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Supply Chain Management 3050 > Chapter 4 - The New Product Development Process > Flashcards

Chapter 4 - The New Product Development Process Flashcards

1
Q

Customer Satisfaction Cycle

A
  • New product development is cross-functional.
    1. Get into the mind of the customer to identify needs.
    2. Conceptualize and develop the new product to meet the needs better than existing options.
    3. Verify financial viability of the new product. (developed, produced, and delivered profitably)
    4. Continuously invest in future customer-pleasing products and services.
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2
Q

Challenges/Risks of New Products

A
  1. Time compression (new ideas need to be ready before the current product is even launched)
  2. Cost (expensive) - speed delivery and lower risk of failure.
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3
Q

Formalized Risk Management

A
  1. Recognize what risk exist in a situation.
  2. Cross-functional team gathers data for each risk element and assigns a score.
  3. Risk reduction plans begin and progress is reported regularly.
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4
Q

Intel’s 8 risk factors

A
  1. Design
  2. Cost
  3. Legal Issues
  4. Supply availability
  5. Manufacturability
  6. Quality
  7. Supply Base
  8. Environmental, health, and safety impacts
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5
Q

4 approaches to reduce the technical and SC risks of new product development

A
  1. Early Supplier Involvement
  2. Core competencies
  3. “Design for” considerations
  4. Modular vs. Integral Product Design
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6
Q

Early Supplier Involvement

A
  • NPD team should include key suppliers of inputs and services.
  • Begin involvement very early, before irreversible design and distribution decisions have been made.
  • Invite suppliers to join the NPD team.
  • Seek long-term supplier relationships.
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7
Q

Core Competencies

A
  • Expertise is identified and applied.

- Never outsource the core competencies.

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8
Q

“Design for” Considerations

A
  • Design for manufacturability
  • Design for purchasing
  • Design for logistics
  • Design for environment
  • Design for disassembly
  • Design for reuse
  • Consider the design on how easy it will be to do these processes.
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9
Q

Modular vs. integral Product Design

A
  • Modular = manufactured in pieces and parts by a variety of sources and then assembled.
  • works well if planning on relying on outside suppliers and standard technology.
  • Integral = fewer options and less competition (mac must buy parts from apple)
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10
Q

Marketing (the 4 P’s)

A
  • Product
  • Price
  • Place
  • Promotion
  • Product Positioning (through promotion and product design)
  • CRM software and customer account teams.
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11
Q

SWOT

A
  • strength
  • weakness
  • opportunity
  • threat
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12
Q

CRM Software

A
  • Capture all data related to customers in a single location

- Allows company to put a single face forward to the customer

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13
Q

The Product

A

Includes the service, ease of use and performance, after-sale support, purchasing experience, the way customers are treated.
- All members of the demand/SC must satisfy the end customer.

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14
Q

Product Positioning

A
  • Understanding your customers and positioning the total package to meet their needs is critical to customer loyalty.
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15
Q

Pricing to Meet Customer Demand

A
  • Marketing
  • What is the customer willing to pay and what price is attractive = target price.
  • Target cost = target price - target profit margin (target cost is all inclusive)
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16
Q

New Product Development Stage

A
  • Begins when an organization identifies an unmet customer need.
  • Determines that the potential demand justifies further investigation.
17
Q

Sequential NPD

A
  • Traditional approach
  • Strict functional boundaries
  • Each functional area does its part and then passes work along to the next function.
  • Time-consuming and inefficient (whole process must finish before idea is evaluated)
18
Q

Concurrent NPD

A
  • Uses a cross-functional team to develop a new product with a targeted unit cost.
  • Teams include managers from marketing, R&D, engineering, production, purchasing, and external members.
  • Use “target costing” to guide decisions.
  • Key difference = key NPD activities take place at the same time that ideas are being shared.
19
Q

Determining Target Price, Profit, and Cost in NPD

A
  • Identify the target price and desired profit margin.
  • Profit margin = looking at the market and what the firm needs to make investors happy.
  • Target cost = target price - profit margin (the most the org. can spend to make the product)
  • Cost needs to be market competitive.
20
Q

Determinants of Target Price

A
  • Competitor Pricing
  • Estimated Cost Structure of product/service
  • Historic Cost Structure
  • Market Research Data
  • Price Elasticity
  • Perceived Vale Versus Competition
  • Market Conditions
21
Q

Best-In-Class Cost

A
  • Ensures that customers perceive the product as being a superior value in the marketplace.
  • Based on this, strategic cost-reduction plans and allowable product-level costs are developed.
  • Product level costs go to target level costs
  • Component level costs are then developed.
22
Q

Target Cost Breakdown and the NPD Team

A
  • Finance People
  • Often based on historical cost breakdowns for similar products.
  • Team of representatives from functions is formed.
23
Q

Cost Management Activities during NPD

A
  1. Supplier Development
  2. Design Change
  3. Material Change
  4. Specification Change
    - Most intense aspect of NPD
24
Q

Design

A

Although the organization might only spend 5% of the total, cumulative product cost on design, design influences 70% of the total cost.

25
Q

New Product Launch

A
  • New product team disbands and turns the product or service over to operations who is then responsible for continuous improvement and ongoing cost management.
  • NPD Costing and Target costing are complementary processes.
26
Q

Profit

A

A measure of how much a company makes after paying all its expenses

27
Q

Operating Profit

A

How much money a company makes from the ongoing business of selling its goods and services.
- Before tax & before money that the company makes or loses from other activities.

28
Q

Profit before tax

A

Represents the sum of operating profits plus or minus gains and losses from other activities.

29
Q

Cash Flow

A
  • The timing of cash payments and receipts that can make a difference to a company’s liquidity, not just the amount of these flows.
  • Cash enters a business through creditors (loans), investors (capital), and operations (cash).
  • Cash flows out to pay for the goods and services used and to repay investors and creditors.
30
Q

Economic Value Added (EVA)

A
  • Measures the true value that a product returns to its shareholders.
  • How much money the company makes from operations after taxes - cost of capital.
  • EVA = Operating Profit - Taxes - (Total Capital Employed x Company’s Cost of Capital)
  • Negative value means the investment didn’t pay for itself.
  • Zero = broke even
  • Positive = Adding Value

Supply Chain Management 3050 (8 decks)

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