Coursera KAIST: SCM101

Supply Chain Management

A Learning Perspective
Lecture 5

Professor Bowon Kim

KAIST Business School

2014 Bowon Kim

New Product Innovation

Recall Value Life Cycle in Lecture 1

Integration of new product innovation and SCM
Why is new product innovation (NPI) important?
Essential condition for sustainable competitive advantage
Integration of NPI and SCM
Looking at the entire value cycle from the new product/service
conception to the end of the product/service life (and starting a
new cycle)
Firm must understand it to achieve competitive advantage in the
global market
New Product Innovation

Time-based Competition in the 1990s

Supply is larger than demand
More competition in the market
Reducing the project (e.g., new product development)
lead-time essential
Concurrent engineering
Flexible NPD (New Product Development) Process
Cross-functional Team
New Product Innovation
Comparison between two approaches
Sequential
100%
(Traditional) Services
Approach Marketing
Manufacturing
Project
Progress Prototype

Design

Concept

Time
Project Lead-time Sales start

Flexible NPD
100%
CFT Approach Services
Marketing

Manufacturing
Project
Progress Prototype

Design

Concept
Time
Project Lead-time Sales start
New Product Innovation Comparison
Traditional/Sequential Flexible/CFT
Fundamental Involving one function at a time Multiple functions simultaneously
Characteristics

Advantages Simplicity Lead-time

Disadvantages Most of the CFTs advantages Concurrent chaos; confusion;

Lead-time complexity


New Product Innovation Cost-Benefit Analysis
When is it better to use the CFT approach?
Assume cost and benefit are determined by the uncertainty in
technology and/or market

Cost
Benefit Benefit using CFT

Cost using CFT

Low High
Technological/Market
Uncertainty
New Product Innovation
Another important role of CFT approach
Attention allocation mechanism to minimize the mismatch between
flexibility (ease) to solve problems and management attention
allocation pattern
Enhancing the awareness level at the early stages

Cost to fix problems

Relative Levels

Traditional management attention

allocation patterns

Flexibility to fix problems

Project Time
New Product Innovation

Three Stages of Change

How to make the transition possible?

Cognitive Change Behavioral Change Performance Improvement