One hundred years ago, before the explosion of marketing innovation to differentiate products, Henry Ford reputedly stated of the Model T, “Any customer can have a car painted any color that he wants so long as it is black.” Even fifty years later, the monopolistic telephone market could dictate that all residential phones had to be black.
Today, however, the age of choice has arrived, with the styles and colors of cars, phones, and thousands of other products limited only by imagination and demand. To compete in a dynamic market in which sophisticated consumer preferences reign, companies cannot afford to be cavalier about product design and development.
The product design and development process—PDDP—accounts for over 80% of the cost and possible sources of supply in manufacturing. PDDP is a multifunctional endeavor that combines marketing’s interpretation of customer desires, manufacturing’s ability to operate efficiently, accounting’s determination to optimize cost, and procurement’s obligation to manage both the sourcing and logistical support operations. How well a company manages PDDP has a significant impact on its future profitability and sustainability.
Supply and procurement professionals are among the most intimately involved in PPDP, but if you do not take an active role, you become administrative processors with only a 20% ability to affect the total cost. To have an effective impact, you must:
- - Recognize the sources and strategies of innovation.
- - Involve your suppliers earlier in your process and solicit their feedback when possible.
- - Understand the financial drivers for PDDP.
- - Implement a value analysis approach.
Achieving these goals requires a concentrated effort to gain the buy-in of your stakeholders, but the results can give your company a distinct competitive edge.
How is your company meeting the age of choice? Is your product range a rainbow of innovation thanks to a carefully constructed team approach? The Academy course Implementing Innovations in Product Design and Development provides a detailed overview for helping your company tap into the benefits of implementing a successful PDDP.