Rethinking Product Development
By Barbara Bell
In an effort to remain competitive in today’s difficult business climate, many wood products manufacturers are working hard to reduce costs and increase sales. Unfortunately, the results of these efforts are often mixed and can leave employees and owners frustrated from continuously reacting to rapidly changing conditions. FPInnovations recommends moving toward a more proactive business model and rethinking how product development can help the business survive. This article describes what product development should look like and why it is becoming an important competitive advantage. It also describes one company’s success with revitalizing its product development processes.
Of course all manufacturers develop products! The question is what priority is given to developing them and how well is it done?
Product development projects are one of the least repetitive processes manufacturers engage in (projects can last anywhere from six months to several years) and as a result, some manufacturers make little effort to improve in this area.
So how do manufacturers make the shift from a reactive cost control approach to a proactive value creation approach? The first step is for them to take a hard look at their current product development methodology. Is there a system in place, or is product development carried out in an ad hoc manner? An unplanned approach tends to rely heavily on the skills of a few individuals and is therefore limited. What is necessary to go to the next level of business is a more methodical approach.
Where to Begin
A number of models exist for implementing new product development, but in very general terms they all begin with a process of idea generation followed by screening those ideas to identify the most viable. This is followed by a development phase, which culminates in a new product launch. Each manufacturing environment is unique, so individual manufacturers need to develop their own tailored method. Though details will vary, the process should be documented and structured so successful practices can be repeated, measured and improved upon.
A good product development process involves an element of teamwork. The use of cross-functional teams or teams that involve people from across a variety of business functions like sales, marketing, design, engineering and production is valuable. As the process of product development is complex, it requires expertise from all facets of the business.
All product development efforts should revolve around customer needs. After all, it is the customers for whom companies are designing and developing new products. Not only is it imperative to have a thorough understanding of the customers’ needs and wants, it is very useful to see how the product is being used by the customers in order to gain a more innate understanding of its application and context.
Product development efforts need to be supported by upper management and be well managed. Companies often develop a number of products concurrently, and managing this product development portfolio helps achieve the right mix of products for long-term success. It is also crucial to the success of product development efforts that the goals are well articulated to all involved, and ways to measure progress and success are in place.
Businesses that have a clearly articulated product development process tend to perform much better than those that do not. One important benefit is that the resulting products are differentiated and have a much higher level of customer satisfaction. This translates into higher margins, easier market access, and sales (better word of mouth advertising). Simply put, differentiated products attract customers in a market crowded with choices and give the manufacturer an edge.
Another important benefit of prioritizing product development efforts is that it helps develop a culture of innovation within an organization. When product development is given a high priority, companies become more agile and are able to respond to change quicker. These companies develop confidence in their ability to effectively turn a threat into an opportunity, which in turn, makes them more comfortable taking risks and
being more proactive.
Since product development involves all functions of a manufacturing business working together in a team, it results in better synergies. People start to better understand and appreciate the roles and contributions of others. The ability to work collaboratively and breaking down silos is necessary for an innovative corporate culture. In addition, a collaborative and innovative work environment is conducive to attracting and retaining quality employees.
And finally, there are cost savings that result from having an efficient product development process. Manufacturers report decreased development times, improved manufacturability of new products, and reduced launch costs.
A Working Example
FPInnovations recently completed a product development project with a manufacturer that demonstrated how a company could become more proactive in its product development efforts and translate that effort into new sales. Based in Surrey, B.C., Cedarline Industries produces lumber for fence parts and prefabricated fence panels from western red cedar and pressure treated pine.
After participating in one of FPInnovations’ product development seminars, General Manager Harpal Dhillon, contacted FPInnovations to discuss the idea of working together on a product development project. FPInnovations has a team of product development experts to draw on with expertise in product design, engineering, design for manufacturability, and market research. Cedarline was about to embark on a product line review and thought the inclusion of a product designer would offer a new perspective. They put together a development team that included expertise in sales, marketing and production as well as an industrial designer from FPInnovations. It is important to note that involving a product designer on these types of products was a highly unusual thing to do, as innovation in this product category has been largely absent for some time.
The process began by undertaking ‘opportunity scouting’ activities. The market was investigated, the company’s capabilities and business goals determined, and new product development opportunities identified. This phase resulted in the identification of three distinct product directions. First, the sales and marketing people at Cedarline observed a market opportunity created by the growing trend toward viewing outdoor spaces as extensions of the home. They recognized that space-dividing screens would be a useful cash and carry product for the DIY market. Cedarline also identified the need for a line of gates that would appeal to consumers who wanted to make a statement in their yards. These consumers were willing to pay a slightly higher price for a better product, since, unlike regular fence panels, the home-owner would only need one or two of the new panels. And finally, Cedarline noticed a gap in the market for a differentiated pre-built fence panel. The same basic three or four panel designs have been available across Canada for at least 20 years, and they felt confident that the market could bear a new, improved fence panel. Consumer research completed by FPInnovations a few months prior, supported this premise and indicated further that consumers would be willing to pay up to 20% more than the panels currently on the market for a new and improved fence panel.
Next, the development team compiled the information they had into a design brief for the project. The brief included information about the current market situation, their own capacities in terms of manufacturing and marketing, as well as the project goals and directions. The design brief is a project planning document that specifies what the project has to achieve, by what means, and within what timeframe. For Cedarline, the design brief helped the team keep the project focused and on track.
Brainstorming and Prototyping
With experience in leading brainstorming sessions with manufacturers and conducting product audits to determine whether a company’s product line is optimal, FPInnovations helped Cedarline get the process going. Initial brainstorming sessions with Cedarline were held to expand each product direction into as many ideas as possible. These ideas were then developed into rough product concept drawings, which were weighed against priorities like strategic alignment, market attractiveness and technical feasibility. Ideas that were deemed too great a departure from what already existed on the market were banked for possible later development. The most viable products were prototyped, further refined and production issues were identified and solved.
As the prototyping began, Cedarline encountered the classic resistance to change from within their production department. However, the development team leader persevered, and in the end the technical issues were solved within the target cost and without compromising the integrity of the product design. When Cedarline was satisfied with the end products, they were photographed and integrated into their existing promotional material. Four months after beginning the project the company’s ‘designer series’ outdoor products were launched.
In all, six new Cedarline products achieved market penetration within months of launching. The company attributed their success to the unique design and reported that as a relative newcomer to an established market, they needed to differentiate their products and “get them in the door” of potential retailers. The new products command a significantly higher margin than their standard products. For example the fence panel is selling for a 20% higher margin than the commoditized versions with no increase in manufacturing cost. “Cheap supply lines or production efficiencies are not the only secrets to success,” commented Dhillon at the end of the project.
Cedarline’s marketing manager Ron Tu was also pleased with the outcome. “By working with a product development and design specialist we were able to target a specific market and come up with products that separate us from the competition,” notes Tu. “The response to our new products in the marketplace has been great.”
Without a reliable method of developing new products, manufacturers tend to produce “me-too“ products that rely on price as their main competitive advantage. Companies that are continuously reacting to external influences work in a very stressful, ineffective manner. Improving product development capabilities in order to create products that are superior and differentiated can help businesses be more proactive.
With over 25 years of experience providing technical and manufacturing support to the wood products industry in Canada, FPInnovations undertakes product development and prototyping projects with companies including product testing to ensure quality, safety and adherence to standards and regulations.
Barbara Bell can be reached at 604-224-3221 or Barbara.Bell@fpinnovations.ca.
For more information, visit www.solutionsforwood.ca, or www.fpinnovations.ca.