How to improve the pace of your new product development process
Launching new products is both exciting and stressful. It can also be costly, labor intensive, time consuming, and data complex. In other words, deeply painful. The assessment guide presented here can help companies quickly determine what they can do to improve the process.
William Crane is the CEO of IndustryStar, an on-demand supply chain services and software technology company. He can be reached at william.crane@industrystar.com.
The new product and service development (NPSD) process is a major endeavor for any firm. (For a quick review of the components and outcomes of the process, see the sidebar, “New Product and Service Development 101”.) Recently, in an effort to reduce new product lead times and costs while improving quality, the NPSD process has undergone extensive revision and rethinking to become more collaborative.
NEW PRODUCT AND SERVICE DEVELOPMENT 101
The new product and service development (NPSD) process embodies all the steps necessary to take a product and/or service from concept to full production. One can envision NPSD as consisting of several linked stages such as:
advanced research,
product/service concept,
specification development,
product development,
pilot,
operations, and
reincarnation/disposal
Sometimes referred to by such names as “simultaneous engineering” and “concurrent engineering,” the collaborative NPSD process typically involves multifunctional teams made up of both internal and external stakeholders. These teams work closely together and consider all stages of the product’s life cycle. For example, the development process will consider not just the initial design of the product but also issues relating to operations planning and execution, such as the ideal manufacturing processes and potential product cost. Furthermore, one function or group no longer manages each activity of the development process in isolation.
Research shows that such a collaborative NPSD process can provide a competitive advantage. My company IndustryStar Solutions LLC, which provides on-demand supply chain services and software that empower teams to bring new products to market faster, recently partnered with Dr. Sime Curkovic of the Haworth College of Business at Western Michigan University on a series of in-depth interviews about NPSD with 126 professionals across 25 industries. Participating companies included: Whirlpool Corp., Toyota Motor Corp., Stryker Corp., Deere and Company, Coca-Cola Co., General Dynamics Corp., and Parker-Hannifin Corp, among many others. Our research produced the following findings:
80% of companies surveyed said collaborative NPSD has helped optimize development cost, ongoing production cost, quality, performance, and customer satisfaction.
75% said that collaborative NPSD has resulted in a competitive advantage.
82% planned to increase collaborative NPSD in the future.
85% wanted to start collaboration earlier in the NPSD process.
However, the survey also revealed that companies face many obstacles in the way of conducting an effective NPSD process. For example:
Only 50% of the surveyed companies said they were currently satisfied with their NPSD results.
70% claimed they lacked a process to integrate suppliers into NPSD.
50% of respondents said their technical staffs were unwilling to share designs with suppliers. This finding contradicted most respondents’ belief that there was trust between their company and their suppliers.
In the interviews, the three most cited obstacles for NPSD were: 1) talent, 2) communication, and 3) alignment of stakeholders.1
To help companies address these three main challenges, we developed the PACE assessment tool. The PACE method is meant to help leaders determine the baseline performance of their company’s current NPSD process and what specific actions could help generate greater NPSD results. The assessments are not meant to provide definitive scores, rather they are intended to be viewed as a guide to best practices. The acronym “PACE” comes from the first four steps of what the five-step assessment covers: 1) people; 2) automation; 3) collaboration; 4) empowerment; and 5) realization. We highly encourage companies to do the assessments in this order.
Step 1: Assess your people
The single biggest key to the success of a new product launch is having amazing people. No process or software technology can add as much as people with clear roles, documented processes, and standardized training. If you want to enhance your new product launches, then it is critical that you first conduct a thorough assessment of the current state of your people, roles, processes, and training.
One thing that is particularly important to assess is how well your team understands the company’s new product focus. The natural impulse that many of us have is to jump right into coaching our teams, but we need to outline our business “game plan” first. Our teams need clarification on what business we are in and what products to focus on. This might seem simplistic, but verbalizing what the company’s focus is can sometimes be more difficult than it first appears. For example, is General Motors in the automotive market or the mobility market? Should the company be focusing on developing electric vehicles or mobility services?
As leaders, we need to communicate a clear vision for where we are headed before striving to align our people for the road ahead. Once our people are onboard with our vision, we need to ensure our team members are in roles that maximize their current skill sets and the value that they add to the company. Further, we need to document our processes, which is typically an area that we can all get better on. Additionally, it is necessary to provide forums for consistent training and enhancements to our processes.
It may seem appealing to assume you are fine in the people department, but you skip this step in the assessment at your own peril. Have your leadership teams and your extended new product and service development team complete the survey in Figure 1 to conduct an honest assessment of the current state of your people. Remember, every company can get better, no one is perfect.
You can also accelerate the speed of product launches by automating repetitive tasks. When it comes to the supply chain part of new product development—sourcing the materials and services needed—many companies have invested heavily in software productivity tools, such as e-sourcing and enterprise resource planning (ERP), to successfully automate many of their repetitive tasks. Still, many find themselves relying upon more manual tools such as Microsoft Excel early in the product ideation stage to organize a product’s commercial bill of material (BOM) for potential suppliers, directional quotes, and estimated lead times. Yes, Excel is a fine product, but it’s built for flexible one-off analysis, not for repeatedly developing and launching new products with large BOMs. It’s simply not the right tool for the job.
Not to mention that an industry best practice for decades has been to essentially expand the commercial BOM and adopt “a plan for every part” (PFEP). A PFEP involves tracking information such as component costs, lead times, and supplier data in one large spreadsheet. This “spreadsheet of all spreadsheets” often includes more than 35 columns of data. Thus, for a 100-line item BOM, one’s PFEP can equate to 3,500 data inputs that need to be manually inputted.Although PFEP is a wonderful tool, it’s often abandoned due to the immense individual maintenance effort required.
Innovative companies, however, are deploying automated PFEP software with application programing interfaces (APIs) to bridge the technology divide between product lifecycle management (PLM) systems and ERP systems. This step up in technology helps to accelerate new product launch speed.
The survey in Figure 2 will help you quickly determine your current level of product development and launch automation. You will also need to review new product key performance indicators (KPIs), data, and information-sharing processes.
The extra work and time spent on the NPSD process is often the result of inefficient collaboration, such as poor communication, data rework, and having “duplicate playbooks.” The good news is that large step changes in productivity—and as a result in speed—can be realized in a surprisingly short amount of time simply by sharing the least amount of right information at the right time. For example, as you move closer to producing a prototype of your product, you will need more information in the product’s PFEP. You should partner with your engineering colleagues to know what specific data they need at each new product development milestone. This ensures that you are not wasting time adding extra data too early in the process. It also ensures that the process is not held up by waiting for a specific piece of information. Improving how you share new information can improve collaboration and increase the speed of the development process.
The questions in Figure 3 will help you quickly determine the level of productive collaboration among your team and the extended enterprise.
When we peel back the onion, we often find companies are doing far too many things themselves, which slows down the new product launch process. Firms should only do the specific tasks that they have a competitive advantage and/or a strategic reason to do. Too often firms do a particular task just because it is what they have always done or because it is what their competitors do. The net result is that companies spend far more money and time completing a task internally when they could easily outsource it to a strategic partner to execute at a lower cost. Outsourcing not only frees up valuable capital, it also frees up valuable time.
We should empower our partners to do the tasks that they excel at, while focusing internally on those tasks where we can provide competitive value. As an example, are we managing prototype-part buying when a supplier could deliver a completed prototype product at lower cost?
Empowerment is more than simply deciding what your company should do and not do. Often, leaders need to delegate more tasks to team members, giving them the chance to develop new skills and responsibilities. For example, is the vice president of procurement approving all commercial request for quote (RFQ) packages when a director could approve them? Is a manager assembling all the logistics routes when a lead logistics coordinator could determine them? If you want to accelerate your NPSD, you need to empower your team to do more.
The questions in Figure 4 will help you quickly determine the level of empowerment of your team, which is critical for speed.
The companies that are the most successful at new product and service development, such as Apple and Tesla, are able to tie the process to realizing the company’s mission. Those leaders who choose to inspire their teams, who craft a noble mission and the core values to support it, and who believe in the mission deep in their souls are near impossible to keep “pace” with. They will realize their mission faster than those who lack that passion. You can assess how well you are performing in this area by taking the survey outlined in Figure 5.
There is an argument for making this assessment process follow (or be combined with) the first assessment area (people), but that’s largely a matter of preference. However, if you find yourself with a low people score and/or in a turnaround situation, consider following improving your people with improving your “vision realization” to accelerate NPSD results.
Interpreting your scores
The score for each step should be viewed as a baseline diagnostic from which to continuously improve upon. Afterall, excellence is a continuous improvement pursuit; there is no end destination for the way in which you develop and launch all new products. Specific solutions to each question in the PACE Method will also vary by industry, company, and product. Tailoring the remedy is the art of maximizing the PACE Method. Your scored self-assessment should act as a starting point, provoking follow-on questions that enable deeper exploration into areas that could improve your new product development process.
We advise supply chain leaders, their teams, and all functions involved in the NPSD process to take the full assessment. The average scores for each step should help you to prioritize what step to focus on first. If a score of 9 or higher is attained for a step (for example, people), then you should focus on the next step in the process that is below 9. Have your whole team repeat the assessment process monthly until scores average 9 or higher for each step. To realize the fastest results, we would advise prioritizing improving one step in the PACE Method at a time. Once scores average 9 or higher for each step, shift your assessment efforts to quarterly.
Pick up the pace
Our experience and research have demonstrated that companies that repeatedly develop and launch innovative products generate outsized profits. Companies that want to be innovation leaders, therefore, need to accelerate their collaborative new product and service development process. The PACE Method can serve as a helpful guide to determining your company’s NPSD baseline performance from which you can then continuously improve upon.
There are no single actions that guarantee new product introduction supply chain success. Insights and tactics from trailblazing leaders simply highlight select actions that organizations can take to accelerate new product launches.
The PACE Method represents a significant opportunity to discover impactful practices that can produce gains in new product development and launch productivity. The key, as with anything new, is to get started.
Notes:
1. It is important to recognize the limitations of our research. The limited sample size and industries involved constrains the generalizability of the findings. Additionally, the qualitative approach does not support causality and the ability to empirically test propositions and hypotheses surrounding NPSD and reducing cost, timing, and risk.
That result came from the company’s “GEP Global Supply Chain Volatility Index,” an indicator tracking demand conditions, shortages, transportation costs, inventories, and backlogs based on a monthly survey of 27,000 businesses. The October index number was -0.39, which was up only slightly from its level of -0.43 in September.
Researchers found a steep rise in slack across North American supply chains due to declining factory activity in the U.S. In fact, purchasing managers at U.S. manufacturers made their strongest cutbacks to buying volumes in nearly a year and a half, indicating that factories in the world's largest economy are preparing for lower production volumes, GEP said.
Elsewhere, suppliers feeding Asia also reported spare capacity in October, albeit to a lesser degree than seen in Western markets. Europe's industrial plight remained a key feature of the data in October, as vendor capacity was significantly underutilized, reflecting a continuation of subdued demand in key manufacturing hubs across the continent.
"We're in a buyers' market. October is the fourth straight month that suppliers worldwide reported spare capacity, with notable contractions in factory demand across North America and Europe, underscoring the challenging outlook for Western manufacturers," Todd Bremer, vice president, GEP, said in a release. "President-elect Trump inherits U.S. manufacturers with plenty of spare capacity while in contrast, China's modest rebound and strong expansion in India demonstrate greater resilience in Asia."
Even as the e-commerce sector overall continues expanding toward a forecasted 41% of all retail sales by 2027, many small to medium e-commerce companies are struggling to find the investment funding they need to increase sales, according to a sector survey from online capital platform Stenn.
Global geopolitical instability and increasing inflation are causing e-commerce firms to face a liquidity crisis, which means companies may not be able to access the funds they need to grow, Stenn’s survey of 500 senior e-commerce leaders found. The research was conducted by Opinion Matters between August 29 and September 5.
Survey findings include:
61.8% of leaders who sought growth capital did so to invest in advanced technologies, such as AI and machine learning, to improve their businesses.
When asked which resources they wished they had more access to, 63.8% of respondents pointed to growth capital.
Women indicated a stronger need for business operations training (51.2%) and financial planning resources (48.8%) compared to men (30.8% and 15.4%).
40% of business owners are seeking external financial advice and mentorship at least once a week to help with business decisions.
Almost half (49.6%) of respondents are proactively forecasting their business activity 6-18 months ahead.
“As e-commerce continues to grow rapidly, driven by increasing online consumer demand and technological innovation, it’s important to remember that capital constraints and access to growth financing remain persistent hurdles for many e-commerce business leaders especially at small and medium-sized businesses,” Noel Hillman, Chief Commercial Officer at Stenn, said in a release. “In this competitive landscape, ensuring liquidity and optimizing supply chain processes are critical to sustaining growth and scaling operations.”
With six keynote and more than 100 educational sessions, CSCMP EDGE 2024 offered a wealth of content. Here are highlights from just some of the presentations.
A great American story
Author and entrepreneur Fawn Weaver closed out the first day of the conference by telling the little-known story of Nathan “Nearest” Green, who was born into slavery, freed after the Civil War, and went on to become the first master distiller for the Jack Daniel’s Whiskey brand. Through extensive research and interviews with descendants of the Daniel and Green families, Weaver discovered what she describes as a positive American story.
She told the story in her best-selling book, Love & Whiskey: The Remarkable True Story of Jack Daniel, His Master Distiller Nearest Green, and the Improbable Rise of Uncle Nearest. That story also inspired her to create Uncle Nearest Premium Whiskey.
Weaver discussed the barriers she encountered in bringing the brand to life, her vision for where it’s headed, and her take on the supply chain—which she views as both a necessary cost of doing business and an opportunity.
“[It’s] an opportunity if you can move quickly,” she said, pointing to a recent project in which the company was able to fast-track a new Uncle Nearest product thanks to close collaboration with its supply chain partners.
A two-pronged business transformation
We may be living in a world full of technology, but strategy and focus remain the top priorities when it comes to managing a business and its supply chains. So says Roberto Isaias, executive vice president and chief supply chain officer for toy manufacturing and entertainment company Mattel.
Isaias emphasized the point during his keynote on day two of EDGE 2024. He described how Mattel transformed itself amid surging demand for Barbie-branded items following the success of the Barbie movie.
That transformation, according to Isaias, came on two fronts: commercially and logistically. Today, Mattel is steadily moving beyond the toy aisle with two films and 13 TV series in production as well as 14 films and 35 shows in development. And as for those supply chain gains? The company has saved millions, increased productivity, and improved profit margins—even amid cost increases and inflation.
A framework for chasing excellence
Most of the time when CEOs present at an industry conference, they like to talk about their companies’ success stories. Not J.B. Hunt’s Shelley Simpson. Speaking at EDGE, the trucking company’s president and CEO led with a story about a time that the company lost a major customer.
According to Simpson, the company had a customer of their dedicated contract business in 2001 that was consistently making late shipments with no lead time. “We were working like crazy to try to satisfy them, and lost their business,” Simpson said.
When the team at J.B. Hunt later met with the customer’s chief supply chain officer and related all they had been doing, the customer responded, “You never shared everything you were doing for us.”
Out of that experience, came J.B. Hunt’s Customer Value Delivery framework. The framework consists of five steps: 1) understand customer needs, 2) deliver expectations, 3) measure results, 4) communicate performance, and 5) anticipate new value.
Next year’s CSCMP EDGE conference on October 5–8 in National Harbor, Md., promises to have a similarly deep lineup of keynote presentations. Register early at www.cscmpedge.org.
Amid unprecedented challenges, the 2024 State of Logistics Report arrives at a crucial time for the global logistics industry. Now in its 35th edition, it remains a cornerstone for professionals, offering invaluable insights into a landscape marked by economic uncertainty, geopolitical instability, and the escalating impacts of climate change. For decades, this report has guided shippers, carriers, and industry leaders with clarity and strategic foresight in navigating an ever-evolving global economy.
According to the report, the balance between shippers and carriers may shift again in the coming months. Potential rate increases loom, driven by external factors like geopolitical developments and environmental concerns. In such uncertain times, comprehensive, data-driven insights are invaluable.
The report provides a detailed understanding of current market dynamics, grounded in data, expert analyses from CSCMP and Penske Logistics, and insights from leading global companies. This rich compilation helps logistics professionals plan strategies to not only weather the storm but also achieve long-term success.
A key takeaway is the contrast between carriers' challenges and shippers' opportunities. Carriers face high operating costs, weak demand, and excess capacity, increasing financial pressure. Conversely, shippers are capitalizing on lower rates and diversifying carrier relationships to enhance resilience. Some are even monetizing their logistical capabilities, turning challenges into advantages.
The report's importance is underscored by over 60 press outlets globally, garnering significant media attention from the likes of Supply Chain Xchange, DC Velocity, and The Wall Street Journal. Many noted that professionals are adapting to “permanent volatility” by leveraging technology to manage disruptions. Meanwhile, Paul Page of The Wall Street Journal notes that U.S. business logistics costs accounted for 8.7% of GDP in 2023, highlighting the industry's integral role in the economy.
At CSCMP, we take pride in releasing the State of Logistics Report, providing professionals with essential information to make informed decisions in a complex world. Our partnership with Penske Logistics and others ensures the report is comprehensive and forward-looking, offering actionable insights to drive the industry forward.
Looking ahead, challenges persist, but with the right tools, data, and strategies, the logistics industry is well-positioned to navigate this turbulent economy. The 2024 State of Logistics Report serves as both a guide and a call to action, encouraging professionals to think creatively, plan strategically, and act decisively amid uncertainty.
CSCMP remains committed to supporting our members and the broader logistics community. Through collaboration, innovation, and knowledge-sharing, we believe the industry can overcome today's challenges and seize opportunities. The future of logistics is complex, but with the right insights and leadership, it is also filled with promise.
2024 was expected to be a bounce-back year for the logistics industry. We had the pandemic in the rearview mirror, and the economy was proving to be more resilient than expected, defying those prognosticators who believed a recession was imminent.
While most of the economy managed to stabilize in 2024, the logistics industry continued to see disruption and changes in international trade. World events conspired to drive much of the narrative surrounding the flow of goods worldwide. Additionally, a diminished reliance on China as a source for goods reduced some of the international trade flow from that manufacturing hub. Some of this trade diverted to other Asian nations, while nearshoring efforts brought some production back to North America, particularly Mexico.
Meanwhile trucking in the United States continued its 2-year recession, highlighted by weaker demand and excess capacity. Both contributed to a slow year, especially for truckload carriers that comprise about 90% of over-the-road shipments.
Labor issues were also front and center in 2024, as ports and rail companies dealt with threats of strikes, which resulted in new contracts and increased costs. Labor—and often a lack of it—continues to be an ongoing concern in the logistics industry.
In this annual issue, we bring a year-end perspective to these topics and more. Our issue is designed to complement CSCMP’s 35th Annual State of Logistics Report, which was released in June, and includes updates that were presented at the CSCMP EDGE conference held in October. In addition to this overview of the market, we have engaged top industry experts to dig into the status of key logistics sectors.
Hopefully as we move into 2025, logistics markets will build on an improving economy and strong consumer demand, while stabilizing those parts of the industry that could use some adrenaline, such as trucking. By this time next year, we hope to see a full recovery as the market fulfills its promise to deliver the needs of our very connected world.