28% of companies do not know if they have achieved the quoted costings for new products, 5% do not measure quality or delivery performance. Without understanding the impact a new product has on overall business performance, a business cannot focus improvement activities or confirm that the use of resources was effective or efficient. The impact of change (customer or internally driven) is regularly underestimated if not closely monitored.
The matrix below further describes the link between NPI capability improvement and business performance. NPI business performance targets are the changes to management level indicators which can be linked to NPI performance. Examples may include turnover impact, customer relationship measurement or delivery performance.
An example of an “engine racing” situation within the NPI environment can be a fragmented functional level process not providing the desired performance results. A typical situation to describe “bubble” within the NPI environment can be an informal cross functional working within the team to “somehow” deliver the desired performance in current state. This may not be sustainable in the growth phase of the business, which would require a structured and formal new product introduction process to produce the desired performance at a “consistent” level.
What is covered?
Industry forum work together with client teams here to establish the link between the business performance improvements and the NPI capability. Typically early phase (request for quotation, bid submission and order acceptance) NPI activity measures will have a close link to overall business growth measures whereas the NPI execution phase (method preparation, first batch and production release) are expected to drive overall business quality and delivery measures. The success of the overall gated process implementation will be measured overall as a performance improvement in Quality, Cost and Delivery measures directly associated with the NPI process. These measures will be a combination of leading and lagging indicators which will be individually defined.
It is further expected that a capable NPI process will form shape of a funnel. This is closely linked to the business strategy, as the gap between the revenue from the existing product lifecycle and the target revenue from business growth has to be covered by NPI. A capable NPI process will provide triggers in the early phase on the required number of Requests for Quotation to be processed, based on a defined RFQ win ratio, to achieve the target revenue (through Purchase Orders) as per business strategy.
Introducing relevant measures to the NPI process will ensure effective corrective action and improvement activity takes place to reduce lead time and improve cost control and delivery performance.