based on the defined design features, dimensions and required tolerance for finished product. The information from the developed process plan is used to calculate the manufacturing time and cost.
Author developed template
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Tips

Align product development with manufacturing capabilities, to ensure that any process issues or infrastructure upgrades are planned and implemented on a timetable appropriate for market launch.
Conclusions drawn from case studies and experience.
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Construct a Critical Path Analysis which specifies a schedule of events and dates with required timing for all production and marketing activities to be completed by launch.
Experiential
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The NPD scale-up and validation stages cannot be omitted to save time or money, particularly when revisions are made mid-project. It is a gamble that usually ends up costing more of both.
Conclusions drawn from case studies and experience.
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Theory of Performance Frontiers suggests that NPD project efficiency is improved through the implementation of changes to project execution processes. Such process changes might apply new technologies, operating procedures, organizational structures, or other practices that remove waste (inefficiency) from design and development activities.
Survey of 137 completed NPD projects. Authors interpretation of theory of performance frontiers as it relates to NPD
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Secondary findings

Barriers

An interesting modification to concurrent engineering is the agile concurrent engineering (ACE) methodology. Its main characteristics are full utilization of resources through resource sharing, agile teams suited for medium or small-sized firms and minimum organization restructuring. In this methodology, a quantitative modeling tool for the concurrent engineering process was developed which describes the mini-circulations and resource sharing within the system. This tool (ESHLEP-N) was a high-level evaluation, stochastic Petri-net model.
Source: Yan and Jiang (1999). In: Kamrani, A., & Vijayan, A. (2006)

Coordination in this sense refers to the problem of ensuring that scarce development resources are allocated efficiently to the different tasks that must be accomplished, that task deadlines are set appropriately and communicated clearly, and that the sequence of planned activities leads to a total project duration that approaches the minimum possible. In the literature on project management, these problems are typically addressed in terms of PERT charts and 'critical path analysis'
Source: Eppen, Gould, and Schmidt (1993). In: Hoopes, D.G., & Postrel, S. (1999)

Use of methods such as design for manufacturing (DFM) to encourage the integration of product and process design decisions has been associated with lower product costs and better conformance quality.
Source: Youssef (1994), Swink (2002), Sanchez and Perez, (2003). In: Swink, M., Talluri, S., & Pandejpong, T. (2006)

Finalize marketing and sales plans.

Primary findings

Carriers

Implement system to facilitate self-education of target market to encourage them to begin to recognize their need for a product.
Case Study
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Utilize other stakeholders to help target market to see their need for a product or service.
Case Study
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Models

Distribution of collaboration during the Trial Production and Market Planning stages was manufacturer involvement (100%), user involvement (0%) and third-party involvement (21%).
Case study of seventeen medical equipment innovations marketed by 13 Dutch firms.
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Methods

Beta testing — A common practice is to extend the beta test beyond the product itself to address support elements such as training and documentation, and the marketing and sales strategies.
Literature review, analysis of twenty-one programs, and four in-depth field investigations.
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Human Factors should be treated as part of the critical path in product design, including usability testing, training of users or sales personnel, writing operating manuals, and writing labels and package inserts.
Medical Device Industry experience.
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Market Predictability as a category had the highest correlation with product success. It was comprised of the following four statements: 1) The customers needs were well defined; 2) The customer's needs could be readily into product performance specifications; 3) We were completely familiar with the market; 4) We could accurately forecast demand for this product.
A balanced sample of 62 success products and 62 failure products drawn from 31 hi-tech firms, were analyzed via questionnaire and case study interviews.
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Market information applied during the commercialization (production) phase of NPD, is shown to be related to product success, when it is used to position the product in the customer's minds within the right market segment.
Survey of 166 firms.
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Marketing Skills and Resources as a category had the second highest correlation with product success. It was comprised of the following six statements: 1) Our market research skills were at ideal level for this product; 2) Our perceived marketing expertise in this project area was very high; 3) Our marketing skills were at ideal level for this project; 4) Our forecast of the market demand for this product was accurate; 5) There was a close fit between our marketing skills and the needs of this project; 6) Our predictions about customer requirements were accurate.
A balanced sample of 62 success products and 62 failure products drawn from 31 hi-tech firms, were analyzed via questionnaire and case study interviews.
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Product positioning is crucial for success. As a product gets closer to launch it may be found to offer no competitive advantage. Therefore it is important for early analysis to focus on product issues such as compatibility and versatility, cost effectiveness and ease of technical service may all differentiate the new offer from existing competitors.
A balanced sample of 62 success products and 62 failure products drawn from 31 hi-tech firms, were analyzed via questionnaire and case study interviews.
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Respondents identified eleven areas covered to some degree in product support planning activities, in descending order of companies covering each topic: 1. Installation methods; 2. User Training, 3. Documentation requirements, 4. Preventive maintenance methods, 5. Repair philosophy (e.g., modular diagnostics), 6. Spare parts requirements, 7. Field organization requirements, 8. Technical/application support required, 9. cost of ownership, 10. Service profit, 11. Upgrades.
Survey of 66 companies plus one case study.
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Utilization of market research early in the new product development process, and continuing throughout the entire development phase is critical to ensuring success.
Survey data.
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Measures

A range of measures for quantitatively measuring customer and product support could be used in combination to generate a more comprehensive evaluation of support requirements at the design stage and during pre-launch planning. These are: 1) Installation — time required; 2) User Training — time required to train to skill level; 3) Maintenance — mean time between and time per maintenance; 4) Repair — failure rate, fault diagnosis time and mean time to repair; 5) Upgrades — time, human resources and materials required.
Survey of 66 companies plus one case study.
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Quality Function Deployment is a tool for bringing the voice of the customer into the NPD process from conceptual design through to manufacturing. A survey also found that QFD was most commonly used to clarify customer requirements and ensure those customer requirements are considered in the product engineering requirements.
Survey of 400 companies.
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Tips

Construct a Critical Path Analysis which specifies a schedule of events and dates with required timing for all production and marketing activities to be completed by launch.
Experiential
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Develop the Communications Mix, including press releases, trade shows, public relations, promotions, media ads and others.
Experiential
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Influencers on new product success or failure are changing, with social media grows in influence. Younger customers are more highly influenced by recommendations by peers, particularly through social networking. Concept and product development must be conducted in tandem to ensure a good product-concept fit, and to avoid costly changes to product features.
Experience as head of new product development and innovation in a corporation.
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Secondary findings

Barriers

Two studies identified the principal causes of new product failure as ineffective product marketing and poor market research.
Source: Hopkins, 1980; Cooper, 1975. In: Zirger, B.J., & Maidique, M.A. (1990)

Tips

Use customer information when planning and managing the launch because the product must be positioned towards the customers' needs while communicating the product solution. A good source for finding customer information is at trade shows.
Source: Di Benedetto (1999), Stryker (1996), Ylinenpaa (1997). In: Frishammar, J. & Ylinenpaa, H. (2007)