5. New Product Innovation(Part 1) - Supply Chain Management

Summary

This lecture on supply chain management delves into new product innovation, contrasting the sequential and concurrent (CFT) approaches in product development. It emphasizes the importance of new product development for market competitiveness and explores the concept of lead time, differentiating between internal company lead time and external customer-facing lead time. The lecture highlights the benefits and drawbacks of each approach, noting that while sequential processes are straightforward, they carry higher risks and costs if changes are needed post-design. Conversely, the CFT approach, despite its complexity and potential for increased coordination costs, offers flexibility, shorter lead times, and better problem-solving capabilities, aligning products more closely with customer preferences.

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Q & A

What is the main focus of the fifth lecture in the supply chain management course?

The main focus of the fifth lecture is on new product innovation, specifically discussing the differences between a transitional and sequential approach to processing in a company and a new product development approach known as the concurrent engineering approach.

Why is new product development important in terms of market competitiveness?

New product development is important for market competitiveness because it can provide a significant advantage over competitors. Although it can be costly and risky, a new product that meets market demands can be highly competitive and potentially command a higher price to gain profits and break even.

What is the fundamental definition of lead time mentioned in the lecture?

The fundamental definition of lead time is the time between a customer ordering a product and the time the product arrives at the customer's house, encompassing the processes from order to delivery.

How does concurrent engineering differ from sequential processing in new product development?

Concurrent engineering, in contrast to sequential processing, involves multiple teams working simultaneously on different stages of product development rather than in a linear, stage-by-stage manner. This approach allows for faster feedback and adaptation, potentially reducing the overall lead time and risk.

What are the potential drawbacks of the sequential approach in product development?

The sequential approach can lead to higher risk, increased external costs if the product fails in the market, and a lack of flexibility to adapt to changing customer preferences. It also may result in concept or engineering freeze, where the product development process halts due to issues that arise late in the manufacturing stage.

What is meant by the term 'risk exposure period' in the context of product development?

The 'risk exposure period' refers to the potential risk that a company may incur for a product. In a sequential approach, this period is longer as there is less opportunity for feedback and changes once a stage is completed, whereas in a flexible, concurrent engineering approach, the risk exposure period is shorter due to the ability to make changes throughout the process.

How does the flexible new product development (NPD) approach with cross-functional teams address the challenges of the sequential approach?

The flexible NPD approach with cross-functional teams addresses challenges by allowing for constant feedback and simultaneous work across different stages of product development. This approach reduces the risk exposure period and enables quicker adaptation to changes, such as shifts in customer preferences or technological advancements.

What are some advantages of the traditional, sequential approach to product development?

Some advantages of the traditional, sequential approach include simplicity, clear accountability, and potentially lower coordination costs since each team works independently on their part of the process without the need for constant communication and collaboration across teams.

What are the potential disadvantages of the concurrent engineering approach in new product development?

The potential disadvantages of the concurrent engineering approach include increased coordination costs, the possibility of duplication of work as multiple ideas are tried out, and the risk of chaos within the company if teams are not effectively managed. Additionally, employee morale may decrease due to the complexity and demands of working in a highly integrated and simultaneous process.

How can a company mitigate the risks associated with the concurrent engineering approach?

A company can mitigate risks associated with the concurrent engineering approach by ensuring effective communication and coordination mechanisms, investing in robust project management tools, and fostering a culture of continuous learning and adaptation. Additionally, companies can benefit from piloting new products in smaller markets before full-scale launches to test viability and gather feedback.