SUPPLY CHAIN AND NEW PRODUCT INTRODUCTION: AN ESSENTIAL MARRIAGE
Supply chain executives whose functions are strongly connected with new product introduction (NPI) processes are more highly valued by business leaders, analysis of field data suggests.
For many successful businesses the link between supply chain management and new product introduction (NPI) is critical. Although NPI is primarily a function built around specialist capabilities in engineering, research & development and design, it is also inextricably linked to demand management functions like marketing and sales, and to supply management functions like sourcing, manufacturing ...view middle of the document...
Figure 2 offers a conceptual depiction of Apple’s evolution from a design- and marketing-driven company with notoriously poor links to supply chain to one that tightly co-ordinates across all three domains of the business. The timescale also corresponds to an explosion in the company’s market capitalisation, which peaked in late 2012 at nearly $650 billion – the most valuable company of all time.
Apple’s journey to NPDL excellence
How Apple’s operations jobs stack up
Size and integration of teams
Demand management Supply management Product management
Number of adverts 1994 2000 2002 2004 2006 2008 2010 2012
45 40 35 30 25 20 15 10 5 Business Planning process NPDL Customer support Data centre Sourcing Other
Source: SCM World analysis
Source: Apple.com job listings, July 2012; SCM World analysis
The story behind Apple’s move toward tightening links between NPI and supply chain starts in the mid 1990s when the company’s legendary design and marketing prowess was essentially handcuffed by poor manufacturing quality, high costs and appalling demand and supply visibility. Current CEO Tim Cook joined the company in 1998 as SVP of Worldwide Operations, having spent 12 years at IBM where the concept of integrated product and process development (IPPD) had been pioneered. The ensuing focus on design for supply chain at Apple steadily improved not only quality but also quantity as a series of hit products won ever bigger shares of the market, leading to ever greater purchasing power in the supply base. Apple’s approach to this strategy has been far deeper than just adherence to stage gate product development processes, which bring cross-functional teams together to assure coherence in the scale up of production to launch. The company has defined and populated hundreds of specific job functions within supply chain (or “Operations” as it is called at Apple) with the sole purpose of executing better, faster and more impactful new product development and launch (NPDL). A snapshot of this approach can be seen in Figure 3 above, which breaks down the details of job postings on Apple’s website midway through 2012.
NPI AND SUPPLY CHAIN: BROADER LESSONS
To understand how the link between supply chain and NPI works in other companies, we analysed data from our 2012 Chief Supply Chain Officer Survey, which asked the question: “What is your assessment of the value created by having a high-performing supply chain for accelerated new product introduction?” Respondents were offered a fivepoint scale ranging from “very high value” to “no value whatsoever”. Aggregate results show that most respondents see substantial value from supply chain’s contribution to faster NPI (Figure 4).
SUPPLY CHAIN AND NEW PRODUCT INTRODUCTION | MARCH 2013
Value created by a high-performing supply chain for NPI
How the supply chain function is perceived
Number of respondents
700 600 500 400 300...