2-F-1 Participate in product/service development or specification/requirement changes that support organizational merchandising and marketing efforts to meet customer needs
New product or service development (NPD/NSD) is a key source of competitive advantage for organizations, requiring the design of better, higher quality products and services and bringing them quickly to market. Organizations today can make use of information technology to bring individual departments together as teams to work on releasing new products or services. Supply management plays a key role in a new product handover to production, or the selection and coordination of suppliers for a new service offering.
A critical practice in NPD /NSD is the use of concurrent engineering to capture input and knowledge from key stakeholders, internal and external. Concurrent engineering, typically employed via cross-functional teams, has been shown to be faster, cheaper and better for product and service development than serial alternatives. Cross-functional teams help ensure that the new product is designed taking into consideration manufactur ability, procurability, reliability, maintainability, schedulability and marketability, in the early stages. Such considerations help avoid errors that waste time and resources later in the product life cycle. Involvement of back-office operations staff, customers, front-line staff and suppliers is similarly critical. A consistent approach to NSD encompassing all relevant disciplines is critically important given the need to manage the more intangible aspects of service delivery arid controlling contact with customers.
Manufacturing and services organizations benefit from following the general rule of involving key suppliers earlier and more extensively in the new product or service development process, and can generate significant gains in product design, service delivery and customer satisfaction.
1) The product and service development process
A) Customer requirements -A customer requirement may be a problem to be solved. The requirements of the customer may be expressed or may be yet to be articulated, and represent new product or service development opportunities for the organization.
B) Quality function deployment (QFD)- QFD according to• the ISM Glossary is a structured method for translating user requirements into detailed design specifications using a continual stream of "what/how" matrices. QFD links the needs of the customer (end user) with design, development, engineering, manufacturing and service functions. It helps organizations seek out both spoken and unspoken needs, translate these into actions and designs, and focus various business functions toward achieving this common goal. The system is designed to ensure that the product or service delivered to the customer meets or exceeds all of a customer's major requirements. QFD works to eliminate the gap between what the customer wants from the product and what the product is capable of delivering. It does this via a set .of communication and translation tools designed to capture the critical characteristics of a new or existing product or service from the separate viewpoints of the customer, market segments, organization or technology development needs. These tools enable the organization to:
• Obtain a thorough understanding of what the customer wants.
• Compare existing product or service features to the customer's wants. Features the customer does not care about can become candidates for elimination. Features that the customer wants can be added.
1.0 House of Quality matrix -The House of Quality is the first matrix in a four-phase QFD process, and is used for defining the relationship between customer requirements and the organization, product or service capabilities. It's called the House of Quality because of the correlation matrix that is roof shaped and sits on top of the main body of the matrix. The correlation matrix evaluates how the. defined product specifications optimize or sub-optimize each other.
C) Needs analysis -This is a process of analyzing customer needs and wants, described in customer terms, and then developing a commercially viable solution. There are four key pieces of information that can be obtained from customers: 1) What is the problem? 2) Who has the problem? 3) How important is the problem's solution to the customer? 4) How valuable is the problem's solution to the customer?
D) Alternative sources of supply -This is a risk reduction strategy implemented to establish additional avenues of supply of raw materials, components and assemblies or services beyond those provided by current suppliers. Products may be redesigned to broaden the potential supply base, or the organization may choose to develop the quality and capabilities of other suppliers.
E) Evaluation techniques of supply forecasts and capacity - Many organizations invest significant time and effort forecasting sales, but forecasts of raw materials, and component availability and cost is just as important. Without the ability to increase production or service capacity at the• same rate as sales. increase, an organization risks late deliveries and irate customers. Forecasts of supply availability should be made just as diligently as forecasts for demand.
F) Benchmarking - Benchmarking is defined as a process by which selected practices and results of one organization are compared to those of one or more other organizations to establish targets for improvement. Benchmarking can be performed by identifying world class organizations and visiting them for information gathering and comparison or by responding to surveys from third-party independent research organizations that collect, aggregate and disseminate benchmark data. (ISM Glossary, 2006.) Benchmarking in product or service development provides an external perspective on opportunities to improve products, services, technology, manufacturing and support processes, the product or service development process and engineering practices. Organizations must have a willingness to scrutinize their operations, products and services and compare them with other organizations without being defensive.
G) Planned obsolescence -This is a conscious decision on the part of an organization to produce a product or perform a service that will become obsolete and/ or non-functional within a defined time frame. Adopted in products from vehicles to light bulbs, this strategy encourages repeat purchases by consumers, thereby increasing sales.
H) Early supply management involvement -Even •before using early supplier involvement (ESI), supply management should be involved in the product and service development and design process. Supply management brings insight into supply market conditions, availability of materials and services and potential sources of supply. Supply management also is able to apply such tools as value engineering and analysis, and standardization to specification development.
2) Role of supply management in product or service design
A) Research and development -Before the design drawings and specifications are released, there has to be a dialog between the designer/internal customer and the supply management department. Both bring desirable information to the table. The supply management professional's knowledge of the supply markets enables the provision of information about service, product or material availability, as well as information regarding new developments on the horizon. Working together improves speed of release, cost effectiveness and total quality for a new initiative.
B) Substitution - Supply management may be able to recommend services, parts or materials that meet functional requirements at the lowest practicable cost. Often suppliers can recommend newer or alternative solutions that provide the same function.
C) Product innovation - Supply management is responsible for maintaining and developing relationships with suppliers that result in their sharing information on innovations with the supply management professional's organization. If such relationships are carefully cultivated, suppliers may recommend new products or services on the market that enable the designer or internal customer to make inventive or resourceful changes.
D) Contracting for design services - During the design phase, scarce project resources (for example, time of designers and engineers, computer capacity) can often delay release of a product into the marketplace. Supply management can contract with outside services to help ensure that each project stays on target. Design services that may be contracted include circuit design, software development and programming, prototype machine and assembly, graphic design, technical writing, modeling, testing and equipment rental.
E) Qualified Product Lists (QPL) -The speed of the entire design process is dependent on the weakest link in the process. Consequently, it is advisable to avoid parts or processes that may impede the smooth flow of the operation. Supply management can assist design and engineering teams by calling attention to parts that are on a qualified products list and those that may have long or unstable lead times.
F) Early Supplier Involvement (ESI) -A practice that involves one or more selected suppliers with a supply management professional's product or service. design team early in the specification development process is defined as early supplier involvement. The objective is to use the supplier's expertise and experience in developing a product or service specification that is designed for effective and efficient launch initiative. See Task 2-A-3 for an additional discussion on ESI.
G) Sourcing and cost profitability issues -.Supply management can become involved up front to make sure all potential costs are identified accurately early in a product or service design project. With its knowledge of suppliers' products, services and know how, supply management is in a position to suggest materials and component substitutions; items ripe for standardization, how processes might be modified, and if specifications are clearly and effectively written, to enhance competition. Use of such information, and the application_ of cost-saving concepts, ensure that supply management is adding value and contributing to the successful decision-making processes within the organization.
H) Target costing -This concept is used in supply management to identify the allowable price for a supplier's product or service, which starts with the selling price of the buyer's end product, or service for its end product, or service in the marketplace subtracting the required profit. The amount remaining is the total that it can cost the organization to make that product or to perform that service, including materials. This cost is allocated among purchases and internal costs. The result is the target cost for each item•. Supply management then works with suppliers to ensure that their prices come in at or below the target cost. Further analysis and negotiation then seeks to remove costs from the buyer's and the seller's operations to reduce the price to the acceptable target level. (ISM Glossary, 2006.)