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 CFT’s 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