While a lot of the big picture questions (like, how much do we expect to make from this product, why are we launching something new in the first place, etc.) are VP or C-level questions, a successful new product introduction (NPI) is something everyone in the organization must help with.

Here are some things engineering, operations, sales and marketing should consider during the NPI process.

Has operations considered . . .

• How to kick off/manage the various production phases (prototype, pilot, production)
• The supply chain strategy—are you consigned, turnkey, hybrid or ”appliance” manufacturing?
• CM selection—will your CMs operate locally or offshore, and should you go with an ODM?
• Production strategy—will you build to order or build to forecast?
• Time that needs to be added for the quality assurance process
• Your production capacity requirements, plans for expansion
• The Finished Goods (FGI) warehouse/distribution plan
• Repair center process and costs
• Cost reduction

Have engineers taken some time to discuss . . .

• The NPI process (gates, deliverables, approvals)
• Product data management and engineering changes
• Part numbers—custom vs. standard, commonality, intelligent vs. non-intelligent
• Design Verification Testing (DVT)/QA
• Product Reliability testing (HALT)
• Test specs
• Available diagnostics
• Special test equipment
• Feedback loops

Have sales and marketing thought about . . .

• Sales channels—will you use a direct model, or work with distributors  or partners?
• Sales regions—there are different considerations if you’re selling domestically than there are if you’d like to expand your customer base to Europe, China, India or Brazil)
• Standard order ARO requirements
• Terms and conditions
• Stock Keeping Units (SKU’s)—how many do you need to have available?
• Sales forecast process
• Customer warranty—how will you manage returns and spares?
• Compliance (UL, FCC, RoHS, WEEE, FDA)
• Software delivery scheme (CD, web-site access)

And for every department, it’s important to make sure the right business systems are in place.

In particular, the following systems make it much easier to manage the new product introduction process:

• Product Lifecycle Management (PLM)—for design and manufacturing documents, BOM and change management and compliance
• Enterprise Resource Planning (ERP)—for purchasing, inventory, order administration and finance
• Customer Relationship Management (CRM)—for sales forecasting and customer orders, pipeline management, RMAs, return rates, customer case history and warranty entitlement

To learn more about new product introduction (NPI)

If you’re interested in learning more about new product introduction best practices, our partner Product Realization Group is hosting a seminar next week that you might enjoy. The event, “Launching Success,” is available as an in-person networking and lunch for $10 (early bird pricing) and as a free webinar. Sign up today!

Some other links you might enjoy

First-to-market innovation challenges: An Arena customer spotlight

Big picture questions to ask when launching a new product

Avoiding NPI pitfalls: Plan for the total customer experience

At Arena, we’ve been working on a couple of new products ourselves, Arena PartsList and Arena PDXViewer, so I’ve gotten to see a bit of what goes into new product introduction first hand. (Admittedly, as a software company we’ve got it much easier since our products don’t need to obey the laws of physics!)

A lot of things can take you by surprise when introducing a new product. You may find that your internal resources are not always available in the time frame or with the required expertise to meet NPI demands. Your internal resources may also have limited bandwidth, forcing you to hire and manage outside partners. And if you are a global organization, the complexities of your global customers and supply chain pose an extra challenge.

The best way to deal with the stress of NPI is to create clear goals, processes and benchmarks from the beginning. These things can keep you on track when production ramps, it starts getting hectic and you find yourself asking, “Why are we doing this to ourselves!”

Our partner, Product Realization Group (who is hosting a webinar on NPI in February) shared with me a list of basic business questions that you can use to start drafting your new product introduction plan.

Kick off your next product launch with the following questions:

- What are the sales/revenue projections for this new product?

- As you move toward launch, will operations require additional/temporary headcount?

- What is the operations budget when it comes to expense and capital equipment plans?

- What are projections for gross margins? (Consider ASP targets and COGS targets)

- What are current and projected product costs? (Include inventory projections, warranty claims and returns and any additional facilities requirements)

There is a lot more to NPI than this checklist, but answering these basic questions is a good place to start. (For example, how can you determine the potential ROI of the product without an idea of what you expect to make? And how much does the extra required headcount impact overall revenue potential?) And if you’re interested in learning more about NPI, check out Product Realization Group’s upcoming seminar—Launching Success.

With the upcoming launch of PDXViewer and PartsList, I have NPI on the brain. Next week, I will share what each department should contribute to a successful product launch.

For more information

Launching success with a solid new product introduction process

For a successful startup, don’t forget the fundamentals

New product introduction (NPI) challenges and solutions

Launch haphazardly and you will find yourself on board a sinking ship. Launch strategically and you can accelerate your time to market, minimize your overall investment and maximize your profits—and with lower risk!

Because a new product introduction can make or break a company, our partner Product Realization Group, a group that offers a “one-stop-shop” of outsourced product development services, is hosting a seminar on new product introduction—Launching Success!

Learn from three industry experts, including: Kevin Rowett, the VP of Engineering at Violin Memory; Tim Miller, the VP of Operations at Trilliant Networks; and Murad Kurwa, a VP of Engineering at Flextronics International.

During Launching Success, you will gain:

• Real world perspectives from successful high-technology executives
• Insights about current NPI best practices
• Key success factors for launching new products
• Tips for scaling into volume production with efficiency

And more.

The seminar will be offered as a Lunch and Learn in San Jose (get early bird pricing now) or as a free webinar for those who can’t make it to the meeting in person.

Sign up for the webinar

Attend the lunch and learn at National University, San Jose CA

Even with the best plan, launching a new product is tough. But with a solid process in place, you are more likely to get your new product to market on time, and at cost.

For more information:

Improving time to market—NPI whitepaper by Arena

First-to-market innovation challenges: An Arena Customer Spotlight

New product introduction challenges and solutions

In spite of being the first-to-market with an innovative product, the company fell into bankruptcy five years after launch. In 2010, the company re-launched as IRX Innovations—this time with a new focus on highly specialized business and enterprise markets rather than consumer markets.

IRX knows that sometimes it takes more than innovation and hard work to successfully launch a company—sometimes, timing is everything. We spoke with Daniel Wiermans, senior electrical engineer at IRX Innovations, to learn more about the risks that come with innovating in a new field.

Interview with IRX Innovations—a leader in e-reader device technology

Alyssa: Has IRX Innovations benefited from embracing innovation?

Daniel: Ultimately, our ability to innovate and adapt has helped us, but not without some bumps along the way. We’ve learned that while innovation can be very important for company success, it is possible to be too innovative, too early.

We developed our e-reader before the market existed—before the publishing world had embraced electronic books. In fact, our device was so new to the United States market that TSA airport security wasn’t sure what to make of our device the first time they encountered it.

We released our first e-reader in 2006, with amazingly advanced features, but it was very difficult to sell the device without the available technology to get PDF books onto the device. Publishers were hesitant to take a risk on electronic books due to piracy concerns, and we had a hard time convincing them that electronic books were the future. We told them this was an opportunity to pioneer the e-reader field, but it was very difficult to find support.

Alyssa: What did you learn from breaking into a highly competitive and foreign emerging market?

Daniel: Companies looking to break into an emerging market, and small companies in particular, have to be ready at a moment’s notice to adapt to swift market changes. Emerging markets are highly unpredictable and the decision to enter often comes down to the question of when and how. Timing is everything.

When iRex introduced its first e-reader, our 3G technology inside e-books was still considered uncharted territory. The FCC had not yet determined an acceptable level of radiation from 3G modems inside e-books, which meant our wireless enabled e-readers sat on the warehouse shelves, unsellable. We lost a lot of money waiting for the green light from the government. The capital exposure that resulted proved too much for our small company and we did not survive the transition.

Alyssa: How did company size impact your ability to compete in the new market? 

Daniel: Larger companies are at an advantage in emerging markets because they can afford to create and influence the market themselves, which lends a much greater sense of control over uncertainties. Smaller companies simply do not have the same resources to bounce back from a major hit.

Once our devices made it to the shelves in the United States, we immediately felt price pressure from larger companies who could afford to sell their products at artificially low prices. Amazon and Barnes & Noble, who produced and Kindle and Nook e-reader devices, respectively, were able to subsidize device hardware costs with e-book sales.

The specialized technology in our devices also drove up our prices. We provided the fastest screen refresh capabilities, the highest storage capacity and the best quality touch screen of any device on the market—but that doesn’t come cheap.

At the end of the day, the price sensitivity of the consumer market drove competition to a level where we could not compete.

Alyssa: When you re-launched as IRX Innovations, how did your company protect itself from falling into the same pitfall?

Daniel: As a smaller company, we took advantage of the ability to go back to the drawing board. We went back to basics and developed a two-pillar approach to match our core business values and expertise.

Firstly, we realized that our strength was our technical expertise in e-ink and e-paper devices, which meant we were not going to sacrifice quality to lower cost. Secondly, we stopped producing devices for price-sensitive consumer markets and turned our focus to relatively price-insensitive markets with highly specified device requirements—such as the military and aviation fields.

By rethinking our strategy based on our product specs and expertise, we have found a niche that works for us.

Alyssa: What unique approaches have helped IRX achieve success?

Daniel: IRX has survived several rounds of setbacks in a highly competitive market because of our flexibility as a company. With fewer than 25 employees, we can respond and adapt well to market changes. We also run all our operations in-house, including engineering and logistics. This allows us to oversee our day-to-day processes and respond better to customer needs.

For more information:

To learn more about IRX Innovations, you can visit the company website and read more on the company’s electronic paper display technologies.  If you would like to be featured in an upcoming customer spotlight, post to our comments section below and I’ll be in touch.

Adopting innovation as a winning philosophy: An Arena Customer Spotlight

The advantages, challenges and risks of manufacturing outsourcing

Arena PDXViewer gives manufacturers and their supply chain partners a common view of product information—even when only one party has access to the PLM system where the data is housed.

To learn more about how and why Arena PDXViewer came to be, I talked with product manager Victor Gill. Victor, who came to Arena with lots of experience in manufacturing and other engineering-heavy environments, took a personal interest in making sure Arena PDXViewer was modern, easy to use and free. Read the following interview to learn more.

Why are you so excited to bring Arena PDXViewer to market?

From my years of working in the design engineering and manufacturing fields, I know first-hand how frustrating it can be to deal with the administrative end of communicating product data. While I was at DeltaValve, we had to make many operational changes to accommodate our rapid growth. We went from being a small company, writing ECOs and part numbers on a piece of paper, to being a large company with a PLM system that managed our entire product record.

As we grew, communicating the rich data we had in our PLM system to our vendors proved to be a difficult problem. We created a work-around where we would pull files one-by-one—BOMs, PDFs, drawings, etc.—and email the zipped production packages to our suppliers. Extracting product data to share with our supply chain was a very frustrating and training-intensive process. The ability to communicate using PDX files would have saved several steps, not only making the process faster, but less error-prone.

Why is Arena PDXViewer free?

It is very important to me that Arena PDXViewer is free. The market is currently lacking a free, easy-to-access PDX viewer that meets modern design standards—and this creates a huge problem in terms of who can use PDX files as part of their everyday business. Not having universal access to a PDX viewer is like having Adobe but not Acrobat Reader—what is the point of creating PDFs if no one can read them? In the same way, what is the point of creating PDX files if your vendors can’t view them?

The easier it is to share product data with partners and vendors, the more useful PLM software can be, so we saw Arena PDXViewer as something we could provide to help anyone who uses PLM software to bring their product to market.

How is Arena PDXViewer different from other PDX viewers available on the market?

There are a couple of big things that differentiate Arena PDXViewer from everything else that’s available out there. The first thing is that Arena PDXViewer is operating-system agnostic—for example, some PDX viewers don’t work on 32 or 64-bit machines, but Arena PDXViewer does.

Secondly, Arena PDXViewer does not require installation, so it’s extremely easy to start using. And because it’s cloud-based, you know you’re always using the latest version with all the newest features.

Another extremely important difference is that Arena PDXViewer is modern. Arena PDXViewer was designed with modern best practices for user interfaces, so it’s simple, straightforward and intuitive to use.

How do you get started using Arena PDXViewer?

In my mind, the best part about this viewer is its simplicity. It’s a straight-forward web app. So visit the Arena PDXViewer web page, click through to the app and open a PDX or view our sample file.

“The market failure of the Michelin run-flat PAX tire illustrates the common mistake of failing to realize that even a groundbreaking product has to create a complete consumption chain. Broken links in the chain mean a broken customer experience, which can lead to new-product-launch heartbreak.”

The story is a reminder that solving an unsolved problem isn’t enough. You have to solve the right problem (i.e. one compelling enough to create behavioral change) – AND you have to make sure you don’t create new unsolved problems along the way.

The HBR post is a quick, interesting read. Check it out.

What about you? What is your company planning to do in the next 6 months? Is new product development (NPD) on your list? If so, will you approach the NPD process any differently than you have in the past?

I’m sure most of you can name the big winners—like the iPod or the USB drive— but there are lessons to be learned from the losers. While 2002’s “wearable PC” was probably destined for failure from the outset, gadgets like the Garmin GPS phone sounded like a great idea, but were hurt by slow development. Announced in January 2008 and not released until late 2009, by the time the device was ready, it was already obsolete. “Garmin’s competitors in the GPS space, such as Navigon and TomTom, released apps that nimbly worked with the iPhone.” And the Garmin GPS phone was doomed.

The lesson? In the high-tech industry, change occurs rapidly, so product development has to be as streamlined as possible.