The Manufacturing Value Chain Report: New Product Development
The Benefits Of Disruption
It's important to note that the new product development challenges cited by respondents apply primarily to satisfying existing customers with product enhancements and platform extensions. The respondents do not consider new product development challenges from the point of view of Harvard professor Clayton M. Christensen, author of The Innovator's Dilemma (1997, Harvard Business School Press). His theme is the challenge of disruptive innovation. Essentially, Christensen says well-run firms primarily support the profitable evolution of their past technological successes. Their challenge begins when they encounter technological innovation that disrupts their market leadership. To survive, Christensen recommends a parallel disruptive path.
See the full report: The Manufacturing Value Chain Report: The Ties That Bind
New Product Development Challenges
| Correct Identification Of Customer Needs | 60.8% |
| Remaining Competitive | 50.0% |
| Increasing Product Innovation | 32.2% |
| Reducing Time-To-Market | 30.4% |
| Managing Overall Costs | 29.5% |
| Proper Allocation of Project Resources | 28.6% |
New Products Faster
Manufacturers are succeeding in shortening their product development cycle times. Three years ago 26% of operations report that it took them 300 days or more to bring a product to market from the start of the design process until the new product was ready for sale. Today only 19% need that much time.
Average Time To Market, Days
| Average In Days | Today | Three Years Ago |
| 0-100 Days | 37.7% | 36.5% |
| 100.1-200 Days | 32.5% | 27.1% |
| 200.1-300 Days | 11.3% | 10.2% |
| Over 300 Days | 18.5% | 26.3% |
Essential Input
Tradition has it that R&D drives new product development, but the real drivers of success are the innovations that the entire organization brings to meeting or exceeding customer requirements. And the innovation process extends beyond corporate boundaries to include customers and suppliers. For example, 51% of survey respondents report extensive participation by customers; 15% by suppliers. Supplier participation is becoming more significant as outsourcing increases.
Functional Participation In New Product Development
| Extensive Participation | |
| Marketing and/or Sales | 74.9% |
| Research & Development/Engineering | 72.8% |
| Manufacturing | 44.0% |
| Finance | 18.0% |
| Procurement/Purchasing | 17.2% |
| Logistics | 8.2% |
| Key Performance Indicators | Bottom 25% | Median | Top 25% |
| Percentage of sales from products launched in the previous year | 10% | 15% | 25% |
| Time to market today, days | 258 | 150 | 60 |
| Products launched on budget | 50% | 75% | 90% |
| Products launched on time | 30% | 60% | 86% |
| Percent of R&D cost for new projects* | 3% | 25% | 50% |
*not including extensions and improvements
