Innovation and New Product

Development

Key Themes
Product planning,
Product life cycle,
Product development process tools,
SCRUM.
Creativity

Product Life Cycles

Cost of development and production

Sales, cost, and cash flow

Sales revenue
Net revenue (profit)

Cash
flow

Negative
cash flow

Introduction

Loss

Growth

Maturity

Decline
Figure 5.1

Product Life Cycle Costs

100

Costs committed

Percent of total cost

80
60

Costs incurred

40
20

Ease of change

Concept
design

Detailed
design
prototype

Manufacturing

Distribution,
service,
and disposal

Importance of New Products

Percentage of Sales from New Products

50%
40%
30%
20%
10%

Industry
leader

Top
third

Middle
third

Position of Firm in Its Industry

Bottom
third
Figure 5.2

Scope of Change
Incremental change - change of a relatively small
scope, such as making small improvements
Strategic change - change of a larger scale, such as
organizational restructuring
Transformational change - change in which the
organization moves to a radically different, and
sometimes unknown, future state

Sources: Adapted from Kidd (1995) Warren, (1995), Unipart 10-to-Zero (1995)

Key Performance Metric Improvement Over

Time - Satisfaction, Success and Failure.
Increased rate of
improvement

Elevated Supplier
Performance

Success
Customer
Satisfaction
(Expectations)

Customer 100%
Just ok?
Our 100%

Increasing gap

Or competitor's systems
design performance
Big improvements

Failure
Short time
Continuously improving
Fast enough?

Future Customer
Requirements

Time

Co-ordinated Application of Improvement Techniques

Critical
Performance
Measure

Co-ordinated
Business System
Engineering
Continuous
Improvement
(Kaizen/C.I.)

BPR and C.I.

Market
Leader
BPR then
nothing
Target
Company

Do Nothing

Newlands, in Newlands and Hooper (2009)

Kaikaku +
C.I.

Time
(3 Years)

Kaizen
Continuous improvement
Requires total employment involvement
Essence of JIT is willingness of all supply chain
associates to
spot quality problems
halt production when necessary
generate ideas for improvement
analyze problems
perform different functions

Benchmarking

Compare all, not necessarily a competitor

Find the best
Learn how
Plan to catch-up
Design new products & services
Implement
Overtake

Paper Plane exercise

Product Development System

Ideas
Figure 5.3

Ability

Customer Requirements
Functional Specifications

Scope of
product
development
team

Product Specifications
Design Review

Test Market

Scope for
design and
engineering
teams

Introduction
Evaluation

Product planning
Specifications inside group, outside group
Families of product (Product Mix)
Upgrade programme, development trajectory
Group Technology (Process Commonality, Flow
efficiency)
Design for X Manufacture, Assembly, Logistics,
Dis-assembly, End of Life
Change of Use

Matching Product Design to Market Demand

Concurrent engineering reduces the design cycle
Greater product variety is achieved through
modular design
Reduced number of parts and components is
achieved through good design, and through
standardization and reuse of common items
Commonality, Compatibility, Carry-over

13

http://www.sounddomain.com/id/audigreecetyp89

Platform Management

14

http://www.geocities.com/MotorCity/1108/passtown.html

VW Passat 1995-7

15

http://www.cardomain.com/memberpage/640544

Seat Cordoba

16

Skoda Octavia c2003

17

An Engine is an Engine is an Engine

The same engine in the Audi TT is in the Skoda
Octavia
Great car for getaways, plenty of room for criminals
and booty

18

Photo source:
http://www.sky.com/skynews/article/0,,30400-13380015,00.html

19

21

22

Variation for variants sake?

23

Originally made in the 1980s, Ninja

Turtles hit the shops again for Christmas
2003
Mickey Mouse & Donald Duck, etc
Snow White (Shrek SW doll not redesigned)
Peter Pan
Batman (car has changed to sell merchandise)
Spiderman
Darth Vader masks for children

French Fries add sauce, large portion?

Lays & Pringles

24

Supply Chain Position and Value Add:

In The Box
Value
micro (Intel)
added
content processors
software

job specific
systems

(Microsoft)

customisation

printed circuit

(D2D)

Final Assembly + Test

Model from Price Waterhouse/Arthur Anderson
25

Supply Chain

Fault tree analysis (FTA)

Copyright 2006 John Wiley & Sons, Inc.

5-26

Guidelines for DFL

Three viewpoints:
1. Design for Easy Variability
2. Inbound Logistics Chain Design
3. Distribution Channel Design

27

Process Improvement

28

 https://jdsupply.deere.com/business_processes/sup
plier_development_process/sd_tools/docs/industry_
standard_value_stream_map.JPG

29

30

Problem Driven to Pareto Prioritised

Number of Stock Items versus Value
Percentage cost of BOM

15

80

20

50

A
31

B
Categories

30

C
Number of items

Achieving an integrated supply chain

Stage One: Baseline
Material
flow

Customer
service
Material
Control

Purchasing

Production

Sales

Stage Two: Functional Integration

Material
flow
Materials
Management

Customer
service

Manufacturing
Management

Distribution

Stage Three: Internal Integration

Material
flow
Materials
Management

Manufacturing
Management

Customer
service
Distribution

Stage Four: External Integration

Material
flow
Suppliers

Internal Supply
Chain

Distribution

Customer
service
Customers

32

Source: Christopher, (1997)

Ramp-Up On-Time and Speed

Volume

Lost Production and Sales

Opportunity Cost
Planned Ramp-up
rate

Actual Ramp-up rate

Time

Planned Ramp-up Start

Actual Ramp-up Start

Typical Layout of Trim and Functional Elements

34

Reduced Part Numbers

=> Reduced Hand Time
=> Increased Productivity

35

Mercedes
Motors & Light Mounted in the Mirror

36

Renault Altenate Solution

37

Component Count

38

Component Count Reduction,

Same Customer Value

39

Ability to Late Configure

No electronics fitted, motors or leavers within the door

40

Rapid Fitting & Rapid Colour Customisation, Rapid

Fitting

41

Developing an integrated supply chain

Material flow direction

Competitors
Quantity Sold

Round One: Traditional Mass Production Baseline Conditions

Good
Received

Supplier

Raw Materials

Components

Inspected
Components

Manufacturing
Management

Distribution

Manufacturing
Management

Distribution

Alpha Co.
Quantity Sold

POS

Round Three: Agile Mass Customisation

Responsive
Suppliers

PO
S

Trade
Customer
Stock

Finished
Goods +
Competitor
products

Round Two: Lean Manufacturing

Integrated
Suppliers

Trade
customer

Production

POS

Core Common
Module Stock

POS = Point of sale the shops

Low cost customer appreciated variant to be
added rapidly at the point of sale when sold
42

Source: Adapted from Christopher, (1997)

Variants in the Supply Chain

Variants

Time through the supply chain

43

Raw
Material

Component
Blanks

Component SubFinished
POS
Finishing Assembly Good

44

Value analysis (VA)

Can we do without it?

Does it do more than is required?
Does it cost more than it is worth?
Can something else do a better job?
Can it be made
by a less costly method?
with less costly tooling?
with less costly material?

Can it be made cheaper, better, or faster by

someone else?

Copyright 2006 John Wiley & Sons, Inc.

5-46

Design for Environment

Design for environment

designing a product from material that can be recycled

design from recycled material
design for ease of repair
minimize packaging
minimize material and energy used during manufacture,
consumption and disposal

Extended producer responsibility

holds companies responsible for their product even after its useful
life

Copyright 2006 John Wiley & Sons, Inc.

5-47

Design for Environment (cont.)

Copyright 2006 John Wiley & Sons, Inc.

5-48

Teddy Bear Factory

49

50

Child Height Product Placement

51

Baby Safe Products

52

All Products are empty of filling

53

Filling Added

54

Personal Stroking during the sale

55

Hearts and Voices

56

Stitching Up

57

Clothes Variants

58

Theme and Special Occasion Clothes

59

Product Life Cycle

Company Strategy/Issues

Introduction

Growth

Maturity

Best period to
increase market
share

Practical to change
price or quality
image

Poor time to
change image,
price, or quality

R&D engineering is
critical

Strengthen niche

Competitive costs
become critical
Defend market
position

Color printers
Internet
Flat-screen
monitors
Sales

Decline
Cost control
critical

Fax machines

DVD
Drive-through
Readers
USB restaurants
Key
DVD+HDD
CD-ROM
Writers
3 1/2
Floppy
disks

VCRs

Operations strategies related to

Product Life Cycle

OM Strategy/Issues

Introduction
Product design
and
development
critical
Frequent
product and
process design
changes

Growth
Forecasting
critical
Product and
process
reliability

Maturity
Standardization
Less rapid
product changes
more minor
changes

Competitive
product
improvements
and options

Optimum
capacity

High production
costs

Shift toward
product focus

Long production
runs

Limited models

Enhance
distribution

Product
improvement
and cost cutting

Short production
runs

Attention to
quality

Increasing
stability of
Increase capacity process

Decline
Little product
differentiation
Cost
minimization

Overcapacity
in the
industry
Prune line to
eliminate
items not
returning
good margin
Reduce
capacity

Measure Design Quality

% of revenue from new
products or services
% of products capturing 50%
or more of market
% of process initiatives
yielding a 50% or more
improvement in
effectiveness
% of suppliers engaged in
collaborative design

Copyright 2006 John

5-62

% of parts that can be

recycled
% of parts used in multiple
products
% of parts with no
engineering change orders
Average number of
components per product
Things gone wrong (TGW)

Build Quality
First time boot rate
Number of products without fault

Number of faults per product

The Lean Transformation at

Lantech

Flow/1995

Product Development Time

Batch and
Queue/1991
3-4 years

Employee hours per machine

160

80

Manufacturing space per machine

100 sq. ft.

55 sq. ft.

Delivered defects per machine

0.8

Dollar value of inventory (with doubled

sales)
Throughput time

$2.6 million

$1.9 million

16 weeks

Delivery lead time

4 20 weeks

14 hours 5
days
1-4 weeks

From: Womack and Jones, Lean Thinking, p.121

64

1 year

Relative Performance in Auto Industry

Toyota Japan USA

Productivity

100
100

Assembly
1st-tier suppliers

Quality (delivered defects)

Assembly (per 100 cars) 30

1st-tier suppliers (PPM) 5
2nd-tier suppliers (PPM) 400

1993-94, from Womack and Jones, Lean Thinking

65

Europe

(average)

(average)

(average)

83
85

65
71

54
62

55
193
900

61
263
6100

61
1373
4723

Relative Performance in Auto

Industry
Toyota Japan

Deliveries (percent late)

1st-tier suppliers
2nd-tier suppliers

Stocks (1 -tier suppliers)

USA

Europe

(average)

(average)

(average)

0.04
0.5

0.2
2.6

0.6
13.4

1.9
5.4

Na
248

37
81

135
69

138
45

st

Hours
Stock turns (per year)

1993-94, from Womack and Jones, Lean Thinking

66

Porsches Lean Transition

1991 1993 1995 1997
Time

7 years -

5 days

3 years
3 days

17.0

4.2

4.2

3.2

120

95

76

45

Concept to launch
Welding to finished car 6 weeks -

Inventories
Days on hand

Effort
Hours to assemble

Source: Womack and Jones, Lean Thinking

67

Porsches Lean Transition

1991 1993 1995 1997
Errors
Supplied parts (PPM)
Finished cars (index)

10,000 4,000 1,000 100

100
60
45
25

Sales

3,102

1,913 2,607 -

Profits

+17

-239

Hours to assemble
Source: Womack and Jones, Lean Thinking

68

+2

Product development process tools,

Kanban
SCRUM
X Foundation

Developments in Revolutionary Change

Innovation: the process by which organizations use
their skills and resources:
To develop new goods and services OR
To develop new production and operating systems
so that they can better respond to the needs of
their customers

Open and Closed Innovation

Jugaad (Jugard)
Indian pioneered innovation method
Survival based solution creation without large
investments
Innovative fix, a simple work-around
Holistic thinking
The creativity of people to make existing things
work or to create new things with meagre resources
Any kind of creative and out of the box thinking
which maximizes resources for a company and its
stakeholders
http://en.wikipedia.org/wiki/Jugaad
http://jugaadinnovation.com/

The Need For Change

Quality
Right first time
Less than 1 fault/product
Quality as company philosophy
Company set up for quality

Logistics and Response Time

Real JIT manufacture
Increased stock turns
Short development times

Product Change and Innovation

Improve management of change
Variety is high
Supplier is involved up front
Responsibility is devolved to the
supplier

Cost
Reduce indirect labour
Reduce overhead
Eliminate unexpected events
Continuous improvement
Full engagement of all employees

Warren, (1995)

A Dynamic Model of Process and

Product Innovation
High

Rate of Innovation

Product innovation

Need stimulated
region
Output rate
stimulated
region

Uncoordinated process
Product performance maximum

Technology
Stimulated

Process
Innovation

Cost
stimulated

Systemic process
Product cost minimum

The four-stage model of operations contribution

Increasing strategic impact

Redefining industry
expectations

STAGE 4
Give an
operations
Advantage

STAGE 3
Link strategy
with
operations

Clearly the best in

the industry

STAGE 2
Adopt best
practice

As good as
competitors
Holding the
organisation back

STAGE 1
Correct the
worst
problems
Internally
neutral

Externally
neutral

Internally
supportive

Increasing operations capabilities

Slack et al based on Hayes and Wheelright

Externally
supportive

Innovation in Manufacturing
Invention
Scientists discover a previously unknown principle.
Innovation
Engineers create new marketable products

Engineering is the appliance of Science

Technological advances create possibilities
Rapidly changing customer needs and wants
International competition - more competitive
Innovation is essential for corporate survival
07 Innovation 1

Strategic Innovation Decisions

1 - Specialisation OR Diversifiation (Product range)
2 - LEVEL of product innovation
Basic
(technical breakthrough)
Incremental
(improvements)
Adapted adoptions (improvements on copies)
Pure adoptions
(straight copying)
3 - CLASS of product innovation
New for the market
(product leadership)
New for the company
(market share)
Improved company products (market expansion)
07 Innovation 2

Reactive Innovation Strategy

(Market Pull)
Product follows demand
Market share / expansion
Low risk / low reward
Investment in market research
Product diversification
Rapid response to market demand
07 Innovation 3

Proactive Innovation Strategy

(Design Push)
Demand follows product
Basic innovation
Product leadership
High risk / high reward
Investment in Technology
Research & Development
07 Innovation 4

Product Innovation Process

Generation of an idea
Perceived need or technological opportunity
Systemic thinking
Lateral thinking
Delphi technique
Brainstorming

Product development
Planning, manufacturing & marketing

07 Innovation 6

Financing of Innovation
Funds are required for:
Project evaluation
Research and development
Acquisition of technology
Production facilities
Marketing activities
Sources of Finance
Venture capital
Banks / Merchant Banks
Shareholders capital
Retained Profit
07 Innovation 7

THE DESIGN BRIEF

Market
Evidence of potential customer demand.
Market segment and target share.
Advantages over competing products.
Specification
Basic performance requirements.
Target costs and selling price.
Relevant legislation and standards.
Requirements for reliability & safety.
Design Tolerances
Resource requirements
Project budget, schedule & resources
07 Innovation 8

Law in Innovation
Patents - covers products (things made)
A patent gives protection to an inventor and legal
rights to financial benefits from an invention.
A patentee can licence someone else to make it
A patent can be bought and sold .

Registered Design - to prevent copying

Registered Trade Mark - product name or logo
Copyright - covers literary works and music
Computer software is covered by copyright
07 Innovation 9

Innovation Strategy
Pro-active

Low Risks
Low Aims

High Risks
High Aims

Risk

Reactive

Reward
Traditional
Current
Current
Practice
Practice
Trends
(Drifter)
(Mainstream) (Fast follower)
STATIC
07 Innovation 3

INCREMENTAL

Novel
Experiments
(Pioneer)
RADICAL

Intellectual Property
Inventions can be exploited without patent but others
can copy. Patents provide protection, preventing copying
Vital not to disclose or use commercially until patent has
been applied for

Patents
Monopoly right to exclusive use
Maximum twenty years
Property - may be bought, sold, hired or licensed
Must be new. Must be inventive
Must be capable of application
Expensive to obtain. Expensive to defend
Patents are published - available for examination

THE PROBLEM SOLVING CIRCLE

create
problem
specn

many
solutions

clarify

select

needs
(aim)

best
solution

make

satisfy
hardware

prepare
communicate
solution
specn

Total Design
a Product-Centred approach

Sales &
Marketing
Packaging
and Despatch

Management
& Finance
Purchasing
& Suppliers

PRODUCT

Manufacture

Customer

Engineering
Industrial
Design

DESIGN PROCESS
Classification
of the task
Conceptual
Design

Market Need
(or idea)
Specification

Concept
Embodiment
Design
Layout

Detail Design
Manufacturing
Instructions

Computer Aided Design (CAD)

Using computers to design

products and prepare
engineering
documentation
Shorter development
cycles, improved accuracy,
lower cost
Information and designs
can be deployed
worldwide

Extensions of CAD
Design for Manufacturing and Assembly
(DFMA)
Solve manufacturing problems during the
design stage

3-D Object Modeling

Small prototype development

International data exchange through STEP

Computer-Aided Manufacturing (CAM)

Utilizing specialized computers and

program to control manufacturing
equipment
Often driven by the CAD system

CAD
CAM
DNC
CNC
ERP
MRPII
PDM
EDM

computer aided design

computer aided manufacture
distrubuted numerical control
computer numerical control
enterprise requirements planning
manufacturing resource planning
product data management
engineering data management

System Relationships
PDM/EDM

ERP
CAD

CAM

MRPII

DNC
CNC

Business
Systems

The basis of design

What the product must do?
Who is going to use it?
How many will be made?
The cost range?
Information

Data

Intelegence

Information

Data

Creativity

Problems

Concepts

Solutions

Production Design
Simplification
reducing number of parts, assemblies, or options in a
product

Standardization
using commonly available and interchangeable parts

Modularity
combining standardized building blocks, or modules, to
create unique finished products

Copyright 2006 John Wiley & Sons, Inc.

5-95

Design Simplification
(a) Original design

Assembly using
common fasteners

(b) Revised design

(c) Final design

One-piece base &

elimination of
fasteners

Design for
push-and-snap
assembly

Copyright 2006 John Wiley & Sons, Inc.

5-96

Cost Reduction of a Bracket through

Value Engineering

Figure 5.5

Sources of Inspiration
Historical - back ground
arrangements used before
i.e. bikes - bone shakers, penny farthings
Micro cars - post war bubblecars
Use of Analogies
Component and product matrixing

EDGAR KAUFMANN Jr.

A modern design should be integrated
as a visually direct
and unembellished whole.

STYLE AND SYMBOLISM

MASCULINE
ORNAMENTED

COMPLEX

SIMPLE

STRAIGHT
FORWARD
FEMINE

CHECK LIST
Solution to whole problem
Elegant, Solved with Economy and with a
Balance of Proportions
Visually Coherent - The Parts Look as if
They Go Together
Parts Do Their Job
The Whole Design Communicates Function
Symbols Conveyed are Correct
Subtle Messages
Colour, Texture, Finish All = Quality
Right Style to Fit The Users Style

Thinking - Creative, Disruptive

Input
proposals
ideas
problemstatement
definition

Designer
Innovator/Team
black box process
mysterious mental
processes
checklists
information
data
intelegence
design ideas

Output
drawings
solutions
ideas
products
markets
problems
proposals

OSBORNS GENERALISED CHECKLIST

PUT TO OTHER USES?
ADAPT?
MODIFY?
MAGNIFY?
MINIFY?
SUBSTITUTE?
REARRANGE?
REVERSE?
COMBINE?

CONSIDERATIONS
USERS
APPLICATIONS
PERFORMANCE
APPEARANCE AND MARKETING
REGULATIONS
COST
MANUFACTURING

Developments in Revolutionary Change

Reengineering: involves rethinking and redesigning

business processes to increase organizational
effectiveness
Instead of focusing on an organizations functions,
the managers of a reengineered organization focus
on business processes.
Business process: an activity which cuts across
functional boundaries and which is vital to the
quick delivery of goods and services, or that
promotes high quality or low costs
100

Order of magnitude improvements

10
1

Service Design
Service typically includes direct interaction
with the customer
Increased opportunity for customization
Reduced productivity

Cost and quality are still determined at the

design stage
Delay customization
Modularization
Reduce customer interaction, often through
automation

Service Design
(a) Customer participation in design such as
pre-arranged funeral services or cosmetic
surgery

(b) Customer participation in

delivery such as stress test for
cardiac exam or delivery of a baby

(c) Customer participation in design and

delivery such as counseling, college education,
financial management of personal affairs, or
interior decorating

Figure 5.12

Moments-of-Truth
Computer Company Hotline
Experience Enhancers
Standard Expectations
Experience Detractors
I had to call more than once to
get through
A recording spoke to me rather
than a person
While on hold, I get silence,and
wonder if I am disconnected
The technician sounded like he
was reading a form of routine
questions
The technician sounded
uninterested
I felt the technician rushed me

Only one local number needs

to be dialed
I never get a busy signal
I get a human being to answer
my call quickly and he or she is
pleasant and responsive to my
problem
A timely resolution to my
problem is offered
The technician is able to
explain to me what I can expect
to happen next

The technician was sincerely

concerned and apologetic
about my problem
He asked intelligent questions
that allowed me to feel
confident in his abilities
The technician offered various
times to have work done to suit
my schedule
Ways to avoid future problems
were suggested

Figure 5.13

Documents for Services

High levels of customer interaction
necessitates different
documentation
Often explicit job instructions for
moments-of-truth

Scripts and storyboards are other

techniques

Service Quality
The Operations Manager must
recognize:
1. The tangible component of
services is important
2. The service process is important
3. The service is judged against the
customers expectations
4. Exceptions will occur

Service Specs
at UPS

Determinants of Service Quality

Reliability

Credibility

Responsiveness

Security

Competence

Understanding/
knowing the
customer

Access
Courtesy
Communication

Tangibles

 People have had plenty of time to learn and practice

undesirable behaviours.
Change requires
Stopping doing things not required, Lean / Toyotism
Starting to do things that are needed
Learning to do these things faster, better and
cheaper than anyone else
Creating, maintaining and increasing the
competitive gap.
Being prepared to do all this over again.

Creating the Future

How Creative are you?

An object will appear. Your job is to identify as many

uses for it as you can in two minutes.
http://www.sxc.hu/photo/205250

 1 in 2 come up with 4 or less

1 in 500 come up with 8 or more
1 in 2000 come up with 16 or more suggestions

http://depositphotos.com/103
6786/stock-photo-Moneywith-paper-clip.html

http://www.allaboutsymbian.com/news/item
/8442_The_paper_clip_solution.php

http://www.diytrade.com/chi
na/4/products/2800102/soft
_PVC_paper_clip.html

http://www.promotionalpromo.com/C
ustom-made/Clock-PaperClip/DCC63244.htm

http://www.clippa.co.uk/fancy_shaped_p
aper_clip_promotional_shaped_invente
d_fancy.html
http://snazzlecraft.blogspot.co
m/2008/12/paper-clip-ring2.html

http://www.geeky-gadgets.com/paper-clipmario-kart/

http://universallyamazing.blogspot.com/201
1_05_01_archive.html

It isnt a magnet, it is showing water tension

http://www.trenddelacrem
e.com/2008_09_21_archi
ve.html

http://www.thisne
xt.com/tag/dogbone-paper-clips/

http://www.awebguy.com/2
010/08/how-to-sell-paperclips-a-closer-look-atmarketing/

How can you possibly expect to lead unless you

have ideas?

Collect ideas,
Filter ideas
Refine concepts
Create plans
Sell these to convince people to join you in the quest
to achieve

Remember the first session? Why are you here?

Instead of you being the centre, make others
involved
Individuals, pairs, fours, present.