scm_ch04

scm_ch04 - Supply Chain Management: From Vision to...

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Supply Chain Management: From Vision to Implementation Chapter 4: New Product Development Process: Managing the Idea Infrastructure
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2 Chapter 4: Learning Objectives 1. Describe the new product development process and how it affects company and SC success. 1. List the risks involved in the new product process. Explain how to mitigate these risks.
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3 Chapter 4: Learning Objectives 1. Describe the marketing process and discuss its role in the new product process. 1. Define target costing and explain its role in developing new products and services.
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4 Chapter 4: Learning Objectives 1. Describe the finance process and discuss its role in the new product process. 1. Discuss EVA, profitability, and cash flow as key financial metrics for organizations.
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5 New Product Development New product development is risky and expensive. More than 9 out of 10 products fail. New product development is cross-functional: Marketing identifies unfilled customer needs Finance verifies that it is economically viable SC leaders rely on teaming which includes suppliers and customers.
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6 Customer Satisfaction Cycle
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7 Mitigating Risk Companies are faced with increasing levels of risk in today’s market. Time Compression – product life cycles are being reduced, this increases risk because: New products must continually be in development Less time to capture development costs Cost – new product development is expensive with costs regularly exceeding $100 million 40% of all quality problems stem from poor design 60-80% of a product's cost is determined during design
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8 Intel’s Plan to Mitigate Risk Intel regularly faces product life cycles that are less than 6 months. Integrated circuit development cost can exceed $30 million, requires $1 billion market to justify expense. To mitigate risk, Intel analyzes 8 risk factors: Design Manufacturability Cost Quality Legal Issues Supply Base Supply Availability Environmental, Health, and Safety Impacts
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9 Intel’s Plan to Mitigate Risk Intel uses a “scorecard” to add visibility to risk in new product development. Additional actions taken: Clear “owner” for each risk reduction plan Cross-functional teams Specific timetables are established for risk reduction progress Progress is regularly reported to top management High risk aspects are highlighted not glossed over Results: Nearly eliminated surprises during development
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10 Intel’s Risk Scorecard
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11 Early Supplier Involvement (ESI) ESI is a key element of innovation strategies. ESI accounts for one-third of the reduction in labor-hours and 4-5 months of the shorter development cycle in the auto industry. Products introduced on-time but 50% over
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scm_ch04 - Supply Chain Management: From Vision to...

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