taking a new product toffmarket · taking a new product to market outsourcing vs. internal product...

Taking a New Product to MarketOutsourcing vs. Internal Product Development

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Taking a New Product to Market: Outsourcing vs. Internal Product Development

Developing and taking new products to market is critical to the success of your brand, but studies show

that 95% of newly developed products fail in market. This can occur for a variety of reasons, including

poor design, failed marketing initiatives, or poor choice in manufacturing or distribution partners.

While many companies have resources in-house to facilitate new product development (NPD), many

organizations have begun to outsource the NPD process. This eBook will help you make an informed

decision when choosing if outsourcing NPD is right for you.

A successful on-time, on-budget launch of your project relates to the availability of resources within

your organization. Analysis of these resources can help determine whether outsourcing NPD is the

right solution. When determining whether to outsource, consider the following:

• The opportunity cost of internal NPD versus outsourcing: What is your organization foregoing

to accomplish this project? Will outsourcing allow your organization to take on more projects or

improve speed to market if you balance projects with external resources?

• An examination of the common pitfalls of internal NPD: Do office politics or resource competition

interfere with good business opportunities?

• An evaluation of the core competencies of your organization in relation to NPD: Do you have the

engineering resources and/or the manufacturing knowledge to understand the obstacles of taking

a project from design to production?

• Ability to staff all the needed internal engineering resources: In today’s tight job market, qualified,

experienced engineers are difficult to find and retain.

Careful consideration of the pitfalls and resources within your organization will assist the decision on

whether outsourcing NPD will be a more efficient, more cost-effective option.




Pitfalls of In-House NPD

If all the resources for product launch are in place within your organization, then a successful NPD can

be successful. However, your company can run into a number of hurdles that will hinder successful

development if those resources are lacking or completely unavailable. The common pitfalls of internal

NPD include:

Design-to-Manufacturer Hand-Off Issues

Your design team can create a fantastic concept but may not understand the feasibility of manufacturing

the product. Miscommunications of this sort between design engineers and manufacturing can cause

production issues and product launch delays. This means you’ll not only need designers on staff, but

manufacturing engineers that understand the capabilities and limitations of manufacturing processes.

Design for Manufacturability (DFM) is an important milestone in the the NPD process. Successful DFM

requires an ability for designers and manufacturers to collaborate during the development process,

but many organizations experience a critical disconnect between ideation and fabrication. Outsourcing

development to a specialist ensures that the design will incorporate manufacturability from its early

stages. Not all NPD designers can handle the handoff to production directly. Look for an NPD partner that

can offer a full end-to-end service, from design to manufacturing, to minimize collaboration problems.




Internal Production Costs Challenges

There are several areas where production costs may become challenging. In some instances,

organizations acquire resources they might not need or may only need short-term. Conversely,

organizations may lack an overall understanding of the specifics of manufacturing and incorrectly

allocate limited resources.

A correct understanding of the scope of development, design, and production can help to mitigate

problems with cost or resource allocation. Areas to consider include:

• Materials

• Sizes

• Tolerances/Stack up

• Manufacturability

• Manufacturing processes

• Tooling

• Material costs (some manufacturers can

offer lower material rates due to bulk

purchases)

Outsourcing can offset many of these costs. An NPD partner will understand the production costs

associated with the design and development process and incorporate those costs into their estimate.

This offers an unbiased view of the overarching cost of NPD early on.

Limited Resources

Handling NPD in-house ultimately strains the resources of the research and development team and

slows the organization’s ability to release new products. An internal R&D team has limited capacity to

work on new product development for multiple products. This can often cause bottlenecks across the

organization for NPD.

Outsourcing greatly expands access to resources for NPD. A quality NPD partner will have the

capacity and experience to work on several projects concurrently, which will support an expansion of

your company’s product footprint.




Sticking to Core Competencies in NPD

Successful NPD requires an intricate understanding of the design and production process for your

particular product. If your new product requires a different material or a manufacturing capability

outside of your existing expertise, this may be the time to look for external resources and support. For

this reason, many OEMs stick to their core competencies and outsource elements that are beyond

what they know and understand. When a third party assists with NPD, it helps decrease time to market

and overall costs by eliminating the need for:

• New equipment purchases

• Hiring in-house engineers

• Project management

• Additional personnel training

• Prototyping capabilities

• Testing

Another aspect of improving time to market and reducing costs relates to expertise and experience in

both the design and manufacturing phases of NPD. Outsourcing elements of your product launch which

are beyond your core competences allows those with expertise to provide the solutions you need.




NPD Engineering Resources

A major component in new product development relates to engineering the new product. Though

retaining a team of in-house design engineers may seem like the ideal solution, the reality of hiring

and maintaining them is a constant struggle. Data from the Smithsonian shows a shortage of qualified

STEM workers in the industrial sector that will exceed 2.4 million by 2028. Simply put—it’s hard to hire

experienced engineers and they don’t come cheap.

Several factors work against retaining in-house design engineers, such as:

• High demand for design engineers

• Labor shortage of design engineers

• Costs associated with training and paying in-house engineers force your organization to hire

inexperienced engineers

Outsourcing to a firm with an established team of engineers already on-staff helps your project benefit

from a higher level of experience and expertise. This is especially important when working with

complex components or designs. Understanding the feasibility of manufacturing your product ensures

that all cost saving opportunities will be identified throughout the process.




Choosing the Right NPD Supplier and Partner

NPD outsourcing is becoming very commonplace. The Business Process Outsourcing (BPO) market is

expected to exceed $343 billion by 2025, according to data from Grand View Research. However, it’s

critical that you choose the right supplier/partner.

Trusting NPD to a contracted supplier can be uncomfortable, and making the right selection will

impact your product launch. When choosing the right supplier and partner, your organization should

establish a set of standards for hiring contract manufacturers. Those standards should include:

• Expertise/experience in the sector or sectors where your product will be marketed

• Flexibility and redundancy in manufacturing capabilities

• Ability to provide cost reduction to your organization without compromising product quality

• Capable of seamless transfers in all phases of product design, prototyping, and manufacturing

• Resources and capabilities to produce your product in the required volumes and lead times

The right outsourced partner in NPD will make a big difference when it comes to a successful launch.

Many times, the immediate thought is that outsourcing means working with overseas providers. This

can bring on a whole new set of challenges. To mitigate these additional obstacles, consider working

with a U.S.-based manufacturer. A domestic partner can:

• Eliminate language barriers

• Provide faster lead times

• Offer improved response times

• Expedite logistics

• Remove hidden costs associated with

non-domestic manufacturers

• Provide higher quality results, especially

on complex products or components.

Finding a supplier and partner with this long list of credentials may seem difficult—but it doesn’t have to be.




Working with Vollrath Manufacturing Services

Vollrath Manufacturing Services (VMS) provides optimal outsourcing solutions for new product

development. Our expert team of technical sales, engineers, designers, and manufacturers work as a

single unit, creating a custom-fit, end-to-end approach to NPD. This integrated, collaborative approach

ensures a seamless experience while keeping costs down. VMS has experience in providing NPD

services in a broad range of industries, including:

• Food service

• Dispensing (food and beverage service)

• Consumer goods (cookware, appliances,

containers, sinks)

• Heavy Equipment (agriculture, construction,

lawn and garden)

• Energy and gas

• Medical

At VMS, we focus on building customer loyalty through our expert capabilities and our bandwidth to

deliver on our promises through our actions.

Organizations considering a new product launch have to choose between in-house or contract

manufacturing. Companies who may struggle to avoid the various pitfalls of in-house NPD, lack core

competencies in the area they are expanding, or desire to eliminate the costs of in-house design

engineers should take a serious look into outsourcing their NPD. Over the long term, outsourcing can

have a positive impact on production time and expenses.

Contact us for more information on how Vollrath Manufacturing Services can support the design and

manufacturing of your new product.


ABOUT US

At Vollrath Manufacturing Services, our

partnerships aren’t limited to manufacturing

production. We support the engineering

community by utilizing our other divisions

to provide tools and resources designed

to help you broaden your expertise and

improve your work efficiency.

CONTACT US

RESOURCE LIBRARY

1236 N. 18th StreetSheboygan, WI 53081-3201 vollrathmanufacturing.com

[email protected]

https://vollrathmanufacturing.com/Contact

https://vollrathmanufacturing.com/About-Us/Resource-Library

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