Publication date: 04 March 2008
Supply-chain design and management is a critical element in the process to bring a new product to market yet it is often under-valued and badly implemented. Its is not just about having stock on the shelf when its needed, its more complex than that and getting the supply-chain right can make all the difference between the success and failure of a new product. More new products fail through poor supply chain design than through poor product design.
In the haste and excitement to design and launch a new product most people’s thoughts are on the look, feel and functionality of the product and rightly so. Yet if no one considers how the supply chain is going to work prior to the first production run then the product may miss its market entry date and be forever known as an also ran rather than the market leader.
When introducing a new product to market designing flexibility into the supply chain will allow for early market fluctuations without tying up essential funds holding “just in case” stock on the shelf or worse, not having stock available when new orders demand it. A Demand Driven Supply Network (DDSN) based approach is the simplest and most effective method of synchronising supply and demand. DDSN works by removing raw material or intermediate assembly lead-times from the critical path, thereby reducing excess inventory while providing necessary flexibility, enhancing reaction speed and minimising delivery lead-times.
To ensure a successful market entry the supply chain should be considered at the same time as the design. Is it vital that your product uses that single sourced component that is on a 20 week lead-time from an overseas manufacturer or will a component that is available through a supplier closer to home in six weeks and has a second source do? The component from overseas may be cheaper, faster, lighter etc, but if it means the product launch is delayed and the market opportunity missed then that component becomes very expensive indeed. By selecting the local supplier you are able to develop a stronger partnership and hold them accountable for their lead-times and through strategies such as demand pull, you will find that your suppliers become leaner, more flexible and synchronised with your requirements.
Demand forecasts for new products are inherently difficult to predict. At Plexus we work with each customer to quantify the nature of their expected demand and service level requirements and model the impact of this information on delivery, cost and risk. By assessing customer demand variations alongside lead-time requirements we are able to achieve their desired results at predictable, market sensitive costs regardless of forecast inaccuracies.
Understanding the need for speed and flexibility within the supply chain while controlling total cost and liability is core to ensuring an on time product launch. Get these elements right and you’ll be well on the way to headache free launch.
“A supply-chain design has to be tailored to meet each customer’s unique market requirements. At Plexus we focus on reducing lead-times through careful supplier development and partnering to ensure our customers products are delivered on time and on budget.”
“Designing a supply-chain is one thing but executing it effectively takes skill and tremendous expertise. We have experts qualified in Production and Inventory Management, Integrated Resources Management and Supply-Chain Design, who work closely with each customer to quantify their requirements. We believe the tools they use to ensure those requirements are met, on budget, are the most sophisticated of any Contract Manufacturer.”
