1. ISQA 510 New Product Introduction (NPI) Lecture 4

2. Agenda -Thoughts on Tyco? -Intro to NPI -DFX -Cisco Case Questions -TQRDC – Kropf Article: Best Practices -Tour Converse / Nike

3. NPI New Product Introduction (NPI) – Why care? Risks & Concerns without it? 60% cost in design phase SCM Strategy – Single / multi-sourced Design for “X” AVL Packaging Postponement Service strategies

4. A Word on Technology Engineering Science Can the Technology be manufactured with known manufacturing processes? Are the critical parameters that control the new Technology’s functions identified? Are the safe operating ranges known? Have the failure modes been evaluated? Have the life cycle effects been evaluated? Are the environmental effects known? If yes, engineering. If no, science

5. Why design for manufacturability matters Management involvement 100% Cumulative percent of cost 0% Product development Total life cycle costs Ability to control costs Production Support 60% to 80% of total life cycle costs are largely determined during development

6. Strategy needs to consider the impact of globalization and pitfalls: The Goal: Maximize GM% early & Ethically

8. NPI Summary – All Affect Cost Purchasing (RFQ / SOW) Engineering (ERP / AVL) Logistics (Packaging) Quality (Yield / Touches) Marketing (PRD) Warranty / Service Most Important – “The Crossover”

9. Sourcing and new product development Involving sourcing decisions in development processes at an early stage can result in contribution of new knowledge and better understanding of: Construction Suitable materials Suppliers Supplier knowledge Involving the supplier in new product development can also result in considerable savings

10. Linear to Concurrent

11. Design for…. -Manufacture -Environment -End-of-life -Disassembly -Recycling -Quality -Maintainability -Reliability -Cost

12. Manufacturing and Producability Make/buy Supplier alignment Integration of new manufacturing into previous manufacturing process with minimum disruption and capitalization costs Maximum responsiveness to surges (and declines!) in demand Ease of Assembly/Manufacturability /Modularity Parts minimization Testability Inspectability Standardization Design For “X” (DFX)

13. Sales and marketing (Customer alignment) Meets Customers’ needs Design to Cost to allow Target pricing Time to market Product Price/Volume/Feature mix Packaging and Labels Advertising strategy, plan and literature Catalogues Design For “X” (DFX)

14. After market Support and Servicing Training of factory personnel, sales force, customers. Manuals and Documentation Maintainability Spare Parts availability Customer assembly Logistics Upgradability Shelf life and Storage Installability Warranties Design For “X” (DFX)

15. Cisco NPI – 6 Questions 1.What are the risks in NPI overall? 2.Why Foxconn or any new supplier? 3.What are the challenges and risks with China directly. 4.What are the benefits of going to China directly. 5.Why Foxconn given reputation? (you may need a little outside research) 6.How do you mitigate the risks of going direct to China?

16. Cisco Case What do we know? Please add to this list important factors Viking Product has transitioned to a faster model, surpassing the competition (Juniper & Alcatel). Now want to go from US-based NPI & China transition to Foxconn out of the gate in Shenzen. Foxconn had never made this complex a box, especially from the start, but now level – 3. 45% of employees and sales from outside US. Proud of their “adaptive supply chain,” cut its number of outsourced partners from 13 to 4 (is this good & why?) 2001 Cisco went from 1,500 suppliers to 600, of which 200 had 80% of the spend. Cisco Lean was the mantra, pull system & predictable lead- times and on-time shipments.

17. Negotiation game…….

18. Negotiation Game Rules -Two buyers versus two sellers -There is a relationship, so not a single transaction -Winners are both “best deal” AND best relational outcome -Feel free to negotiate between now and Friday, but details subject to change

19. Converse Tour