Approachment of New Product Introduction (NPI) for Defense Industry

New Product Introduction (NPI) and development activities are carried out with different methods based on market and customer needs analysis by companies that develop products to consumer markets. But, the defense industry market has different dynamics and characteristics compared to the civilian consumer market. In this market, in order to develop products, defense industry companies are being directed by customers in a specific manner. On the other hand, it is a general expectation that these products should not only be mature and common in our local defense market, but also they have a significant share and commonality in the international defense markets. Therefore, it is evaluated that customer-specific solutions and products developed for the local defense market should take into account more broad customer needs in order to take a market share in the international defense markets. 

In this report, the new product development processes and methodologies are studied and a process proposal was developed for the Defense Industry companies. In the scope of work; New Product Introduction activities have been examined for all phases from idea evaluation, to the stage it is placed on the market as an initial product, critical stages and control points have been determined in the NPI process and relations between functional units of a generic company and product development activities are analyzed and described in terms of roles and responsibilities. The Stage-Gate methodology which is widely accepted and used in this domain, is chosen as a reference model and an applicable process proposal is developed for the New Product Introduction. Activities related to the product life cycle are assessed as they are not to be part of the new product development process and have not been addressed in the scope of this study.

1. Introduction

1.1 Product Market Assessment 

New product introduction and development activity is being conducted by many companies carrying out development activities for the civilian market. These companies can follow different methods throughout the product’s concept development stage until its introduction to market. Companies aim to fully meet the demands of the potential consumer groups by conducting detailed content, client and market analysis and identifying the characteristics of the product accordingly in order to minimize the product selling risks. 

On the other hand, when the development of our country’s defense industry market is considered, predominantly a customer – oriented (Turkish Armed Forces – TAF) market is observed. In other words, for the systems/ solutions determined by TAF in accordance with its requirements, the projects are being realized by the companies and these requirements are fulfilled through project output solutions. Then again, maintaining the continuity of the outputs put forth as a result of the projects could only be achieved with continuous demand of the relevant customer. Meanwhile, as the project output solution is custom developed, finding alternative customers requiring such a solution presents difficulties. Within this scope, additional development over the existing solution is usually required when fulfilling the demands of the new customers. However, this method may require important amounts of expenses and may cause disadvantages in terms of competition. At this point, in respect to cost efficiency and to be appealing to more customers, meeting the demands of the customers over products or product families remains as an alternative strategy. Fulfilling customer demands through products and product families requires examining the market analyses, innovation and new product introduction activities within an integrated approach. Products developed based on good market and customer requirement analysis will result in advantages in the long run, in terms of both providing products and product support with lower costs to the customer and faster fulfillment of the demands.

The selection of the approach to be adapted in order to reach a sustainable product based on customer needs is also an important problem and the New Product Introduction process actually deals with this problem. When the consumer market and defense industry market are examined overall, two market related characteristics affecting  product development stand out. The first characteristic is the market environment containing the settled products for meeting customer needs. In this environment, the products of different companies fulfilling the demands of the same customer are generally available. In such an environment, the companies mostly select the product development method by taking a domestic or foreign product that had success previously in any market department as a reference. At this point, designing lower-priced products completely similar with the reference product appears as an alternative for the companies. Another method can be designing products with additional features and with better performance specialties. The second of the aforementioned characteristics is the market environment containing customer needs that could not be met through existing products. Since there is no product model to be taken into account as a reference in this environment, the companies have to develop a completely new product offer to the market. At this point, the process of designing and developing a sustainable new product contains important challenges. 

1.2 New Product Introduction 

New Product Introduction can be defined as the operational process governing the process implemented for the introduction of a product which is capable of meeting the customer needs cost efficiently. This process includes the generation of all data related formation of the detailed definition of the design related with the product’s concept, manufacturing of the product, its installation and testing and decision-making activities interacting with each other [1]. 

In other words, the New Product Introduction process focuses on the matter of the selecting the methodological approach regarding the activities from the idea of the new product until its development and launch into markets within the aforementioned market conditions. Actually, it is presumed that most of the manufacturing companies in the market were conducting new product introduction activities within the framework of their own practices. However, the example in which this problem is dealt with through a systematic perspective is quite rare besides the major global companies. 

The main advantages expected from the New Product Introduction Process are as follows: 

It enables the systematic and effective assessment of the product idea in respect of the market. 

Provides the filtering of the content of the new product according to the dynamics of the market and business. 

Allows an efficient business analysis prior to product development activities. 

Increases shareholders’ adoption of the product idea and provides internal focus within the organization. 

Enables senior management’s involvement in the innovation process as decision makers and resource providers. 

Supports the accomplishment of the product development activity through cross functional approach. 

Allows the precise and timely elimination of poor product ideas. 

Enables the efficient monitoring and control of all product development stages. 

It is evaluated that the new product introduction approaches commonly used by the civilian markets for long years contained methods and elements from which the defense companies in our country can benefit. 

Suggestions on various methods and methodologies are observed within the scope of New Product Introduction approach in the literature [2]. Departmental Stage, Activity Stage and Decision Stage Models can be listed among the models of New Product Introduction process. In the New Product Introduction process suggested through this declaration, an approach developed by taking the Decision Stage model as a reference has been used used. 

2. New Product Introduction Process Methods and the Stage - Gate Methodology

In practice, the Decision Stage Model among the New Product Introduction Models is also known as the Phased Project Planning, Gating System or Stage Gate. The stages herein represent the sections which the relevant activities are conducted while the Gates are the revision points containing specific entry and exit criteria and results such as Continue / Improve/ Pause / Cancel. The Stage – Gate model, suggested by Cooper in 1990, is one of the most commonly known models within the Decision Stage models [3].

Various types of the Stage – Gate model according to project types and project scales were proposed by Cooper as well. 

Alternative models in which Stage – Gate model has been scaled according to the type and risk of the project are displayed in Figure – 1. Within this framework, for product development models of medium level risk such as product improvement, extension and changing; using Stage – Gate Xpress model is advised whereas Stage – Gate Lite is suggested for the small sized product development projects based on simple user requests. Meanwhile, regarding the cases where the correct product definition was not established at the start, adapting the Stage – Gate model in a way it includes the spiral development approaches is possible. 

Stage – Gate approach mainly offers a flexible and adaptable model. At the company or institution in which it will be implemented, identification of activities and deliveries deemed sufficient by the project teams for each Stage and Gate is possible. On the other hand, certain activities may be built overlapping within this approach. For instance, some activities foreseen during the product’s launch to market stage can be moved to an earlier stage. However, in this case the project team will have to compare the expenses that may emerge in cases of the delay or cancellation of the product and to decide accordingly. 

The companies with the highest level of performance (Microsoft, Hewlett-Packard, Procter & Gamble, Siemens, etc.) implemented the Stage - Gate processes and achieved presenting rapid and effective products to the market. 

Within the scope of the New Product Introduction process we presented, an adaptation was made by taking the aforementioned Stage – Gate models as references and a model was put forth within the framework of a typical company’s functional organization.

3. New Product Introduction Process Proposition 

The process we recommended has been defined based on the functional units which may exist at a typical commercial company or defense industry company and is demonstrated in Figure – 2. These functional units are determined as R&D/Innovation, Technology/Product Counseling Board, Marketing/Sales, Product Management, and Engineering/Project Management. As part of the given process, the tasks and responsibilities of these functional units are described as follows:

The task of the R&D/Innovation Unit can be summarized as mainly triggering R&D and innovative idea development activities and managing the created ideas, designing the R&D ideas as projects or support their design, monitor and control the executed R&D Projects and technology management.

Technology/Product Counseling Board is composed of the unit leaders from the internal cross units and basically its task is to realize the revisions and controls to be accomplished at the Gates as part of the recommended New Product Introduction Model. Technology/Product Counseling Board can assume various other roles within the company as well.

Marketing/Sales Unit’s task within the scope of the recommended process contains the activities such as assessment of the product concept in terms of the Market, definition of the product concept, execution of competitor analysis, delivery of the product value suggestion. Additionally, the strategy as part of the launch of the developed new product into market can be listed as one of this unit’s tasks.

Product Management Unit’s responsibility within the process is the execution of the sponsorship and ownership of the product within the company on behalf of the senior management. In this context, activities such as determining the road map of the product, identifying the initial product qualification based on the views of the marketing department, managing the life cycle of the product are amongst the responsibilities of the Product Management Unit or the specifically assigned Product Manager.

Main function of the Engineering/Project Management Unit within the scope of the recommended process is the execution of the required project and engineering management functions in order to enable the accomplishment of the engineering developments in a way to let the new product development project with feasibility study remain within the determined content and budget.  In respect of the recommended process, the Product Management Unit or the Product Manager plays the role of the internal customer of the Engineering Unit. Although, the Engineering and Project Management Units conduct their activities as separate functional departments in certain companies, as it does not create a meaningful difference in terms of the recommended process, it is assumed as a single functional unit.