ISQA 510New Product Introduction (NPI)

Lecture 4

Agenda-Thoughts on Tyco?-Intro to NPI-DFX-Cisco Case Questions-TQRDC – Kropf Article: Best Practices-Tour Converse / Nike

NPINew Product Introduction (NPI) – Why care?Risks & Concerns without it? 60% cost in

design phaseSCM Strategy – Single / multi-sourcedDesign for “X”AVLPackagingPostponementService strategies

A Word on Technology

EngineeringScience

•Can the Technology be manufactured with known manufacturing processes?

•Are the critical parameters that control the new Technology’s functions identified?

•Are the safe operating ranges known?•Have the failure modes been evaluated?•Have the life cycle effects been evaluated?•Are the environmental effects known?

If yes, engineering. If no, science

Why design for manufacturability matters

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Product development

Total life cycle costs

Ability to control costs

Production Support

60% to 80% of total life cycle costs are largely determined during development

Strategy needs to consider the impact of globalization and pitfalls: The Goal: Maximize GM% early & Ethically

NPI Summary – All Affect Cost

Purchasing (RFQ / SOW)Engineering (ERP / AVL)Logistics (Packaging)Quality (Yield / Touches)Marketing (PRD)Warranty / ServiceMost Important – “The Crossover”

Sourcing and new product developmentInvolving sourcing decisions in development

processes at an early stage can result in contribution of new knowledge and better understanding of:ConstructionSuitable materialsSuppliersSupplier knowledge

Involving the supplier in new product development can also result in considerable savings

Linear to Concurrent

Design for….- Manufacture- Environment- End-of-life- Disassembly- Recycling- Quality- Maintainability- Reliability- Cost

Manufacturing and ProducabilityMake/buy Supplier alignment Integration of new manufacturing into previous

manufacturing process with minimum disruption and capitalization costs

Maximum responsiveness to surges (and declines!) in demand

Ease of Assembly/Manufacturability /Modularity Parts minimization TestabilityInspectabilityStandardization

Design For “X” (DFX)

Sales and marketing (Customer alignment)Meets Customers’ needs Design to Cost to allow Target pricingTime to marketProduct Price/Volume/Feature mixPackaging and Labels Advertising strategy, plan and literatureCatalogues

Design For “X” (DFX)

After market Support and ServicingTraining of factory personnel, sales force,

customers. Manuals and DocumentationMaintainabilitySpare Parts availabilityCustomer assembly LogisticsUpgradabilityShelf life and StorageInstallabilityWarranties

Design For “X” (DFX)

Cisco NPI – 6 Questions1. What are the risks in NPI overall?2. Why Foxconn or any new supplier?3. What are the challenges and risks with

China directly.4. What are the benefits of going to China

directly.5. Why Foxconn given reputation? (you may

need a little outside research)6. How do you mitigate the risks of going

direct to China?

Cisco CaseWhat do we know? Please add to this list important factors•Viking Product has transitioned to a faster model, surpassing the competition (Juniper & Alcatel).•Now want to go from US-based NPI & China transition to Foxconn out of the gate in Shenzen.•Foxconn had never made this complex a box, especially from the start, but now level – 3.•45% of employees and sales from outside US.•Proud of their “adaptive supply chain,” cut its number of outsourced partners from 13 to 4 (is this good & why?)•2001 Cisco went from 1,500 suppliers to 600, of which 200 had 80% of the spend.•Cisco Lean was the mantra, pull system & predictable lead-times and on-time shipments.

Negotiation game…….

Negotiation Game Rules

- Two buyers versus two sellers- There is a relationship, so not a single

transaction- Winners are both “best deal” AND best

relational outcome- Feel free to negotiate between now and

Friday, but details subject to change

Converse Tour