At many companies, new product launches are a rite of passage, often due to the immense pressure and struggles that build in getting a product from idea to sale. Launching complex hardware products with large bills of materials isn’t simple by any means, but it doesn’t have to be back-breaking either. Our research and experience demonstrate that most companies have experienced overrun costs and timelines during production launches, both of which reduced profits. Unfortunately, there are no simple fixes for eliminating this type of excess, as these outputs are often the culmination of complicated, multi-functional micro decisions. Luckily there’s a solution: Plan for Every Part (PFEP). Implementing a PFEP tool into your launch process will improve your team’s visibility and speed and will reduce both cost and time with your next production launch.
The hard truth is, most hardware companies succeed or fail based on their launch success. Launch delays directly reduce a product’s time in the market, effectively narrowing the amount of peak selling time, thus reducing company revenue and profit. Despite the detailed percentages and quantitative impact data being hard to come by, due largely to most organizations’ hesitation to openly share unflattering results, it is obvious that launch headwinds are vast, including poor product development management, poor design changes, little to no cross-functional collaboration between departments, and resource shortages.
4 Steps to Reduce Launch Costs & Expedite Timing
New approaches to quantifying the effects launch risk has on a business are shining light on the criticality of getting great at launches. Companies that develop a competitive advantage in launching products realize several core benefits like reduced product development costs, greater operational flexibility, increased profitability, and increased market share.
1. Define KPIs & Data Inputs
There’s a range of inevitable issues that will arise during a production launch. Thus, it’s imperative that companies outline specific program KPIs at a granular level by defining program timeline milestone dates. Typical KPIs may include lead time and costs for piece price, engineering, design and testing, tooling, gauges, and inbound logistics.
Next, determine the commercial data inputs needed to calculate these KPIs. You may end up with a total number of inputs spanning anywhere from 20 to120, but keep in mind it’s more important to begin the journey with fewer inputs, while your team absorbs the new method and processes, than trying to track every input on day one. A basic PFEP template with 20 data inputs should have columns for piece price, lead time, and shipment size; whereas an advanced template may have more than 120 inputs and include columns like target product costs, part sourcing status, and alternate/backup suppliers. Ultimately, starting slowly with fewer data inputs will reduce the occurrence of data entry errors, subsequently reducing your risk and improving results.
2. Develop a Data Acquisition Team
Eliminating the grey areas of responsibilities is fundamental to unlocking launch success. Each data input – i.e. carrier, lead time, part weight – should have an overall lead assigned to it, but successful companies take this a step further to strengthen their launch processes by assigning commercial leads to each part, or basket of parts, by type. These overall commercial leads, especially on critical path parts, provide additional sets of eyes to ensure parts successfully advance toward launch.
It’s often true that smaller teams are more agile and typically get more done in less time, but it’s important to ensure that each major functional area of your business is represented on the launch team. Clearly communicating the benefits of an on-budget/on-time product launch, as well as the drawbacks, will help motivate cross-functional teams to be on board with the new PFEP processes quickly to drive the change needed to realize success.
3. Gather & Populate Commercial Data
Data gathering should start in the product development stage to ensure a smooth transition from idea to product launch. This is because some of the biggest impacts to cost, timing, and quality can be made in the initial phases of a product’s life cycle. So, before product approval and funding are granted, require a basic PFEP with 20 data inputs be completed.
Gathering and populating the commercial data necessary to produce a successful launch is hard, time-consuming work, so it’s essential to find ways to motivate your team. One such method would be to track the percentage of PFEP data added as a launch risk KPI. Improve team progress by requiring specific percentages be completed, along with KPIs met, at various launch milestone gates.
4. Monitor & Optimize Data
Though establishing and tracking target KPIs and data inputs throughout the launch process are crucial activities, there’s more to be done to reach launch cost and timing potential. Teams must manage through problems to ensure KPIs are met. Due to the increasing pace of new product introductions today, it’s becoming harder for supply chain professionals to keep pace with manual tracking systems. Leaders must be agile and adjust their strategies and tactics as real-world events unfold and influence their plans during launch.
Expected costs on one commodity during sourcing might require targets to be adjusted higher in one area and cause a lowering of targets in another area. As a result, supply chain professionals are turning to PFEP cloud software to increase their productivity speed, stay organized, and improve communication and visibility. Automated real-time KPIs, multi-user read/write abilities, and standardized automated formula calculations are some of the biggest advantages of switching to web-based PFEP applications, which increase speed while minimizing human error.
Launch experience is invaluable, traditionally tribal knowledge that directly contributes to a company’s financial prosperity. Too often, this knowledge and expertise is siloed in various parts of the business and undiscoverable by supply chain professionals. Break through this barrier by facilitating knowledge sharing that will enable your team to make better decisions, faster.
Because new product launches are experience-driven endeavors, it’s vital that firms incorporate highly scalable standardized tools, such as PFEP, to reduce the cost, time, and risk of launches. Companies should then maximize reuse of these processes and systems to fully leverage the lessons they learn from the commercialization of each new product to enable future success. Make PFEP the your core of your product launch engine to reduce costs and expedite timing.