New Product Development, or NPD, is a race that’s constantly being run faster.
Companies have to keep up with aggressively changing consumer trends, and while software might be able to rapidly iterate and push new code in days, the same isn’t true for complex manufactured products.
Today, we dig into the ecosystem that complex products are now built in, and uncover the answer for how companies can keep up (spoiler: it’s the product stakeholder network).
The state of how complex products are made
First, let’s clarify how products are made.
Historically, things are manufactured in a linear way:
Basically, you take your assembly line and stretch out that logic across the supply chain.
So, supplier A does one thing, then passes that on to supplier B, who adds something, and so on until the product is built.
The problem with linear new product development
The challenge with this approach is twofold.
First, it means that as supply chains become more specialized, they inevitably get longer. If each supplier is only adding 1-2 things instead of 50-100, then it quickly becomes an untenable way to launch products quickly.
With increasing product complexity, the supply chain for a similar product might look like this:
Second, we live in a global economy. End-sellers like Apple and GM are manufacturing a tiny percentage of their products and are spending more of their time assembling their products from procured-in components and sub-assemblies.
Components and sub-assemblies that are manufactured all over the world.
The result is a supply chain that by its nature is long, convoluted, and has to be incredibly integrated. If there are 3,000 steps between supplier 1 and the end-assembler, it’s unlikely that their assembly will be fit for purpose by the time it gets there.
You can think this challenge to new product development like the world’s longest (and most expensive) game of Telephone: a micro-change at every stage eventually leads to problems when you’re trying to put it all together.
So if linear new product development isn’t going to for complex product manufacturing, what’s the answer?
The answer: the product stakeholder network
The product stakeholder network is a distributed network of suppliers who all contribute to finishing a final product.
increasingly, final manufactured products are designed and built by a diverse distributed network of individuals and teams—the Product Stakeholder Network.
The key points here are that it’s a network and that it’s non-linear.
Network vs chain
A network is comprised of individuals all working together on a single project. They can all communicate and have a shared version of truth as the new product development project plans move forward.
In contrast, the links in a chain can only talk to the people on either side. However, decisions made throughout the network have product-wide impacts.
By moving towards a distributed product stakeholder network with open, cross-participant communication and a shared version of truth, organizations can:
- Meet the demands for complex products brought to market quickly
- Dynamically respond new product requirements
- Drive new product innovation faster.
Suddenly, the new product development process looks more like this:
How to make the product stakeholder network a reality
The product stakeholder network isn’t going to spring into being overnight. We spoke to a client recently who said they have more than 3,000 suppliers to coordinate – each their own company with their own idiosyncrasies.
But aside from the sheer size of the task, we think there are two main challenges.
1. Companies don’t collaborate
The first issue is that companies don’t/can’t collaborate. Of those 3,000 suppliers, how many do you think work together? Supplier managers are swamped just keeping the ship running and cross-supplier communication simply isn’t the way products are built.
Complex manufacturers need a solution that will enable them to see what other suppliers are working on in a clear and controlled way.
2. Data isn’t shared
We like to think of our IT systems like a smoothly integrated machine. But that’s not the reality, as anyone who’s ever tried to automate moving data from A to B can attest.
Systems like CAD editors, BOM managers, ERPs, SCMs, CRMs, and PLMs don’t play well together. Getting everyone on the same page internally is challenging enough – the task of getting disparate suppliers working as one is often a non-starter.
Organizations need a product that will bring together systems internally to allow data to be pushed quickly and easily, and they need that product to scale across the supply chain.
Pressure for new product development is mounting. Companies have to deliver the latest and greatest faster than ever before while at the same time, the complexity of products has grown exponentially.
Essentially, manufacturers have less time to do a harder job.
Traditional linear supply chain models are incapable of meeting this demand:
- End-users work with more and more external providers to increase
- Specialization drives the number of suppliers up
- Procured-in content is now up to 70% of all finished products – companies are assembling, not building.
The result is that businesses need to shift their focus to a distributed product stakeholder network, where suppliers can communicate, data is accessible, and there’s a shared version of the truth.
That’s where complex manufacturing is headed. We’re pretty excited to help get it there.