Thursday, 29 September 2016
Wednesday, 21 September 2016
Delta Consulting-solution for abroad education, Business Management & Export-Import, Kolkata: Role of Logistics in the New Product Development (...
Delta Consulting-solution for abroad education, Business Management & Export-Import, Kolkata: Role of Logistics in the New Product Development (...: Abstract- In today’s highly competitive environment, logistics plays a key role in any firm’s success. It also plays a critical role...
In today’s highly competitive environment, logistics plays a key role in any firm’s success. It also plays a critical role during new product development (NPD). There are several literatures available about the importance of different logistics activities at the time of NPD, but there is a gap of literatures to find out the most important activities during this period. This research work explores the most important logistics activities in a chemical industry specifically during NPD. The in-depth analysis and multiple case interviews enable me to identify few critical aspects of logistics during NPD in a chemical industry.
In the entire thesis, theories are presented from literature reviews, and then analysed by real-life cases from AstraZeneca, Tikkurila, and Aerosol Scandinavia. Several interviews have been conducted with the supply chain and product development professionals of these industries. A qualitative method has been employed, in order to achieve more precise and deep understanding about this topic. The finding of this thesis suggests that customer service, procurement, plant and warehouse site selection, traffic, and transportation are the most important logistics activities, on which organisation should focus to enhance the performance of a new product.
Key words: - Logistics, New Product Development (NPD), and Chemical Industry.
In recent years, industrial firms are concentrating on product innovation to satiate the customer’s dynamic need, and to sustain in the increasing global competition with the ever-changing technological phenomenon (Cooper, and Kleinschmidt, 1991). For many firms, an innovative new product is an essential criterion for long-term survival (Zacharia, and Mentzer, 2007; Balbontin, et al., 2000). It gives customers an additional reason to buy their products avoiding low margins (Fisher, 1997), creates new sales and profit (Takeuchi, and Nonaka, 1986), provides sustained growth and competitive advantage (Cooper, 1990), raises industry standards, attracts human resource, exploits non-utilized R&D discoveries, and builds confidence and momentum for the management (Wheelwright, and Sasser, 1989).
In today’s highly competitive globalised environment, NPD is one of the riskiest yet most important management challenges (Cooper, and Kleinschmidt, 1991). Firm’s market position will deteriorate without the introduction of new products for long-time (Yelkur, and Herbig, 1996). Previous research by Kellogg School of Management reveals that products less than five-years and one-year-old generate around 50 percent and 10 percent of company’s revenue respectively. According to Hanfield et al. (2002), 40 percent or more revenues come from new products introduced in the previous year. From the interviews of supply chain and production development professionals, I knew that new products (< 5 years old) in Tikkurila (paint industry) bring approximately 10-20 percent of total profit. For aerosol industry, this profit is around 25-30 percent even for the product less than 2 years old.
From the response of the professionals of AstraZeneca, Tikkurila, and Aerosol Scandinavia, I found that there are several motivational factors play key roles at the time of NPD in these chemical industries. Management also faces several challenges during this period. Management takes some primary strategies to increase the success rate of newly developed products. These several motivational factors, challenges, and primary strategies are plotted below using 'Likert' scaling technique (1-5 scale, 1-not important, 5-most important) from the ranking (average) of product development and supply chain professionals of these industries.
In the process of NPD, Supply Chain Management (SCM), as well as Logistics plays significant roles. Here, I experimented qualitatively through case study research over fourteen logistics activities related to NPD in the three chemical industry contexts. I found critical logistics activities during NPD are customer service, procurement, plant and warehouse site selection, traffic and transportation, warehousing and storage and logistics communication (Fig. below).
Fig: Importance of fourteen logistics activities during NPD (according to industry professionals)
On the other hand, according to my opinion, sustainability issues like energy preservation and pollution reduction policies should be integrated in the innovation process to save our planet from environment’s harmful effect as well as to reduce the cost of the new product.
Sunday, 4 September 2016
NPD, a core business process (Srivastava, Shervani, and Fahey 1999), has long been an important concern of management (Nakata and Sivakumar 1996), especially with the advent of shorter product life cycles and faster product development times (Griffin 1997). The focus on improving competitive advantage through NPD in recent years has been on time-to-market, overlapping problem solving, and multifunctional teamwork (Twigg 1998). Besides that, Kellogg school of management reveals that product less than five years old generate around 50% of company’s revenue and profit and 10% of the company’s revenues generated by products less than a year old. Clearly, effective new product introduction constitute the life blood for the future of the companies. That’s why NPD has found its way to the top of the agenda at organizations around the world.
On the other hand, one of the most significant paradigm shifts of modern business management is that individual businesses no longer compete as solely autonomous entities, but rather as supply chains. Business management has entered the era of internetwork competition. Instead of brand versus brand or store versus store, it is now suppliers-brand-store versus suppliers-brand-store, or supply chain versus supply chain. In this emerging competitive environment, the ultimate success of the single business will depend on management’s ability to integrate the company’s intricate network of business relationships [Lambert, Cooper]. As told by John Kasarda (Forbes, October 18,1999) “Manufacturers now compete less on product and quality — which are often comparable – and more on inventory turns and speed to market. So supply chain Management plays a crucial role in today’s market. Wal-mart, Dell and Seven-eleven are examples of companies that have built their success on superior design of their supply chain. This is the belief that supply chain management will increasingly be the principal determinant of the ability to compete. Supply Chain Management (SCM) is "Maximizing added value and reducing total cost across the entire trading process through focusing on speed and certainty of response to the market." Due to globalization, SCM has become a tool for companies to compete effectively either at a local level or at a global scale. SCM has become a necessity especially for manufacturing industry when it comes to deliver products at a competitive cost and at a higher quality than their competitors.
Logistic as well as Supply Chain Management has been shown to play an important role in New Product Development. The role includes customer service, product availability, time advantages, low cost distribution and global manufacturing. It also interfaces with manufacturing, marketing and R&D to deal with procurement, inventory, warehousing and distribution.