Download White Papers: A Lean Product Development Process 

Abstract

How many products hit the market and are too expensive, too big, don’t have the desired features or take too long to develop?

Lean is a Process Improvement Tool to reduce waste in organizations.  Few processes cross over as many different departments in a company as product development.  Product development can include hard-goods, software or new services.  As the efforts cross marketing, research, engineering, purchasing, operations and sales there are numerous opportunities for the product development effort to stall or reverse direction.  This can be due budget problems becoming visible; product definition being rushed and/or the operational problems.

By applying Lean concepts to product development, you can create profitable products faster.  However, before you do, you will have to learn that sometimes slower is faster.

The Lean Product Development Process

  • Return on Investment Analysis
    • Stage-gate
  • Marketing Specification
    • Stage-gate
  • Concept Design
    • Stage-gate
  • Design Product or Service
    • Stage-gate
  • Pilot Manufacturing Run (if applicable)
    • Stage-gate
  • Field Test
    • Stage-gate
  • Launch Marketing Plan
  • Review Product Profitability versus Plan

Each stage of the Lean Product Development Process will be explained.  However, more important than each individual stage is the concept of the “stage-gate”.  A stage-gate is a place in the process that, after everyone signs-off, they cannot go backwards.

Initially, stage-gates can seem to slow down the process.  Until the department or team downstream of a stage-gate accepts the input to their stage of the process the effort cannot go forward.  However, this will actually make the process faster, and much more effective, because it creates accountability and eliminates the possibility of getting a product that is too expensive, slow, large, etc. from getting to the market.  Products are designed to sell profitably and launch when scheduled.

The other importance of the stage-gate process is that as product development progresses, it gets more expensive.  Final design requires more time and resources than concept design.  Pilot manufacturing is a significant expenditure due to tooling requirements.  Finally, the launch of the product is most expensive of all stages, as the company will be spending money to market the product and will most likely begin marketing expenditures.

Return on Investment Analysis

This stage is the primary responsibility of the Marketing Team.  They will:

  • Understand the need
  • Create the concept
  • Develop sales forecast
  • Identify cost targets
  • Work with Research and/or Development/Engineering to define the product development budget and timeline
  • Present financial return on investment for approval

This initial stage creates the financial case for developing this product or service.  By creating the sales forecast based on initial cost targets, the Marketing Team takes responsibility for the final sales and profits that result from this product development effort.  Because Research and/or Development/Engineering is involved they get early buy-in and communication on the concept.

Once this stage-gate is passed the company agrees to move forward with the concept design.  Management can kill the effort at this point or give its approval to move forward to concept design.

Marketing Specification

The Marketing Product Development Representative will define their requirements for the product or service.  This may include:

  • Critical dates
  • Development budget
  • Target market and application
  • Performance specs
  • Functional requirements
  • Appearance/Size specs
  • Unit-Sales expectations
  • Regulatory standards
  • Competitors’ products
  • Life expectancy
  • Determine field-test sites

When the Marketing Rep documents this list of requirements they will meet with Research or Development/Engineering, who will sign-off and accept this as their concept design input.  This is another stage-gate.  Now the project is in the hands of the Research or Development/Engineering Team to create their conceptual design.

Concept Design

If this product involves innovative technology, then typically the Research team will be responsible for concept design.  Research would be responsible for handing the Development/Engineering team a “developable” concept design.  If the product is an extension of existing technology, then typically it moves right to the Development/Engineering team.

Research or Development/Engineering will brainstorm possible designs and create mock-ups of this design if needed and budgeted.  They may work with purchasing to gather preliminary vendor costs.  The output of this stage is a conceptual design (which can be a drawing, 3-D model, service or software demo), estimated cost, design timeline and test data if appropriate.

At this stage-gate Marketing, Development/Engineering and Operations must sign-off on the conceptual design.  If they reject it, then the team responsible for concept design has to refine the concept.  This may involve changing the appearance, cost, functionality, etc.

Design Product

This stage is the responsibility of Development/Engineering with input from Purchasing and Operations.  This stage includes:

  • Create detailed design budget and timeline
  • Finalize design
  • Run failure mode & effects analysis (FMEA)
  • Create detailed demo, model and bill of material
  • Create work breakdown structure
  • Choose components and select vendors (working with purchasing)
  • Produce prototype
  • Document test requirements
  • Design packaging
  • Create initial customer manuals
  • Determine final cost

When this is complete and the prototype is produced or procured there will be a stage-gate approval meeting with Sales and Marketing.  They must approval the cost, appearance and functionality.

Pilot Manufacturing Run (If the product is a hard-good)

Pilot manufacturing is a collaborative effort between Development/Engineering, Purchasing and Manufacturing.  While design-for-manufacturability may have been used during final design, this stage represents the transfer from Development/Engineering to Manufacturing.  Vendors and Manufacturing are tooling up to produce parts.  When the pilot manufacturing stage is complete Manufacturing is expected to have completed all production and testing documentation (standard operating procedures).

Field Test

  • Install product at customer field test sites
  • Run product
  • Evaluate results with Marketing
  • Make changes if necessary
  • Finalize customer manuals

Pilot run production prototypes are sent to field-test sites.  The purpose of this test is find problems.  These problems may include quality issues, durability, functionality, installation, etc.  Hopefully none are found, but if we were 100% confident of this, then field-testing wouldn’t be needed.  Some organizations have separate Field-Test groups.  Often field testing may be done by Technical Service teams or can be managed by Development/Engineering.

Marketing Launch

  • Review launch schedule
  • Distribute promotional material
  • Distribute training material if applicable
  • Train Sales Force
  • Train Customer Service
  • Review initial customer service data
  • Provide feedback to Development/Engineering and Operations

Once field testing is complete and the design in locked down, the company is ready to start selling.  Selling must be preceded by training for sales reps, customer service and customers.  The selling process must be planned like all other steps in the product development process.

Evaluate Results

The last step of the product development process is to evaluate results.  This is often-overlooked.  Many companies accept the results they are getting.  The most successful companies evaluate the actual results to their original budget.  If sales are under budget then they evaluate why and make adjustments to the next product development effort.  If sales are over budget then this too is evaluated to understand what led to this success.

The Role of Documentation in Product Development

  • Task
  • Primary Department Responsible
  • Specific Person Responsible
  • Measure of Success Description
  • Documentation of Success

It is important to document the product development process.  While we don’t want to create un-necessary paper or electronic files, there needs to be proof that each step of the process is done successfully and a clear definition of what success means.

The actual product development process is usually a minimum of 100 discreet steps.  More complex products are far more detailed.  Therefore, we need to define what documentation clearly shows that each step was successfully completed.  The bullet points above provide the minimum information we expect to see on the Product Development Checklist.

"*" indicates required fields

Ask us your Lean, Six Sigma, or Supply Chain question.

We're the experts! We'll get back within 48 hrs. with a valuable response.

This field is for validation purposes and should be left unchanged.

“In a time of volatile supply chain disruption, Supply Velocity is helping us develop Demand and Supply Planning processes to proactively tackle these new challenges. They are genuine partners, working with our team, facilitating and teaching.”

Jane Thrasher, Vice President of Supply Chain, Horizon Hobby
“Supply Velocity has provided the technical expertise and political capital to move our project forward. They have just the right amount of push and the right amount of support. Supply Velocity has helped us make real changes to improve efficiencies in logistics without jeopardizing our performance. We’re happy and our customers are happy.”
David Walters, President, Hy-C
“In thirty years of hiring consultants, Supply Velocity, Inc. was the first to tell me what they were going to do, set a price they stuck to and substantially exceed my expectations. I have recommended them to friends and acquaintances. They were true partners in assisting with the turnaround of an acquisition we had been struggling with for two years.

Their math-based technology, solid down-to-earth facilitation skills, and positive, patient and enthusiastic attitude combined to make our implementation of Lean a very rewarding experience.

We increased our production by 50% in the first month of implementation and continue to see improvements. Improvements have not only been realized in productivity, but also in quality and morale. We have increased profitability by $2M on flat sales of $10M.

Based on Supply Velocity, Inc.’s integrity and our results, I will continue to refer them to others and utilize them in the future as we expand our company through acquisitions.”

Bill Gilbert, President, Fusion Coatings
“Our experience with Supply Velocity was one of the best values we have ever had from a consulting project. Cyril Narishkin brought a structured lean methodology, invaluable experience and engaging facilitation skills to help us streamline a very complex and disjointed sales order process. Just as importantly, our team now has the knowledge and process competencies to address other business improvement opportunities going forward.”
Mike Howard, CEO, Aspeq
“C&R was struggling with labor productivity. The construction crews were often missing materials that they needed to do their work. This caused significant idle time. Supply Velocity, Inc. and C&R used value stream mapping and visual management tools to make dramatic improvements in operations. Most importantly, two years later C&R is sustaining and improving on the implementation. C&R’s return on investment was 11:1. C&R had a record year last year in both sales and profits and would not have been able to pull it off without the changes Supply Velocity, Inc. helped us make.”
Tom Kuthe, V.P. Construction Operations, C&R Mechanical
“We engaged with Supply Velocity to help us embed process improvement at all levels of the business. Our team learned from Mitch to let the data drive decisions, to use Lean tools to help us see our processes critically and objectively, and to create a control plan to manage all of the tasks that were the outcome of the data study.

The project turned out to be very significant to the company and most importantly, our customers. We reduced our customer wait times by 40%, and cut in half the labor cost to fulfill customer orders.

Some results are not able to be measured. However, as a result of this project, we have started to build a Lean mindset and culture, which is part of our strategic mission to save our customers money. Supply Velocity has been a valued partner in this mission.”

Dionne Dumitru, COO, Weekends Only

“Supply Velocity created visibility within our Assurance Services Group… visibility of performance, Client-service, employee satisfaction and processing time. Using the Supply Velocity System, Audit Report Cycle time is down over 50%. We are using his strategies to create greater Client loyalty.”

Fred Kostecki, Partner-In-Charge, Assurance Services, Rubin Brown
“We are pleased that Essex selected Supply Velocity, Inc. as our Lean Implementation Partner. At one facility, we have saved over $350,000 in work-in-process inventory, reduced throughput time from 2 weeks to minutes and increased inventory turns 3 to 8 times per year. All these results are in just 6 months. Our return of investment is very high.”
Terry Etter, Vice President of Operations , Essex Medical Systems

“Supply Velocity gave us the tools to analyze our business and processes based on the facts and numbers versus our perceptions. Our common quote was “Let the numbers lead us”. The key for our organization was how quickly we moved from classroom to actual project initiation. We were able to jump in, start using the tools and see a difference right away.

The get-into-action approach was good for our culture.”

Ned Lane, President, CeeKay Supply
“The role of the Erie Insurance Marketing Department has been evolving over the past several years – from a support role to a more critical role of driving growth in our organization. Because of our increased workload and desire to prioritize the most critical projects, we hired Supply Velocity to teach us the skills of Lean Six Sigma.

Participants included the Promotions, Market Research and Agency Licensing sections of the Marketing Department.

We learned valuable tools to help us to prioritize based on the voice of the customer.

I firmly believe these skills made a difference in how we work every day. We are moving new projects forward, eliminating or changing ineffective processes, and we are a much stronger department. We continue to use the tools to help us with our highly-complex and time-consuming projects. Supply Velocity helped us to accomplish our goals.”

Karen Rugare, Director of Marketing, Erie Insurance
“For several years we have worked with Supply Velocity to support us with their expertise on Lean Operations and Supply Chain Management. Supply Velocity has helped us implement Lean, improve our inventory systems, and educate our people. They are professionals who are always available to help us as needed.”
Lorenza Pasetti, CEO, Volpi Foods
“In 2015 we began working with Dr. Mitch Millstein to optimize our inventory locations supporting e-commerce and in-store inventory needs. From this work we developed a new omni-channel warehousing and inventory plan that entirely redefined our approach to warehousing, inventory management, store distribution and fulfillment. As a result of the analyses by Dr. Millstein we have begun the move to an improved omni-channel design by reassigning MSAs to new warehouses, greater leveraging of in-store inventories to satisfy e-commerce demands, and exploring acquisitions of new warehousing space in strategic locations. We have already seen an improvement of $300,000 from both more efficient shipping strategies due to better inventory management.”
Rob Bowers, Vice President of Strategy, Total Hockey
“Supply Velocity’s Lean Six Sigma System has given us new tools to help improve our sales performance. We have learned new ways to analyze our business which makes problem solving more accurate and has made us better leaders.”
Rachel Andreasson, Executive Vice President – Marketing, Wallis Companies
“Myerson engaged Supply Velocity, specifically Ray Davis to visit our plant in Trinidad to conduct a two day assessment of our production procedures and provide us feedback on areas for improvement and where applicable, areas for future analysis.

Put simply, we got everything we paid for and in addition to more in depth analysis, we got specific tasks that were immediately actionable. Our local management team found Ray to be engaging, highly credible and insightful based on his wide experience. In other words the cultural differences and lack of specific industry knowledge weren’t impediments to things we could implement immediately and on our own. In a nutshell it was money well spent and will pay itself back many times over.”

Lee Hartwell CPA, Plant Manager, Myerson Tooth

“I am thrilled to provide this testimonial for Supply Velocity and their outstanding work in implementing Lean Warehouses and processes at Crescent Parts & Equipment through the COVID pandemic. With their data-first focus and Mitch’s exceptional coaching and experience, they transformed our business into a more supply chain-oriented organization, enabling us to grow while prioritizing employee safety and creating a better work environment. Supply Velocity’s expertise in Lean methodologies and their comprehensive evaluation of our customers have been instrumental in optimizing our operations and increasing customer satisfaction. We highly recommend Supply Velocity to any company seeking to implement Lean processes and enhance their supply chain efficiency.”

Josh Cole, Director of Supply Chain, Crescent Parts & Equipment
“In the spring of 2003, the St. Louis Area Chapter of the American Red Cross engaged Supply Velocity, Inc. to perform a study and make recommendations to streamline office processes, maximize cash flow in purchasing and warehousing and restructure and enhance our maintenance department. Supply Velocity, Inc.’s process was methodical, flexible, staff-oriented, inclusive and, above all, trackable.

In the last six months, our Chapter has realized expense savings of over $380,000 annually, and significant improvement in intra-company service levels has been attained. Supply Velocity, Inc. will return to the Chapter periodically throughout the next 18 months to audit our newly implemented processes. We have been pleased with our results and Supply Velocity, Inc.’s professionalism.”

Joe White, CEO, American Red Cross – Saint Louis Chapter
“Supply Velocity has helped Clean succeed in a number of ways. First, they provided the education that kicked off our Lean Process Improvement journey. They also facilitated a number of large supply chain and process improvement projects including: 1) building quality into our direct-labor productivity incentive program, 2) designing the layout of our garment warehouse, and 3) streamlining our route service process.

We have integrated the methods that Supply Velocity taught us into our management and strategic planning. In the process our quality measurement has improved 22% from 2013 to 2015, we have reduced required annual labor by 2200 hours from the garment facility layout project and we’ve seen 50% decrease in error rate. Obviously the numbers speak for themselves, but just as important, Supply Velocity has been fun to work and have become true partners. They have “taught us how to fish” so our internal teams are able to implement change on their own, with the skills we learned from Supply Velocity. This relationship has been invaluable.”

Jeff Lazaroff, Senior Vice President, Clean Uniform
“We used Supply Velocity to rethink our sales process. By analyzing the entire process we found wasted time in our Sales, Admin and Operations departments. Streamlining this process created extra time for each Sales Rep, allowing them to spend more time with Customers and increase the value we add. Gross profit margins are up 40%!

We are now using Supply Velocity to help us rethink our entire Strategic Plan.”

Jeff Reitz, Vice President, Central States Bus
“We are using Supply Velocity’s Lean Six Sigma methods to analyze a variety of processes including rationalizing SKUs (stock-keeping-units). By using math to evaluate SKUs we took some of the emotion out of our decisions. We expect significant increases in sales and productivity from reducing poor performing SKUs.”
Mark Kelso, Director of Process Improvement, Save-A-Lot
“Supply Velocity is driving instrumental change in our inventory management processes. This is critical for us to be competitive in a supply chain environment with numerous disruptions. They are making change happen, which can be challenging in a 182 year old organization.”
Jim Carroll, Executive Vice President Operations, Schaeffer Manufacturing

“Your process encourages this group to work together, better communicate and have fun doing it.”

George Edinger, President, C&R Mechanical
“Anheuser-Busch Precision Printing had been implementing Lean Operations on our own for the past two years. We needed to move faster and partnered with Supply Velocity, Inc. Through Supply Velocity, Inc.’s mathematical workflow balancing and visual management tools, dramatic improvements were achieved. The entire converting operation was rearranged based on Lean principles. The result is a 20.6% productivity improvement, enabling us to operate with 23 fewer people in production.”
Rich Lavosky, General Manager, Anheuser-Busch Precision Printing
“Closure Medical recently completed a major reorganization in order to enhance our ability to rapidly create innovative medical devices. We hired Supply Velocity to help us map out the process and service flows of the new organization that would maximize our product development process (PDP). In four weeks, Supply Velocity helped us envision a new PDP structure, develop measures and accountability for each step, and gain consensus within the organization. Supply Velocity’s focus on speed and accountability helped us complete a critical project in a timely fashion.”
Gabe Szabo, Vice President, Product Development, Closure Medical – A Division of Johnson & Johnson
“Mitch Millstein and his team helped guide our shop fabrication division in the re-layout of our custom pipe and steel fabrication facility when we moved into a new building. It is not only the results but how he helped. We were involved in every step. I personally did time studies and was able to see the non-value added steps required to manufacture in our old layout. When we created our new layout, everyone was involved, from the executive team to our direct labor force. With Mitch’s help we increased our throughput by a 3x multiple, while providing more competitive prices to our clients as a result of the efficiency improvements.

This has enabled us to not only make more money but also to expand our commercial reach and serve more, and larger customers. I would recommend Supply Velocity to any company that wants to make improvement in supply chain and operations.”

Geoff Gross, President, Gross Mechanical
“Many thanks to all three Supply Velocity presenters. I think you guys took a very difficult time for learning and capitalized on everyone’s time and training needs. I truly hope this helps your business as this was a considerable undertaking on the part of Supply Velocity. Outstanding!!”
Mark Holdinghausen, VP of Operations, DEMA Engineering
“We used Supply Velocity on our Warehouse optimization project. One of the key characteristics of Supply Velocity is that they listened to our requirements and provided a clear path for our Warehouse processes using lean tools and our future sales growth as objectives.”
Haris Tokalic, President, Grand Rock, Inc.
“Isolating a problem, finding short, and long term solutions with measurable results is what was promised and results is what was delivered by Supply Velocity. Upon launch of the Lean Six Sigma Selling System, we knew more about our customers, our products, and were able to create a solid plan to increase sales of our most profitable products. Within months of implementation, our booked sales jumped 60% and our most valued customers were getting direct, active, and calculable attention.”
Mark A. Presker, General Manager, Architectural Millwork of St. Louis