Activities undertaken to launch new products can cause risks, which need to be effectively managed if the return of business growth is to be realised. Risk management is integral to the pursuit of product launch excellence and strategic minded organisations do not strive to eliminate risk. Rather, these organisations seek to manage risk exposures across all parts of new product launch processes. To do this, organisations require a risk management process that is practical, sustainable and easy to understand. The process must proceed in a structured and disciplined fashion. It must be correctly adapted to the organisation’s size and complexity related to new products being launched.
Impact of Failing to Manage Risks in NPI
Many organisations assume that establishing stretch objectives and accepting challenges from its customers is enough to achieve better, faster and more profitable products. Yet in reality, implementation teams for new product launch are not always clear on what needs to be done. In the pursuit of “Faster” products, teams can cut corners in following the process and can consequently miss key steps in the early product development and introduction stages. The result is a multitude of risks introduced during product launch and uncontrolled change implementation, leading to poor “right first time” quality and eroded profit margins, due to money spent on correcting errors. Moreover, considering the complexity of collaborating with engineering, supply chain, quality assurance, and manufacturing, planning and executing seamless risk management in a new product launch environment is always challenging.
What Can You Do to Develop a Risk Management Approach?
Casting a wide net to understand the universe of risks is a good starting point, as long as they are assessed and prioritised to help and focus attention of both the team and senior management. This would require a common set of assessment criteria to be agreed. Typically, risks are assessed in terms of impact and likelihood. Something else to remember is that risks do not exist in isolation and risk interactions need to be managed. Even seemingly insignificant risks on their own have the potential, as they interact with other events and conditions, to cause great damage or create significant opportunity. The results of the risk assessment process then serve as the primary input to risk responses whereby response options are examined, cost-benefit analyses performed, a response strategy formulated and risk response plans developed.
An Easy Way to Consider Risks Early in NPI
Often, the challenge in the early phase of NPI is uncertainty. During this phase, teams find difficulty in keeping the disciplines of risk management. A simple way to consider risks in the early NPI phase is to create a “Risk Map”, often called a “heat map”. These are usually two dimensional representations of impact plotted against likelihood. Risks with a high probability and a high impact may then be prioritised for appropriate mitigation during the early NPI phase.
Fig.1: Risk Map with Likelihood and Impact
What Can You Do Next as a Manufacturer?
Over 60% of Industry Forum’s NPI client engagement listed risk management as an improvement topic. You may start by asking the below questions relating to risk management practices within your teams responsible for the launch of new products:
1) How do we identify risks during project implementation?
2) How do we record and categorise risks?
3) How do we prioritise risks and select an appropriate response action?
4) How do we communicate NPI risk management methodology and practices within our organisation?
If you would like to discuss any of the responses to the above questions, email us or give us a call on +44 121 717 6600 to talk to our expert practitioners.
Earlier this year, Industry Forum launched a free NPI self-assessment tool to help organisations start their NPI improvement journey. Click here for your chance to complete the free NPI self-assessment, if you have not already done so.
– November 2019 authored by Robin Talwar
A Bit More About Robin
Robin Talwar has over 20 years of international experience within the manufacturing sector, working with leading OEMs and cross-sector tier 1 suppliers. He began his career as a Quality Engineer for Honda Car Manufacturing, developing skills in Problem Solving, Kaizen and Quality Circles. Moving in to the role of Supplier Development Engineer at BMW Germany, Robin was involved in NPI activities and application of Core Tools with suppliers. Joining the Greenfield Project Team with Daimler Trucks, Robin led the Supplier Selection and Development activities to achieve a challenging 85% localisation target. Before joining Industry Forum in May 2015 as Principal Consultant in NPI and Lifecycle Management, Robin was Head of Logistics Operations for a brand new car manufacturing plant of Honda Cars in India, where he successfully developed a Japanese 3PL for inbound logistics and milk run operations.
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