Risk in New-Product Launches Made Greater When All Parties, Including Supply Chain, Aren't on Board

New products are inherently risky in meeting quality objectives, whether the defects are real or simply perceived by the customer. J.D. Power and Associates released the results of its automotive quality survey in June, highlighting this challenge for some companies that topped the list last year. In the survey, Ford ranked 23rd, compared to fifth place one year earlier, and Hyundai dropped from seventh to 11th place. The Wall Street Journal identified new product designs as a factor that led to this poor performance. Ford had negative feedback on its new touchscreen entertainment and phone system, while Hyundai struggled with new designs of the Sonata and Elantra vehicles. Both of these companies will no doubt rebound to top the list again. Yet, this demonstrates the challenge all companies face in meeting customer demand for quality amid increasing complexity. This wreaks havoc on supply chain professionals, as they adjust demand plans and inventory that require design changes, resulting in rework or scrap.

A recent Gartner study on new-product introduction found that fewer than 50 percent of new-product launches successfully meet original business goals. Nearly one-third of respondents identified quality as the top reason for failure, ranking it among the top five reasons new product launches fail. A lot has been done to embed quality into products since the days of Juran and Deming, yet perfection still eludes even the top companies. The reality is that pressure continues for organizations to reduce new-product time to market, even as the products become more complex, and both design and manufacturing become more global.

Quality Starts With Developing Products and Services for the Total Customer Experience

Quality starts with the customer, but this is not always understood. Leading companies develop products and services that deliver value across the total customer experience. Even the coolest features can flop if there are other barriers preventing the customer from being delighted. The Swiffer from P&G is a well-known example, born when design teams observed homeowners' poor experience using a conventional cleaning mop. Toyota did this with the Tundra pickup truck, observing how drivers used their vehicles as a remote office as much as for hauling payloads. Even Pfizer did this in life sciences by creating the Getquit online website to offer additional patient support when it discovered it was a critical service to ensure success of the Chantix smoking cessation drug.

By observing behavior, companies can better serve a customer's total needs by combining product design and supporting services. To do this best requires the entire value chain team to understand the customer beyond simply marketing's interpretation of those needs. If product development, supply chain and customer support understand the customer well enough, they are in a better position to add value and eliminate waste. Once development starts, it is then necessary to observe the customers using the new product or service to ensure it meets their needs. The more iterations of this process that are completed, the more likely it is to meet customer expectations.

Ensure Business Processes Support New-Product Quality Goals

Even when customer needs are understood, there is plenty of opportunity for the new-product development and launch (NPDL) process to break down. The reasons are many, ranging from poor cross-functional communication to simple inertia in the process that slows cycle time.

A few areas to consider for improving new-product quality include:

• Product portfolios should categorize quality risks — brand-new products carry higher risk than minor extensions and should be segmented and managed accordingly.

• Validate that customer requirements are addressed — scope creep often happens during design cycles, so take extra care to approve any variation prior to commercialization.

• Verify a robust product design and manufacturing readiness — fundamental in design for Six Sigma use simulation and in design of experiments to optimize functionality and manufacturing capability.

• Use a metrics hierarchy that defines total product launch success — measure performance against strategic business value and operational goals for a complete view.

• Post-launch feedback and corrective action — capture customer feedback from various sources, including directly, through channel partners and via social media, and take immediate action.

Organizational alignment can be a barrier to success. Gartner's Simon Jacobson has written extensively on the topic and suggests it's time to take an end-to-end view of quality across the entire value network. Yet, Jacobson's research finds that quality still resides in silos and that supply chain organizations' ownership of quality is in its early stages, with most supply chain organizations claiming responsibility for quality management only 47 percent of the time (see "Best Practices for Taking Quality Beyond Manufacturing and Into a Business Capability Supporting the Value Chain").

Technology plays a role supporting the business processes that lead to these new-product quality goals. Whole hosts of technology providers specialize in quality management that extends beyond new-product launch into manufacturing and corrective action. Specific to the process of NPDL, product life cycle management (PLM) applications lay a strong foundation, but must connect to an end-to-end business process. PLM core capabilities include managing customer needs, product portfolio management, direct material sourcing, collaborative product-process design and product data management. Simulation and virtual reality help enhance new product quality, along with various capabilities to ensure manufacturing readiness and to support installed customer product. This extends to industry-specific process support such as validating that complex system customer-design requirements are met.

Of course, total quality must extend further than what PLM or any one application can provide alone. Several manufacturing execution system (MES) vendors have quality functions, and are expanding their touchpoints into PLM. ERP vendors also support PLM, while integrating it into broader business processes, including demand and supply planning, scheduling, and inventory management, among others. Before investing in any of these technology solutions, manufacturers and retailers should identify the root cause of new product quality failure and define the appropriate business process that will address their need. Technology providers also specialize by industry requirements, such as those that specifically target apparel, food and cosmetics, among others.

New product quality will always be a challenge as long as time-to-market cycle times are squeezed. However, improvement can be achieved with a holistic view of quality that starts with the customer and is viewed as an end-to-end business process.

Thanks to Gartner for their input on this posting.