There is often the excitement that accompanied the launch of a new product. It’s like holding a newborn baby in your hands and introducing him or her to the whole of relatives and friends. It’s a proud moment for the company too. The pains of all the hard work in getting the product to the market are suddenly forgotten. What is the painstaking work that has gone into the new product?
It all start with the conceptualization of an idea that eventually takes shape into a compatible design after much refinement. The value chain goes into the project that will turn the design into commercialization via mass production. The product life cycle plays an important role in determining what value(s) to input to the final design. The supply chain is affected end to end and different control measures must be set in to handle the product until it is transfered to the customer’s hand.
A new product will be impacting the operations from the start to the shelf. Or some will call it from the cradle to grave. If the product is designed to compete on cost, then the following examples of process considerations are as follows:
- Research and Development
- raw materials easily available at a low cost
- suitability of currently available parts
- breakthrough technology that used available production equipment
- Purchasing
- synergies to build with existing suppliers
- volume leverages with current purchases
- flexibility in purchase volume
- Production
- opportunity to use spare capacities
- overall equipment efficiency improvement
- yield improvement
- Packaging
- able to maintain current machine setup
- spare capacities
There may be further impacts on the distribution network such as responsive to fluctuating demands and overall cost effectiveness to bring the new product to the market place. Since the focus is on cost, there is pressure to maintain cost leadership in the product eventually through gains in the market share.
On the other hand, if the new product is competing on superiority of quality or innovation, then the above considerations may be slightly tweaked to enhance the product’s reception. The focus will be much on the downstream activities such as the following:
- Inventory Management
- manage with Made to Order
- minimise stock build up
- Demand Planning
- keep close to market updates
- forecast based on actual sales
- minimise obsolescence cost of existing products
- Distribution
- agile network to add speed to responsiveness
- frequent deliveries at small batches
- cost of distribution factored into margins
Although the upstream is important for such high quality or innovation products, the new product launch will take a slightly different focus to make it successful. The total supply chain cost will be optimized through projected gains in the market share.