Developing a new product, adding a new feature to an existing one, or simply issuing a change to a single part of a complex assembly comes with a series of impacts to cost, timing and risk. And approaching the new product development process with a series of siloed departments drastically increases the chances these impacts are detrimental to an organization’s profitability. Breaking down silos and engaging the supply chain team early in the new product development process can mitigate risk and reduce costs and timing before the product would ordinarily reach the purchasing team.
Passing tasks “over the wall”, as is practice in many organizations, means departments traditionally involved early in the development process have the greatest influence over which components and features end up in the final product. This is for good reason, as most would prefer engineers engineer the products that make it to market. But passing a completed design to the purchasing department before considering the cost, timing and risks associated with each feature is a mistake easily avoided by allowing supply chain to support the development process.
The supply chain team can take early designs and gather directional pricing and lead times from potential suppliers, which is invaluable during development process, as it allows the engineering team to make informed decisions on potential design features, ruling out potentially costly and risky designs early that would typically make it to suppliers in a more costly form.
3 Reasons to Involve Supply Chain Earlier During New Product Development
1. Cost Benefits
Early engagement with the supply chain team allows for more accurate costing of preliminary engineering BOM’s, converting them into purchasing BOM’s that more closely resemble future work orders. With each line item costed, the new product development team can gain a more fundamental understanding of how each potential design feature affects the overall cost of the new product. This makes tracking and abiding by established cost targets far easier, giving the team a higher confidence in the future cost of the new product being developed.
The early engagement of the supply chain team is not at all unlike in-process quality control in manufacturing. After all, when making parts or assemblies, it’s far more cost effective to detect a quality defect at the raw material level than just before the parts make it onto the truck to be delivered to the customer. Uncovering potential cost increases right away can mean the difference between success and failure, as discovering cost issues too late can mean changes are impossible to make without sacrificing a great deal of timing, threatening the launch of the product in the first place.
2. Timing Benefits
Timing risks can be mitigated much in the same way as cost risks. Suppliers are able to provide directional timing and insights into future obsolescence and availability of supply. The lead time hurdles that arise from soon to be obsolete parts being designed into new products can prove costly to surmount and detrimental to overall program timelines. These hurdles are avoidable altogether with early supply chain involvement by switching to more widely available products.
Timing can be reduced for non-off-the-shelf parts as well. Supply chain’s engagement with suppliers in the market can inform decisions on material specifications in the new product design process, finding more available materials that pose a lesser threat to timing without sacrificing the overall performance of the product.
3. Risk Reduction Benefits
It’s never too early to assess risk in the supply chain, even for a product or feature still currently in the design phase. Allowing the supply chain team to engage potential suppliers immediately for site visits and financial risk assessments facilitates a completely de-risked supply chain before purchasing is given the green light to begin ordering. The benefits of risk reduction activities occurring early and often can be realized before the product gets to market.
Supply chain managers have a diverse toolbox for de-risking the supply chain ahead of launch, but utilizing well-developed site audit templates and an experienced team of auditors can help the design team become comfortable with what the supply chain might look like in the near future for the product being designed. In addition, increased comfort in sharing information with suppliers and vice versa can result in a more manufacturing-friendly product, making the transition into production far less risky and more seamless.
Allowing supply chain to inform design decisions early in the process has a profound impact on the success of a program, reducing cost, timing and risk alike by developing the supply chain far earlier than in a more siloed environment.