The business of managing new product development projects requires optimization of the balance between:
1. DEVELOPMENT SPEED
Reducing time to market to achieve the earliest possible launch date and generating earlier sales and potentially increasing market share.
2. PRODUCT COST
Minimising the cost per unit over its lifecycle including maintenance and warranty costs.
3. PRODUCT PERFORMANCE
Adding features or increasing development time can enhance product performance but at a cost.
4. DEVELOPMENT PROGRAM EXPENSE
Faster development may result in earlier sales but can have a corresponding increase in development program expense. Product developers, project managers and executives responsible for optimizing the business outcomes from new product development need new tools and new rules to manage this complexity. The development trade off model developed by Don Reinertsen and Preston Smith provides a useful framework for optimizing business decisions in new product development.
Example:The trade-off of product performance verses development speed.
The question: Should we add the
feature to the product?
Benefit
Cost
1% extra revenue $100 m x 1% = $1 m At 16% profit margin
$1 m x 16% = $160,000
2 months’ delay at $470,000 per month
Benefit = $160,000
Cost = $940,000
Cost outweighs benefit. Don’t add the
feature.
Source: Developing Products in Half-the-Time – Smith & Reinertsen
Manage
New Product Development - Wrap it in numbers!
Wrapping the trade-off
alternatives in numbers provides the business information required to
make more complex decisions and optimize the business performance of new
product development projects.
Other topics included in this workshop
series are:
Quantifying the value of cycle time vs. other project objectives
Developing decision rules to guide complex tradeoff decisions
Compressing the Fuzzy Front End
Controlling the overall scope of projects
Developing solid specifications quickly
Using product architecture to influence the schedule
Staffing and organizing product development teams
Designing management control systems for rapid development projects
Choosing metrics for managing rapid development projects
Avoiding bottlenecks and queues
Techniques to reduce program risk on high speed projects
Achieving early manufacturing involvement
Learn how to apply this to your
organisation
Don Reinertsen,
the pioneer of this material will be in Australia to deliver a series of 2 day MasterClass workshops
and 1 day seminars in Australia in August 2008.These events have sold out in the US and Europe and have not been offered in Australia before.
MasterClass participation is
limited to 40 attendees per location. For more information on
these workshops visit
www.prodex.com.au/training
