The article "A Proactive Partnership for New Product Introduction: Design and Supply Chain," written by Alicia Scavona, Project Manager, Tefen USA was recently featured in Medical Product Outsourcing, focuses on developing an integrated, collaborative NPI process.
While FDA warning letters may not be anyone’s idea of a fun, when it is focused on the supply chain, it provides an inflection point around which companies can rally to take an introspective look at their supply chain business process. One key area to explore for manufacturers, regardless of industry, is the New Product Introduction (NPI) process. All too often suppliers are selected during the NPI process due to unique capabilities, personal relationships, and geographic proximity as opposed to solid data and information on the supplier’s capability to meet and deliver on specific specifications and performance requirements.
Exploring the Main Areas of Supply Chain Risk During the NPI Process
Before you begin, it is important to define the current and future state of your process flow and outline the main areas of risk during the NPI Process. For instance:
These are some of the areas which can cause a backend conundrum for the Supply Chain group, who manages the strategic and operational sourcing and external audits of all suppliers and components. Without reviewing these, a component may be single-sourced by a Do Not Use or Phase Out supplier, or by a supplier who did not have an adequate quality system, leaving the manufacture at risk of quality and reliability issues in the future. However, if you take the time to evaluate the capabilities of your suppliers and select those during the NPI process which present the lowest risk, one can avoid the additional cost and time associated with resovling supplier issues or potentially finding alternative sources of supply. So, what are the steps an organization can take to have a successful NPI process, while mitigating Supply Chain risks?
The Early Bird Gets the Worm– Participation from the Beginning
At the beginning of any new product development, it is important to engage and solicit active participation from the organization’s Supply Chain professionals during the selection process. By partnering with the supply chain team, the design engineers can focus on the technical requirements and testing, while the supply chain determines the appropriate suppliers to fit the new conceptual component needs. The first step in creating a more efficient NPI launch is to streamline the communication and information flow. It is important to align the organization’s Supply Chain Review (SCR) process to the NPI phase gate process (NPI PDP) to integrate and balance the requirements of both teams with respect to component capabilities, supplier qualifications, manufacturing assessments, sales and operations planning, and product launch. By formulating a SCR process that parallels with the NPI PDP, a unique collaboration between key stakeholders, design, and supply chain is established from the initial planning stage, which is critical to new product launch and manufacturing quality control. In each phase of the SCR, critical elements are presented and reviewed at “gate checks” with senior management in conjunction with the design team prior to moving forward. By implementing the SCR alongside NPI PDP, accountability and responsibility is driven, tasks are finished and aligned, and speed to the market is increased. Even more importantly, upon product launch, the supply chain model is sustainable and efficient.
When New Product Means New Components & New Suppliers– The Advantage of a Solid Database
Another weakness that many organizations experience is the lack of data and information on supplier performance. To really drive improvement and establish a solid supply chain foundation from the start, organizations need a clear, comprehensive, well-defined matrix/database listing all of the suppliers, components, competencies, and performance.
Supplier and Component Library
Develop an internal supplier database, which links supplier segments (i.e. partnership, phase out, etc), risk scores, and supplier competencies (i.e. electronics, plastics, etc) into a searchable index. By creating this library of purchasing information, the sourcing process becomes more streamlined and the information available provides better sourcing decisions. This tool should be made available to all employees and utilized during the first phase of SCR, Supply Definition.
For example, if your company needs to source a new electronic component, the buyer could reference the library and search under the competency “electronic” to determine current qualified suppliers, the components that have been manufactured for you, and the most recent performance metrics. All of this information combined allows for an informative decision when preparing and issuing a request-for-information (RFI) or request-for-quote (RFQ).
Countdown to Product Launch
With a robust and integrated SCR/NPI process established, the supply chain team will have advanced notification of new products and a clear understanding of requirements both at the development stage and ramping up to production. Combine this with information from participating in Sales & Operations Planning (S&OP) meetings to understand demand requirements, the Supply Chain organizations is now armed with the necessary information to finalize the contracts, establish the BOM and create the necessary component inventory levels to ensure successful production.
Overall Benefits of an Integrated NPI Process
Developing an integrated, collaborative NPI process that includes the organizations Supply Chain early in the process can lead to numerous benefits- Least of which is a reduction in the risk associated with selecting the wrong supplier as a partner earlier in the selection process thus reducing the size and scale of supply chain issues during production.
Additionally, benefits are also realized through:
Integration of NPI phase Gate processes and Supply Chain Review
Development of a Supplier Database
Preparation for market penetration regarding inventory, demand planning, and sales forecasting
In summary, organizations who utilize integrated NPI processes that include participation from the Supply Chain organization are able to hedge against future eruptions and non-conformances. By cooperating throughout the entire process, the design and supply chain team have established a relationship that will promote the initial market launch and assist as the product grows, develops and matures. The value of this internal partnership will ultimately translate to the product’s integrity and the customer’s perceived value; thus, enhancing the organization and its market-value.