Product and Service Development

and Innovation strategies

 Learning objectives
• Understand strategic importance of Product and service development
• Learn the link between Operations and Product development strategy
• Understand new trends in Product and service development
strategies
• Learn Operations resource requirement for Product and service
development
• Understand the role of technology in Product development
 Introduction
• Successful products and services determine the long term success of the
organisation.
• New products and services are important drivers of revenue for any organisation
• New product and service development process is important for the survival and
growth of the company.
• New product or service development process is a complex one.
• It requires the organisation to focus on market in order to find and leverage
business opportunities for their products and services and it also requires inward
focus on its resources, talents and people skills
Importance of Product development and innovation
• Three important development recently put lot of pressure on product and
service innovation.
• Time to market has reduced
• Product life cycle is shrinking
• Product technology is continuously changing and hence process also need to be
changed.
• There is also another trend which is highly disturbing.
• More products reach disposal point early and it means more environmental problems.
• Recycling of old products may be an option and it put extra pressure on design of
products with more focus on design for recycling and remanufacturing.
Strategic importance of product and service development
Time to market
Integrated Product/Services Design and
Production Process
• According to the Product Development and Management Association (PDMA), the
product development is
• “the overall process of strategy, organisation, concept generation, product and
marketing plan creation and evaluation, and commercialisation of a new product.”
• Integration within the engineering function (e.g., integration of both product design
and process design and integration of electrical, mechanical and software design)
• Integration of the design and engineering function with the rest of the enterprise-
with marketing and function, with supply chain and finance function and
integration of the engineering function with external organisations (distribution
network and suppliers network).
Objectives of Integrated Product Development
• The developments of products to meet customer expectations and
quality specifications
• The design of processes or the consideration of process capabilities in
developing products so that products can be produced at a
competitive cost structure
• Reduction of time-to-market to bring products to market earlier and
be a pioneer
Concurrent method of product and process
development
• Product design stage determines almost 50% to 60% of product cost.
• The choice of material and sequence of the process is determined
during the design stage itself.
• Time pressure to launch new product forces many organisations to
practise simultaneous development. This will reduce the time to
market and hence improve competitiveness of their products in the
market.
Operations and Supply Chain Perspectives
• Repeatability
• Testability
• Serviceability
• Traceability
• Product volumes
• Logistics cost
• Match between the design and existing capabilities
Level of Product/Service Change
Product and Service Development as a Process
• NPD consists of every activity associated with developing an idea, developing a
product/service based on that idea, and creating a marketable product/service that
generates revenue and profit.
How Do We Measure NPD Success?

NPD success is often measured by whether the new product meets:

• Performance, product cost, and product quality objectives
• Project cost objectives
• Schedule targets
Concurrent Engineering

• Concurrent engineering, also called simultaneous engineering, is a

process for designing and developing products in which different phases
of new product development overlaps with each other, rather than a
sequential process.
• Cross member team
• Product design engineers
• Manufacturing engineers
• Marketing personnel
• Purchasing
• Finance
• Principal vendors
Advantages
• Faster time to market
• Enhanced quality
• Lower development costs
• Increased productivity
NPD and Competitive advantages

• Quality and New Product Development Process

• Speed of Product and Service Development
• Benefits of reducing time to market:
• Early bird advantage;
• Supports frequent product launches; and
• Advantage in Technology dependent market
Flexibility in Product/Service Development
• Flexibility in product/service development process is the ability to adapt to external
and internal changes normalised by the cost of adaptation.
• External factors
Benefits of flexibility in process:
• Competition changes
It reduces product development
• Customer preference changes risks
• Self-service technology changes It reduces cost of major
• Internal factors modifications in product designs
• Emergence of superior materials It avoids major market and internal
• Technology changes failures
• People competency changes
Cost of Product and Services Development

• Cross-functional team labour, overhead, fringe benefits

• Consultants and subcontractor's cost
• Prototype and testing material
• Tools for testing
• Depreciation of capital equipment
• Infrastructure cost
• Cost of inputs for product development
Operations Resources Requirements for
Product and Service Development
• New Product Development Capacity
• Unstable Demand for Development
• Role of Supply Partners in Product Development
• Strategic Alliance with other partners for development capacity
• The market is risky
• Powerful competition
• Organisation do not have technology
• Development time is predicted to be long and uncertain
• Collaboration with Customer for Development
Development chain and supply chain
Collaboration with Customer for Development

• The new emerging needs and wants of customers

• Where and how do customers buy the products? (in terms of SKUs,
retail outlet or online buying)
• How do customers store the product? (difficulty in storing, space
constraints)
• How does customer use the product? (right usage or wrong usage or
used for different applications which are not intended)
• How do customer dispose the product?
Product and Service Development
Technology
• Simulation helps in designing a complex service system containing some
waiting lines and inter-connected service sub-systems. (For examples:
hospitals, airport, theme park and so on)
• Simulation also helps in studying product/services robustness and resiliency
with what-if analysis and scenario development.
• Simulation also helps in prediction of failures of products.
• Simulation also helps in developing a service system virtually with many
replications so that one can study its performance to enable improvement in
service systems.
Product Lifecycle Management

• PLM is an integrated, information driven approach comprised of

people, processes/practices, and technology to all aspects of a
product’s life, from its design through manufacture, deployment and
maintenance-culminating in the product’s removal from service and
final disposal. By trading product information for wasted time, energy
and material across the entire organisation and into the supply chain,
PLM drives the next generation of lean thinking. (Grieves, 2006)
3D Printing and Product Development
• 3D printing, or additive manufacturing, is having large impact on product
design and manufacturing.
• The technology is not only transforming how products are manufactures,
but also how products are designed, and how quickly they are launched.
• As the technology continues improving, the availability of suitable raw
materials is improving, and the cost of producing with this technology is
going down.
Risks in New Product Development
• Steps in Risk Management:
• Identifying risk factors in the process
• Evaluation and measurement of these risks
• Prioritisation of these risks based on impact and loss
• Development of mitigation strategies and action plan
• Follow-up with corrective actions
• Some risk issues emerge after launching the product.
• Product failure/Product risk –recalls etc., (Product recalls involve logistic at a larger scale and hence more cost)
• Warranty issues
• New product introduction lead to cannibalisation and deviation in forecast estimation
• Product safety issues
New Trends in Product/Service Development
• Reverse innovation
• Reverse innovation is the strategy of innovating in emerging (or developing)
markets and then distributing/marketing these innovations in developed
markets.
• Product Design and Sustainability
• The sustainability approach has proven that it is possible to produce products
that do not harm the people and the planet, but support their health while
generating profit at the same time.
Some design aspects for sustainability
• Product must consume less materials while production
• Design must consider the issue of remanufacturing and recycling (Easy to dismantle,
design for redesign and design for recycling)
• Production process should not consume more energy
• Product must be designed for self-destruction without damaging environment after its
use
• Product design must consider water consumption during production
• Carbon footprint must be considered while designing the products
• Products must be designed to consume less energy
• Products must be designed to release less pollution gases