New product development

Cost/Benefit analysis cost Is high and benefit is very low (extremely). Case studies Must have 3 characteristics: significant business issue or issues, sufficient info on which to base conclusions, and no stated conclusions. Many cases also have: Information noise, unstated Information, a nonlinear structure. Therefore… To successfully read a case, construct conclusions, filter out irrelevant info, furnish missing info from inferences/assumptions, and associate evidence. You have to read a case actively and construct your own meaning, then read it again. Case study situations:
Putting the bottom line up front! Conclusion, reasons, evidence There Is no such thing as a right answer In a case study Analyze the case… Give it meaning in relation to the key issues or questions asked. Communicate your thinking effectively. Class 2 – September 3 (in note book) Paper #1 – conclusions, applications, evidence. Site (professors, websites, interview, In-text citation, base your conclusions from evidence. How well they manage or don’t manage the way they deliver that product. Scarce exam: 1 . Over the years, Scarce expanded its business model and made it’s processes more complex. Low barriers to entry (Boeing, airbus – has HIGH barriers). Scarce had many “mom & pops” competition, this says It was easy to enter market. All Scarce had to do Is buy cars, rent In parking garage 3. Lean: customers did not have to fill the gas tank before returning the car (from customers perspective: customers always has to fill up before delivery, dirty car is an added step for customer since you’ll need to clean, not normal in a customer’s perception). 4. Carcass process similar to: the airline industry 5. Scarce competes on low prices, which doesn’t support this?
Allowing changes to he customer contracts 6. Yield enhancement tools and models to manage rental value for money 8. Right 9. Right 10. Right Chapter 2: New Product Development – the manufacturer is creating an environment where the supply chain plays a greater role in the design innovation of the product. NYPD process: idea, develop concept, analyze and screen, develop product and process, test, introduce product to market – NYPD finds ways to shorten this process by finding ways to shorten each cycle time. NYPD along the Supply Chain Customer focus: existing demand from customers. Get market input (example: Frito-

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Lay [test markets] and make products from that. Product focus: find customers after product is released. Early supplier involvement Process selection: match the production process to the product based on: Expected level of output Expected Cross-organizational Teams: Consider: what factors should an organization think about when integrating supply chain partners into its new product development process, ask: Technical capability to do it? Capacity to support? Reducing the NYPD cycle time: design for manufacturing & assembly (DAFT) modularity (where see: automobiles GM midsized models chastise are ALL the same)
Mass customization, key: postponement, make into a pull system. Made standard until the very last moment. A push-pull at the point of differentiation. 3-D concurrent engineering: the design of the product, process, and supply chain are considered simultaneously. Get product to market faster. The Fast Innovation Value Proposition (not in chapter 2) I have an idea, goanna spend a lot a market until I introduce to market, BUT I’ll make money before I to To market. BUT cut in half The 3 innovation imperatives (Innovation itself, says new product needs to be different): Differentiated
Understand the heart of the customer Fast to market Attack the biggest drivers of innovation lead time. Deploy rapid cycles of learning. Disruptive Make the competition obsolete Costs & Benefits of Differentiation Highly differentiated offerings vs.. Low or “Me too” offering. How to become fast: the Law of Lead time and how you can cut that down. Lead Time: average lead time of any process= # of things in process/number of things completed Lead time factors: 1. The % of utilization of critical resources 2. The amount of projects completed 3. Attacking the Lead Time: Think of the system
Apply theory of constraints principles Avoid “multi-tasking” at the critical resource point. Complexity has its place. 3 rules: Eliminate complexity customers will not pay for (rid of non-value added steps) (Henry Ford – T car) Exploit the complexity customers will pay for (Alfred Slung – MM, some people will pay for complexity) Minimize the costs of complexity you offer (lowest cost as much as possible) “Simplicity is the ultimate sophistication” Leonardo dad Vinci The value of complexity Customers with unique demands who are willing to pay a higher price that additional value are much more loyal.
Companies can increase complexity in response to those valued customers. **There is room in a given Market for only one very low-cost operator** (Wall-Mart’s biggest competitor now: good will) But there is room in each market for businesses that offer customer-driven complexity with a favorable value proposition. Continuous improvement: “imperfection drives all innovation” – Matthew E. May DARPA – high caliber teams Hire some people and outsource other people. Fast innovation – can you outsource innovation? YES – DARPA successfully does. Interesting that the temporary people feel more free to expand/take risks.
This is because they’re not afraid of getting fire, this risk is not there. Quote from professor: companies should create a small, dedicated independent organization to work in Pasture’s Quadrant. Best way to prevent surprise is to create it! – best quote of the paper. Don’t get surprised, be ahead of the competition. Put a contingency in place. Applied Research – Many issues from the 1st and 2nd generation product. The product was not created correctly/effectively so product had failed twice. 1st failure – 3. 1 million people died from bad drinking water – first product tried to remedy this.
Dysentery – extreme form of water (160,000 people a month were dying from dissenters). Had a strong odor – product failed 2nd failure – budget cuts, battery usage – too much energy use, had to switch out the battery too often. 3rd attempt – residential water system. So people in India didn’t like this cue it went from saving people’s lives (water), to blank, to making people’s grass green. Issues: price point (high or low), Cynthia said, do 3 phases: she provided structure… 1 . Concept & market Specs & prototype Business plan ENTREPRENEURIAL – entrepreneurial inside the company…
Turn it around or shut it down – Cynthia thoughts (new UP, so this is her first big decision). With this, Cynthia accepted and product went to market. Professor thinks that the way and the person the product is presented to the final approval person, Good investment for developing the team… Added in their annual review ($MM not that big a difference). Customer Relationship Management The customer is not always right Fire your customers Why? Cost you money Which ones? Customers that are UN-profitable by complaining (getting things for free), returning items after buying (return merchandise after you use it once [special occasion].
Companies can band these customers. Other unprofitable – customers that do minimal purchases – not enough for the company to break even, buy the lost leader – company loses money. Customers who buy low profit products – eliminate the product and then those customers go somewhere else – not enough profit margin. How does this impact your supply chain? Impact: yes, example: McDonald’s swirl cone, stopped selling so now they don’t have to buy chocolate. Remove an item (inventory) then you don’t have to manage it – frees up space for other items, or even teeter streamline the supply chain. Normal TV vs..
Smarts – get rid of normal, then supplier raises price on Smarts cue they were giving you a discount or the company can fire you all together. A dissatisfied customer is 10 times more likely to tell their friends versus a satisfied customer. Gives you more time to focus on your profitable customers. CRM – managing the customer relationship. Resolving customer issues, call centers. It is a process seeking to maximize profits. Something else How does CRM change with a different competitive business strategy? Differentiation Low Cost Response questions before implementing and CRM idea: 1 .
What is the value being added and for which customers 2. Does it strengthen or dilute the firm’s strategy 3. What is the expected effect on the firm’s profitability. What is individual marketing? Company gets your info and they bombard you with emails about the product or similar products (buying history). How successful do you think it has been? Sometimes it works and sometimes it doesn’t, cue you’re not paying attention. What are customer loyalty programs? How effective are they? Make sure CRM takes into account: Strategy, legacy systems, analytics

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