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How to Involve Supply Chain in New-Product Planning

The supply-chain professional should be intimately involved at every step of new-product development, says Jillian Alexander, founder and managing director of Conduit Consulting.

Supply-chain professionals should be involved in new-product planning and demand forecasting from the onset, says Alexander. “The supply-chain manager usually has a good idea of what they need and what the cost structure will be,” she says. Input from supply chain can prove vital even during the design and prototyping phases.

Alexander participated in the development of a personal computer-based TV for Sony. The designers weren’t sure about the features and functionality that they wanted to incorporate into the product, or what the cost structure would be. They had ideas, but no outside input from the prospective customer.

“I was brought in to collect that information, and layer that onto existing information that the product planner had,” Alexander recalls. “We ended up being able to reduce the cost structure of the prototype product, and [were] very successful by limiting the markets it was launched in.”

The idea that input from supply-chain professionals can affect product development is alien to many traditional organizations, but it’s beginning to take hold. One of Alexander’s clients was struggling with the production forecast for a newly created component that goes into a mobile device. The original forecast called for 300,000 units in the first year. Unfortunately, there were difficulties in dealing with the outside vendor that was charged with producing the prototype. Based on advice from the supply-chain side, the company put out a request for proposal to alternative vendors, one of which was willing to participate if the production run was much larger than originally planned. The change led to revisions in the company’s capital plans, as well as how it intended to go to market when the product was launched.

New-product forecasting demand is difficult by its very nature, in that they lack history and the target customers aren’t always obvious. Again, says Alexander, supply-chain considerations can help to shape the final plan. The trick lies in getting engineers to work with the supply-chain side of the company, overcoming the “siloed” behavior that typifies so many organizations.

“If the supply-chain people are working with the attitude of ‘I’m here to help you achieve your goals and control costs,’ and if there’s a real partnership, then it works very well,” Alexander says.

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