Global Logistics and Supply Chain Strategies - August 2008 - (Page 32) way to meet those targets is to get better at the entire process of innovation,” he says. Lastly, says Blanter, “once a company starts on the path of trying to be more innovative, it creates a positive feedback loop. More innovative products result in higher profits, which allow more investment in innovation.” That assumes, of course, that the products companies bring to market are hits with the consumer. From one-third to one-half the time, this is not the case, according to various estimates of new product failures. “At the end of the day, if you don’t have the right product for the right market segment at the right price and quality, you are not going to be successful, no matter how great an infrastructure you have behind that product,” Davis says. However, he adds, the opposite is equally true. A company dent of applications marketing at Oracle, a major enterprise solutions provider based in Pleasanton, Calif. “It no longer is sufficient to have engineers working in their own little bubble, selecting components and suppliers for technical reasons alone.” Moreover, he adds, developing products without taking into consideration existing global contracts and relationships “simply undoes a lot of great work by folks on the purchasing side.” “It’s the companies that figure out how to drive integration and collaboration with supplier partners and with the supply chain and engineering teams, all at once, and make it truly a joint development team, that are able to launch innovative products quickly,” says Prentis Wilson, vice president of product operations for Cisco Systems, San Jose, Calif. Wilson also likes the con- “Every company should make it a mandatory requirement for the supply chain to be involved in product design.” — Jerry McNerney of Motorola may have a great product design, but if it doesn’t execute well on producing and getting a product to market, it will not succeed. Convergence Is the Answer The critical nature and interdependence of these two competencies is leading companies to realize that to succeed at innovation, design excellence and operational excellence must converge. For that to happen, barriers between product development and supply chain management have to come down. The traditional linear process where a fully developed product is handed off to the supply chain at the end of the process no longer works, if it ever did, experts say. Supply chain activity should occur concurrent with new product development. “The concept of “right” to market depends on getting the supply chain, operations and purchasing to be partners in the new-product introduction (NPI) process, versus handing something off to them once it is designed,” says Chris Farinacci, vice presicept of “right to market” rather than “time to market” for new products. “What we are focused on is the notion of TTQV [total time to quality and volume[ at FCS [first customer shipped], meaning we are right to market on day one,” he says. Jerry McNerney, senior director of transportation, distribution and logistics solutions at Motorola’s enterprise mobility business, Holtsville, N.Y., contends that “every company should make it a mandatory requirement for the supply chain to be involved in product design.” At Motorola, he says, “supply chain teams are completely aligned and participate with newproduct development teams so they can leverage the bill of materials for new products and help make decisions on how to manufacture and bring new products to market. In today’s environment, you are going to be at a complete disadvantage if you don’t have your supply chain teams as a full participant in the development and the life cycle execution of your products,” he says. One way that Cisco leverages the discipline of designing a value stream and a product at the same time is to do trade-offs that might help it be more competitive in the marketplace, says Wilson. “For instance, decisions on when we might do late stage differentiation to meet a global market need may force a trade-off in design that a designer would not have thought of otherwise. Making those trade-offs during the design phase enables us to get to market quicker. When you are trying to solve a need in the marketplace, the solution needs to be defined based on supply chain characteristics as much as on design features.” Decisions in the development process also have significant impact on other processes in the distribution side of the supply chain,” adds Hans Thalbauer, head of PLM solutions management at enterprise solutions leader SAP, Blue Bell, Pa. “For example, decisions about where suppliers and manufacturing will be based will impact network design,” he says. “Or, if a new product is replacing an existing one, there needs to be a supply chain strategy for phasing out products that are still in the market or in inventory.” “We are finding that our customers are more concerned than ever about lead times, so at Sun we think seriously about our forward distribution system during development,” says Marcy Alstott, vice president of enterprise system operations at Sun Microsystems, Santa Clara, Calif. Lead time considerations and product differentiation or postponement strategies go hand in hand, she says. “We look, for example, at having global configuration centers closer to our customers so we can achieve the very competitive lead times they want.” Designing products with the entire value chain in mind is essential from a cost standpoint since 80 percent of costs are built in during the design phase, says Fabian Fedida, PLM and SCM strategy director at Dassault Systemes, a provider of PLM and computer assisted design engineering solutions based in Paris. “That means designing for manufacturing, for sourcing, for easiest support and maintenance, for packaging and distribution, for matching the requirements of the customer—all of that.” There are trade management issues that make it important to involve the supply chain up front as well. Products need to be designed for compliance to make sure that 32 AUGUST 2008
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