Sunday, 4 September 2016

New Product Development (NPD) and Supply Chain Management

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.

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