New Product Development

Week Nine – New Product Development



In this week’s lesson, we will four key objectives:

  • Understand the benefits of involving buyers and suppliers in the product development stage
  • Recognize the steps in designing and developing new products
  • Appreciate supply management’s role in the new product development process
  • Identify ways in which supply management can increase its role in the product development process


This chapter addresses four key issues: (1) early supply management and supplier involvement; (2) the process of designing and developing new products, with an emphasis on supply management’s role in the process; (3) several approaches to increasing supply management’s role in the new product development process; and (4) a description of supply management professionals who interface successfully with engineers during the new product development process.


World class firms excel at a crucial triad of activities: new product development, the design of the required production process, and the development of the optimal supply chain.  A firm is a series of products or services in different stages of the life cycle (hence the product life cycle).  To drive revenue growth, firms will need to find new markets, new products and new services.


Rapid changes in technology, the emergence of global industrial and consumer markets, increasing market fragmentation and product differentiation, and the increasing options for developing and producing products have increased the pressure on all firms to more effectively and efficiently develop new products.


New product development is a cross functional effort between all areas of the firm.  The lack of effective, cooperative teamwork among the functions noted above frequently has been accompanied by quality problems, cost overruns, forgone all-in-cost savings, major scheduling problems, and new products which are late to the market place.  The cross functional team must effectively work together throughout the new product development phase.