A concurrent approach to NPI process must be taken because the serial approach takes too long. Most companies cannot stay the course for more than six to nine months. The NPI organization should be a cross-functional team with all company functions represented. The best people in the company have to be involved—senior active participants in running the company, who may need to devote more than half of their time to NPI deliberations. These people need to be pressed into service even at the expense of ongoing activities slowing down.

NPI is synonymous with change, and successful change requires people who are comfortable with their abilities and secure in their positions because they will asked to take risks without knowing all the facts. An NPI project is put in place to hit home runs, not singles. The important thing is to survive and make sure that optimum performance is achieved within the NPI team.

Typically, a senior manager is appointed team leader. He or she must be adept at participative management techniques and be able to create ownership for the project for all team members. The team leader must bring about a situation where taking risks is expected, and failures are not punished but cherished for what they teach the team.

Active leadership will vary with each step. While the assigned team leader is the company's authority person, the most knowledgeable individual is really the team leader. Since it is a cross-functional team, leadership will change automatically as the topics change. The official team leader serves best by being a facilitator.

There are 13 steps to the NPI process.

1. Define customer requirements (opportunity identification). This activity is normally led by the marketing/sales representative, and involves an intensive understanding of the market the company competes in and ways to uncover selling opportunities. Quite often, marketing will have a handle on the situation; if not, a research group can be hired. The team will judge what is really manufacturable within the company.

2. Define customer requirements (technology capability analysis). The purpose of this phase, which is often chaired by members of the design engineering or manufacturing engineering team, is to create an objective assessment of what the company can and cannot do. This often leads to a matrix sheet detailing the entire range of capabilities. The size and range of computer-numerical-control vertical boring mill capabilities, for example, will definitely limit the sizes the company may quote on.

This assessment cannot be just a superficial evaluation. It must be thorough, so all types of product-offering opportunities can be evaluated.

3. Determine how requirements can be met (product concept and definition). Design engineering and marketing lead the team. The group uses brainstorming, storyboarding, quality functional deployment, and the like to match market opportunities with the company's capabilities.

4. Determine how requirements can be met (product specification). If a product concept looks feasible, the group will need to scope out a product specification. The marketing representative will ensure that it meets the perceived needs of the marketplace. Some say this step is too early—that it would be better to find more potential business for the product concept. This can be done in parallel with product specification. There could be some potential deal killers if a product specification does not exist.

Let's say a manufacturer has the potential to sell some motors. The company has the required technology, and the team is excited before a specification is defined. Then the specification work reveals that ISO 9001 certification is required, which the company is six months to a year away from getting. The window of opportunity is only three months. Without a product-specification check, a lot of effort could have been wasted.

Creating a product specification also forces a definition of what the company will offer to the marketplace. This minimizes the chance of making an offer that will be difficult to fulfill. It also tends to preclude misunderstandings between customers and vendors about what constitutes successful delivery of the product.

5. Produce engineering drawings and specifications (design specification). The abstract phase is complete, and now the team needs to produce a first iteration of a design that is relatively producible in the factory—"relatively" because it will still need to be tried. Simulation techniques may avoid some trial and error, but real manufacture with real production equipment is still needed to test the process. This should be done concurrently with the next step, which is to design a method of manufacture.

Preplanning here can minimize the iterations required to get a mature design. One difficulty is that there may not yet be a firm customer. Unless the product is to be used exactly the same way by everyone, the final nuances of design will be influenced by the intended user. So the team must have a good idea who the potential first customers are. This phase and the next are led by design engineering and manufacturing engineering.

6. Define a method for manufacturing the product (prototype build and test). Here, the team will be heavily influenced by the capabilities of the company—what type of equipment it possesses and has strengths in using. A company that is strong in metalworking would naturally favor metals rather than plastic for the base material. Even if plastic would have an edge saleswise, more often than not it would still be a bad choice to elect to use plastic and incur an extensive learning curve unless the market is very lucrative and can withstand slow entry.

Continuous checking and iteration with design development is needed to maximize optimum producibility. In building a prototype, one should wherever possible use equipment and processes that emulate production capabilities. To do otherwise can lead to costly traps and extensive redesigns. A prototype must represent the design features and manufacturing features of the product specification, or it isn't of any real value.

This step is led by manufacturing engineering and design engineering, with support from shop operations and materials.

7. Develop a bill of materials and routing, then determine total cost. This is the stage of testing economic viability for full production, led by manufacturing engineering, materials, and shop operations. The prototype is structured for manufacture, and the necessary vendor supply-chain relationships are established.

To compress cycle time to market, the entire logistic system must be developed and be capable of producing the product, even if the prototype may not be the same as full production models. There are lessons to be learned that are still valid. This exercise of the supply chain will strengthen the final design through feedback about what works best. This experience will also validate the cost estimates. While volume production will probably be less expensive, the actual cost of prototypes, factored for reductions due to volume materials purchases and operator learning curves, yields a very good cost model.

8. Evaluate the capacity to make this product along with all other products requiring the same capabilities (manufacturing capacity development). This step is led by manufacturing engineering because of the technical nature of computing factory capacity, with leadership from the marketing representative in understanding market needs.

This step is often overlooked. So far, the team has a design, a process, plans for prototypes, and an idea of sales potential. Many companies, liking what they see, now plunge into selling the product and disregard all previous commitments that require the factory's resources.

If capacity is insufficient and customers are time-sensitive, another grievous error can occur when the company needs to commit capital resources to obtain that capacity. This may turn a viable new-product launch into an economic failure by making the return on investment unattractive.

An additional mistake is made when enthusiasm overcomes common sense, and the venture is launched anyway. The hope is that, since the market projections were abstract, perhaps there will be additional sales to justify the capital expenditures. This is a very risky proposition.

9. Compare capacity (delivery date to customer) with the needs of the customer. This is usually done concurrently with the internal evaluation of capacity. The new product needs to be introduced in a timely manner to take advantage of the market opportunity. Timing of market entry is often relegated to secondary importance, much to the despair of those who do so. Capacity is more than physical equipment—it is people and procedures, too. Any issue that prevents shipment in the required time or volume is a capacity issue and must be resolved.

10. Determine required margin and calculate profit (or loss). One must always keep in mind that profits have to be realized for a company to remain in existence. The team, led by marketing and finance representatives, takes all the data, calculates the potential profit, and verifies that the new product will match the company's strategic plan. The profit calculated must be within the company's targeted range, or resource use will not be optimized. Otherwise, a company will soon have a very busy factory making products for low margin as it wonders why achieving a positive bottom line is so very difficult.

11. Take corrective action to achieve the required margin and meet customer requirements. If unsatisfactory results are indicated by the calculation of profit, the team must reconsider all of its options to see if the project can be saved. This step, typically led by the team leader, is a review of the project to date and will occur regardless of any shortfalls the process has turned up. It is a prelude to going commercial and starting full production. If there are no shortfalls, this step happens under the guise of a project review.

This is the redemption step. With virtually all data now available, the team needs to look carefully at the absolute must-haves and evaluate how close they are to achieving them. If what is needed can be achieved, the team must understand what additional effort and resources are required so they can inform senior management. The team makes a recommendation, but senior management makes the final go/no-go decision.

No reiteration of the NPI process, other than for minor issues, should be pursued until this decision has been made. The NPI investigation is complete, and product launch is now on hold pending final decision.

12. Release for manufacturing after all internal and external requirements are determined to be achievable (volume manufacturing). The senior management decision may be to stop, hold, refine some more, or commence product launch. The last two choices are action directives to the team.

"Refine some more" involves directives to do specific things: refine the market forecast, look again at the capital required, or answer any of a host of questions senior management may ask. The team leader will work with the function representatives involved. Once the answers are obtained, the team will review and endorse them and send the matter back to senior management for their decision.

If the directive is to begin product launch, the team will prepare a report for the company leadership and turn over specific responsibilities to the respective functions. The details of each function's responsibilities will be mapped out by their representatives. This transition phase often needs to be detailed out in project step format (Gantt or critical-path formats are recommended). Representatives on the NPI team need to be senior people from each function because they will now have to take on leadership within their domains to move from a project to a routine assignment of business tasks. At this stage the term "NPI" is replaced with "fully supported product offering."

13. Monitor production and sales progress, and take corrective action as required. This is the post-NPI step. Each member of the team needs to monitor the early progress of commercialization to ensure that everything is running smoothly. Invariably, something will occur that requires a quick reconvening of the team to put fixes in place. These should be minor if the team has done a thorough job. For this purpose, the team will stay formed for six to 10 weeks after commercialization.

The NPI process is an intensive inspection of how a company does business. It is originally set up to guide a new business opportunity into reality. But since it is an intensive investigation, it will time and time again uncover deficiencies in how the company does business. The team members, being senior individuals, are the right people to deal with these shortcomings and make some sort of fix to move the NPI project forward. These may be short-term Band-Aid fixes, but they will be catalysts for changing future business practices.

NPI is a not only a cleansing process that allows companies to learn how to perform better but also one that teaches team management, and it can expand that knowledge throughout the entire company.

Daniel T. Koenig, a former president of ASME International, is executive vice president at Ontario Store Fixtures in Weston, Ontario.

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