Product development process: Using real options for assessments and to support the decision-making at decision gates

Enterprises need continuous product development activities to remain competitive in the marketplace. Their product development process (PDP) must manage stakeholders' needs - technical, financial, legal, and environmental aspects, customer requirements, Corporate strategy, etc. -, being a multidisciplinary and strategic issue. An approach to use real option to support the decision-making process at PDP phases in taken. The real option valuation method is often presented as an alternative to the conventional net present value (NPV) approach. It is based on the same principals of financial options: the right to buy or sell financial values (mostly stocks) at a predetermined price, with no obligation to do so. In PDP, a multi-period approach that takes into account the flexibility of, for instance, being able to postpone prototyping and design decisions, waiting for more information about technologies, customer acceptance, funding, etc. In the present article, the state of the art of real options theory is prospected and a model to use the real options in PDP is proposed, so that financial aspects can be properly considered at each project phase of the product development. Conclusion is that such model can provide more robustness to the decisions processes within PDP.

User-designer collaboration during the early stage of the product development process

As an understanding of users' tacit knowledge and latent needs embedded in user experience has played a critical role in product development, users’ direct involvement in design has become a necessary part of the design process. Various ways of accessing users' tacit knowledge and latent needs have been explored in the field of user-centred design, participatory design, and design for experiencing. User-designer collaboration has been used unconsciously by traditional designers to facilitate the transfer of users' tacit knowledge and to elicit new knowledge. However, what makes user-designer collaboration an effective strategy has rarely been reported on or explored. Therefore, interaction patterns between the users and the designers in three industry-supported user involvement cases were studied. In order to develop a coding system, collaboration was defined as a set of coordinated and joint problem solving activities, measured by the elicitation of new knowledge from collaboration. The analysis of interaction patterns in the user involvement cases revealed that allowing users to challenge or modify their contextual experiences facilitates the transfer of knowledge and new knowledge generation. It was concluded that users can be more effectively integrated into the product development process by employing collaboration strategies to intensify the depth of user involvement.

Output from the 1998 Product Development Value Stream Workshop: A Framework for Understanding Information Flow in the Product Development Process

The descriptions below and the attached diagrams are outputs of the 1998 LAI Product Development Focus Team workshop on the Value Chain in Product Development. A working group at that workshop was asked to model the product development process: in terms of the phases of product development and their interfaces, boundaries and outputs. Their work has proven to be generally useful to LAI researchers and industry members, and so is formalized here.

Integrated Product Development in Truck Industry - A Case Study on Product Development Processes

This paper presents the result from a case study at Scania on product development processes. The objective with the case study was to gather information on Scania’s product development process (PDP) including the use of CAD and simulation tools, and project work. The objective was also to find any deviations or different interpretations among the employees on the PDP. To gather the information, semi-structured tape-recorded interviews have been used to ensure that individual interpretations from the interviewees could be gathered. Scania uses a defined and structured PDP which facilitates concurrent and cross-functional work. The PDP is implemented and followed to various degrees. The newly employed personnel may have difficulties with communication, both to find and to give information. Although, newly graduated personnel may find it easier to adapt to changes, and also to use a structured process which they have studied at universities. It was also known during the case study that the PDP is a major support for the newly employed personnel, which in turn decreases the time to get into the same working process as the more experienced personnel. Employees with decades of experience know the right sources from which to both give and gather information. Also, the terminology and definitions in the product development process may not be used as intended. This makes it difficult for other project members or teams who need to interpret the information received. At the same time, the routines among the more experienced personnel, which have been set-up throughout the years, make them more inflexible in adapting changes. The findings in the case study as well as challenges with implementing the PDP are known to Scania and are a part of the continuing work with improvement.

Evaluation of maturity levels in the management of product development: case studies in the capital goods industry

In recent approaches to the management of product development process (PDP), maturity levels have attracted the attention of practitioners and researchers. The CMMI model contributes to evaluate the maturity levels and improvement of the product development process management. This paper, based on CMMI model, analyzes the practices adopted in two companies of the capital goods industry, which develop and manufacture equipment upon request. It was observed that on account of market conditioning factors and different practices adapted to PDP management, these companies are at different maturity levels. One company is at the initial level of maturity while the other at the most advanced one. It was also noted that the application of CMMI model can provide improvement to PDP management, as well as present guidelines to achieve higher maturity levels, adequate to companies' needs.

Managing supply chain knowledge in the new product development process:a social network analysis approach

The aim of this paper is to propose a conceptual framework for studying the knowledge transfer problem within the supply chain. The social network analysis (SNA) is presented as a useful tool to study knowledge networks within supply chain, to visualize knowledge flows and to identify the accumulating knowledge nodes of the networks. © 2011 IEEE.

Engineering change impact on product development processes

This paper presents a method to manage Engineering Changes (EC) during the product development process, which is seen to be a complex system. The ability to manage engineering changes efficiently reflects the agility of an enterprise. Although there are unnecessary ECs that should be avoided, many of the ECs are actually beneficial. The proposed method explores the linkages between the product development process features and product specifications dependencies. It suggests ways of identifying and managing specification dependencies to support the Engineering Change Management process. Furthermore, the impacts of an EC on the product specifications as well as on the process organization are studied. © 2009 World Scientific Publishing Company.

Market-oriented new product development of functional beverages

Strategic reviews of the Irish Food and Beverage Industry have consistently emphasised the need for food and beverage firms to improve their innovation and marketing capabilities, in order to maintain competitiveness in both domestic and overseas markets. In particular, the functional food and beverages market has been singled out as an extremely important emerging market, which Irish firms could benefit from through an increased technological and market orientation. Although health and wellness have been the most significant drivers of new product development (NPD) in recent years, failure rates for new functional foods and beverages have been reportedly high. In that context, researchers in the US, UK, Denmark and Ireland have reported a marked divergence between NPD practices within food and beverage firms and normative advice for successful product development. The high reported failure rates for new functional foods and beverages suggest a failure to manage customer knowledge effectively, as well as a lack of knowledge management between functional disciplines involved in the NPD process. This research explored the concept of managing customer knowledge at the early stages of the NPD process, and applied it to the development of a range of functional beverages, through the use of advanced concept optimisation research techniques, which provided for a more market-oriented approach to new food product development. A sequential exploratory research design strategy using mixed research methods was chosen for this study. First, the qualitative element of this research investigated customers’ choice motives for orange juice and soft drinks, and explored their attitudes and perceptions towards a range of new functional beverage concepts through a combination of 15 in-depth interviews and 3 focus groups. Second, the quantitative element of this research consisted of 3 conjoint-based questionnaires administered to 400 different customers in each study in order to model their purchase preferences for chilled nutrient-enriched and probiotic orange juices, and stimulant soft drinks. The in-depth interviews identified the key product design attributes that influenced customers’ choice motives for orange juice. The focus group discussions revealed that groups of customers were negative towards the addition of certain functional ingredients to natural foods and beverages. K-means cluster analysis was used to quantitatively identify segments of customers with similar preferences for chilled nutrient-enriched and probiotic orange juices, and stimulant soft drinks. Overall, advanced concept optimisation research methods facilitate the integration of the customer at the early stages of the NPD process, which promotes a multi-disciplinary approach to new food product design. This research illustrated how advanced concept optimisation research methods could contribute towards effective and efficient knowledge management in the new food product development process.

New high technology product development: The case of light emitting diodes

New high technology products usher in novel possibilities to transform the design, production and use of buildings. The high technology companies which design, develop and introduce these new products by generating and applying novel scientific and technical knowledge are faced with significant market uncertainty, technological uncertainty and competitive volatility. These characteristics present unique innovation challenges compared to low- and medium technology companies. This paper reports on an ongoing Construction Knowledge Exchange funded project which is tracking, real time, the new product development process of a new family of light emitting diode (LEDs) technologies. LEDs offer significant functional and environmental performance improvements over incumbent tungsten and halogen lamps. Hitherto, the use of energy efficient, low maintenance LEDs has been constrained by technical limitations. Rapid improvements in basic science and technology mean that for the first time LEDs can provide realistic general and accent lighting solutions. Interim results will be presented on the complex, emergent new high technology product development processes which are being revealed by the integrated supply chain of a LED module manufacture, a luminaire (light fitting) manufacture and end user involved in the project.

Open innovation and user s involvement in new product development: a case study in the automotive sector

Innovation is an essential factor for obtaining competitive advantages. The search for external knowledge sources for product creation, which can contribute to the innovation process, has become a constant among companies, and users play an important role in this search. In this study, we aimed to analyze user’s involvement in the product development process based on open innovation concepts. We used the unique case study research method. This study was carried out in an automotive company that has developed a project of a concept car involving user’s through the Web 2.0. With such scope, the research demonstrates that users can contribute not only with generation of ideas but also with the innovation process itself.

An initial proposal for PDP of smes developing hospital furniture

A large percentage of the industrial SMEs has an organizational structure for product development too far from the adequate practices and models, elaborated by renowned authors with expertise in the theme of product development. On the other hand, the authors state that SMEs obtain considerable advantages by adopting a model of product development process (PDP) management. Healt is one of the most innovative sectors in the world, and countries like Brazil and Colombia are transitioning from a system that cares for contagious infecttions diseases where the drug product is the main form of treatment - to a system that cares for chronic degenerative conditions - where the equipment, including hospital furniture, has more relevance to the treatment. This change is offering better opportunities of specialized markets to hospital furniture SMEs that adopt an adquate PDF model. The present study proposes a first outline of a model of PDP management for industrial metal-mechanical SMEs that develop and manufacture hospital furniture, from a review of models proposed for great mechanical area.

Product performance and specification in new product development

This paper deals with product performance and specification in new product development. There are many different definitions of performance and specification in the literature. These are reviewed and a new classification scheme for product performance is proposed. The link between performance and specification is discussed in detail using a new model for the new product development process. The new model involves two stages, with each containing three main phases, and is useful for making decisions with regards to product performance and specification.