Get involved early with new product launches
By Brian Milligan -- Purchasing, 10/21/1999 2:00:00 AM
Get purchasing managers and their supplier contacts involved in new product launches. And get them involved early.
That's the advice from purchasing professionals responding to a recent Purchasing survey. A full 96% of those surveyed say it's a good idea to involve purchasing personnel and suppliers in new product launch efforts.
Perhaps the statement that best summarizes what purchasing brings to the product development table is this: "Purchasing professionals have experience and new technology contacts to offer in the planning stages." So says J.D. Bassinger, procurement manager for Lockheed Martin Vought Systems in Arkansas.
To get the most out of purchasing pros in this area, managers say companies must:
- Seek their input about suppliers and their abilities.
- Allow engineering, marketing, financing, and purchasing to work closely together to establish the best target costs.
- Foster a workplace attitude where purchasing is respected for its know-how on supplier capabilities and supplier relationships.
A better outlook
The outlook for purchasing managers' increased involvement in new product launch efforts is certainly brightening. Many survey respondents--91%--say they have been involved to some extent. Some managers even say their companies have made organizational changes that could enhance the involvement of purchasing and suppliers when a new product is being designed and developed.
"We've been located near the new product group and organized to provide dedicated support to them," says Jonathan Wilk, corporate purchasing manager of the Kentucky-based Lexmark International, Inc.
"Purchasing is now involved in development of concept, cost, and defining assumptions," says Fred Wisdom, purchasing manager for Magna Symatec in Michigan.
Those who have participated in these changes say the new organizational structures greased the wheels of progress. The changes also placed purchasing in a much more respectful light. "It raised the bar on purchasing professionalism," says Bill Davies, purchasing manager for Victoria Vogue in Pennsylvania.
But there is still room for improvement in organizational structures that would enhance purchasing's role in design. Wilk, Wisdom, and Davies are on the minority side of the survey results. Fifty-four percent of those surveyed say their company has not made any organizational changes that could bring purchasing managers closer to new product development. And many of those who are getting involved say they are entering late in the game.
A lot to offer
This is too bad. Most of those surveyed say early involvement in the process can keep problems from popping up later on. These can include delays with production due to material shortages, quality shortcomings, and cost overruns. Purchasing managers say work teams can benefit from purchasing departments' sources as they develop a product. Purchasing managers can likewise help suppliers become more readily involved in the process and offer their expertise and tips. Between the managers and suppliers, they can offer contacts that can help streamline the process and smooth out technical challenges.
But most of those surveyed say suppliers still tend to be Johnny-come-latelys when a product is being developed. Only 13% of those interviewed say suppliers are brought into the idea stage of new product development. Most--44%--say suppliers are only made aware of the process when the product begins to hit the prototyping stage. And 41% say suppliers are being invited to join in during design development.
Arm's length
Many of those surveyed say suppliers are kept at arm's length and are not brought on-site to actually assist with product design. Those that do come on-site aren't guaranteed that they'll get a piece of the action when the product is pushed toward its final stages. Sixty-three percent of those surveyed say suppliers that come on-site are not guaranteed a contract when the product moves into production.
"It depends on the situation," says Wilk. "If it is a custom-made component, then yes. Otherwise, no production guarantees are made."
Many purchasing managers say their contacts can lead to improved timelines and less potential for supply additions that don't gel with the new product idea.
Reduced cost
Most important, purchasers say their early design involvement leads to reduced costs. But many who partook in the survey insinuate that this is an area that could use some improvement.
"Cost has become very important due to global competition," says Victor Vachhani, president of TelTec Inc. in Minnesota.
Survey participants say their companies have many and varied methods for establishing target costs in a new product launch. Some base their targets on customers' expectations. Others take an estimate of the cost of materials and roll it into a target price. In some companies, marketing department representatives establish a benchmark sale price after consulting engineering departments. Others simply establish aggressive target costs for a product they believe will be popular.
But many purchasing pros strongly believe the best target costs can be established when engineering, marketing, financing, and purchasing departments work together. This means getting good suppliers into the process early on and listening to how they can help get quality parts for low prices.
Avoiding problems
Perhaps most important, the managers say their involvement and supplier contacts can prevent companies from trying to build new products with components that will soon be obsolete. Those managers can also encourage engineering and marketing departments to seek out additional sources for parts.
"Suppliers can provide expertise that you may not have," says Dick Disch, director of purchasing for the Illinois-based Rockford Products Corp.
"This leads to fewer surprises in an already difficult situation," says Wilk. "It enables the supplier to influence the design to best fit his processes."
Some, like Scott Bristol, purchasing manager for the Connecticut-based Kenyon, say simply that purchasing managers should not be kept out of the process.
"Purchasing should always be in the loop," Bristol says. "Suppliers can add comments to their areas of expertise."
There are several signs that things are improving. Seventy-eight percent of those surveyed say compared to five years ago, purchasing personnel and suppliers are becoming involved at progressively earlier stages in product design cycles.
As they become more and more involved early on, company representatives say suppliers are increasingly expected to prove their abilities. This test could have included coming through for the company on past projects or showing a willingness to work on the project and provide suppliers no matter what the cost. This could include a promise of service and technical help over a long period of time, if need be. They must be willing to provide quick turnaround on new product part samples, or provide attractive leadtimes for production orders. And in today's market, the ability to commit to just-in-time inventory deliveries helps, the purchasing managers say. "They have to have a willingness to be prepared for the long haul regardless of the end results," says English.
Good results
Those purchasing managers who were involved in a new product launch effort report good results. They say they were able to provide helpful suggestions on where engineers can turn for products or parts. J.D. Basinger, procurement manager for the Arkansas-based Lockheed Martin Vought Systems, says his involvement helped coordinate sourcing and scheduling for all of the departments involved.
Sheri English, purchasing manager for the Indiana-based Summit Circuits Inc., says she had a very simple yet important influence on the new product development process: "Securing rock-bottom prices for raw material prior to building."
But not all surveyed purchasing managers paint an entirely rosy picture of their involvement in new product design. Some, like Robert Leigh, the purchasing manager for Titan Tube Fabricators in Missouri, express frustration.
"Some people in engineering don't have a clue what to do," he says.
And of those that were involved in new product launches, most say they were not involved at the idea stage of the process. Forty-five percent say they were involved in the design development stage, while only 13% say they were involved in the idea stage.
Change in perceptions
Before things can change significantly, purchasing managers say there must be a change in the perceptions of their co-workers. Many of those who responded to the survey indicate an ever-present wall between engineering departments and purchasing departments. Some managers say they are even bypassed by others who want to go directly to the supplier source for answers.
"Sometimes the engineers think they are not ready to have purchasing get involved. They want to have direct contact with suppliers," says Vachhani.
"Sales and engineering are resisting the changes in their roles," agrees Wisdom.
Such attitudes, the survey respondents say, are only going to have a damaging impact if they are allowed to prevail.
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