sipoc and new product launch

SIPOC and New Product Launch

byVivek Naik

http://viveknaik.net

How to we launch new products without disturbing the flow of our current products and processes?

Is this new product(s) right fit for our business?

Hot Lead will buy thousands

Need S

am

ple

s Parts available ?

Manufacturing Drawings

Costing

Pro

cess

Cap

acit

y

QU

ALIT

Y

MarketingMATERIAL

Kanbans

DELIVERY

Size of opportunity

TRAINING

DemandSetup Required C

ompetition

ASSEMBLY DRAWING

Procurement

overwhelmed?What about stable operations?

get

rig

ht

pro

du

cts

to m

ark

et

on t

ime

Very short window of opportunity

What is the solution?

Where do we start?

Focus

We need to Focus on the Right type of Products,Follow a Standardized

ProcessAnd

Communicate

How do we accomplish this without wasting too much time?

DEFINERight Type Products

Product Platforms and their extensions

Select Products that uses existing process flows

DEFINE and AVOIDWrong Type Products

Product which are not part of the platform

Products with just onetime demand

Products which may violate certain regulations or copyrights

How toStandardize the Process Of new product launch?

SIPOC

SIPOC ustomer

We start

here

What does the Customer want?

Does it fit into our definition of rightType of product?

What is the opportunity size ($)?

What is Demand?

What is the profit margin?

SIPOCutputs

What is the Product Definition?

Do we need to have FGI? how many (quantity)?

What are the quality requirements?

What is are delivery requirement?

What is maximum allowed cost?

SIPOCrocesses

Which Processes are needed to produce this product?

What are the cycle times?

Do we need new process, tooling or setup?

Do people need training, SOP?

Does process have capacity to meet the demand?

What process setup cost and running cost?

SIPOCnputs

Which parts/items are required?

Are these existing parts or new parts?

What is the BOM Qty. and Inventory Qty.?

What is unit cost and in process inventory cost?

What is minimum order qty.?

SIPOCupplier

Are these existing suppliers or new suppliers?

What are their lead times?

What are their freight terms and cost?

How is their quality?

How reliable are they for on time delivery?

What is the frequency of price fluctuation?

S I P O C

Communicate

Custome

r xyz

Product AWith yearlyQty. of 10,000 unitsAt $500/unit

Process routing and capacity

CommunicateWe need to share all the know facts about the Product and its setup with the entire Team During all the Project phases

How to Communicate and What Information is needed during different phases of new product launch?

Let’s take a look at a story of new product launch

“would you like to buy our great product?”

Mike the salesman visits a customer

But Alan the Customer has a Different need

“Actually we needed to solve this problem, can you help us?”

“We don’t have that right now……But we can develop a new product just for you!”

And so starts the project to launch a new product in shortest possible time

The new product promises a greatIncrease in revenues

Sales presents the idea back at the Company

Jerry the CEO wants to make a good business decision

“Do we really need this now?”

“How many units can be sold?”

“Are we capable?”

“Do we have capacity?”

“How soon can we realize ROI?”

Opportunity Assessment Phase

Opportunity Assessment Phase

What we need to know1. Product definition2. Does it match our right type

product3. Potential Demand and time to

reach that maximum demand4. Expected selling price and profit

margin

Mike the salesman fills out all the details about this opportunity to prove it is worth selling this new product

S I P O C

Custome

r xyz

Product AWith yearlyQty. of 10,000 unitsAt $500/unit

Process routing and capacity

Use SIPOC to get understanding of what is involved and potential

Capability, Capacity, and Cost Risk

Opportunity Assessment Phase

30 Minute SIPOC evaluation

Operations and Engineering Prepares the SIPOC for evaluation

Jerry the CEO makes a good business decision based on the Report of the Opportunity Assessment

Initiation Phase

If project is approved Initiation Stage starts

In-depth SIPOC begins to evolve

Procurement is initiated

Prototype is built

Output of Initiation Stage

Prototype Ready for customer testing

Precise Costing

Manufacturing Capacity verified

Quote is prepared

Approval Phase

Mike the salesman visits the Customer and presents them the prototype/ Sample along with the Quote

$$

Changes may be made to the product and pricing till the Customer approves and it is profitable for the company

Once approved……

Setup Phase

If Product is approved Setup Stage startsParts are ordered

Tooling/fixtures designed and fabricated

Inventory is setup in its location

Production run is carried out

Output of Setup Stage

Production Ready

People trained

Manufacturing operation’s SOPs and pull systems in place

Production schedule adjusted

Once Setup is complete regular Production begins

How do you guaranty

Sales Process Phase

Sales Process is setup to track and meet the target sales goalsAll potential location are Identified

Sales and profit forecast is made

Action plan is setup to reach the maximum sales potential of this product

Output of Sales Process

All potential location are reached

Sales and profits tracked against the forecast

Demand is adjusted based on learning

Monthly Reports of sales growth for this product

When properly launched New Products can lead to steady increase in revenue

Vivek NaikEmail: viveknaik@viveknaik.netWeb: http://viveknaik.netTwitter: @viveknaik

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