Aligning Manufacturing and R&D in New Product Development (NPD)

New product development (NPD) is about creating knowledge resulting in new products that drive revenue and earnings growth. It is arguably the most important business process and one of the most difficult to manage (1). Why? Because it encompasses a series of workflow, information and decision flow across the entire organization. It is unique as well since every other process in the business can be driven to maximum efficiency. NPD is not just about efficiency, which often is the focus.  The real concern should be how to make it more effective. 

Many think of new product development strictly in terms of R&D’s responsibility in the process. They often assume that innovation success or failure lies with the R&D organization. In a manufacturing firm, however, effective NPD and innovation will only result if Manufacturing and R&D are closely aligned and equally engaged. Let’s look at the key determinants of success.

The first important requirement is the attitude and engagement of the senior manager, and the expectations that are set at this level. This person will be responsible for the financial success of the organization, and a culture that supports innovation. It may be the owner, the CEO, or divisional president if the organization is a large, decentralized company.

While there are many aspects of an “innovation culture”, the focus in this article concerns the shared responsibility between Manufacturing and R&D for innovation success. The senior leader must set that expectation. How R&D and Manufacturing management are motivated and rewarded should be aligned so they feel equally responsible. Furthermore, while most if not all project managers will typically reside in R&D, Manufacturing engagement in the process is an imperative. The senior leader should understand that and manage accordingly.

That does not mean that R&D and Manufacturing leadership will always agree. In fact, I have found that a “creative tension” will lead to better products. R&D will be focused on the product and its functionality. Manufacturing will be concerned about manufacturability which in turn impacts quality. There will be much room for disagreement, but a strong working relationship between the two functional leaders, supported by an engaged and knowledgeable senior manager will lead to success.

A second key determinant is the NPD process itself. A formal, but adaptable phased development process is important for any company managing multiple projects. That process will likely include the key aspects of how projects are managed including the use of core teams, which are temporary and specific to a project.

In my experience, the core team leader for a project is typically the project manager. The project manager in turn typically comes from R&D in most organizations. The core team consists of key players from each functional group, including Manufacturing, and assists the project leader in guiding the project from start to finish through the multiple phases. The core team members will in turn marshal and coordinate the resources necessary in their respective functional groups to drive the project. It is critical that Manufacturing commits and dedicates a competent, engaged core team member to the team.

In many manufacturing companies this will be a senior-level Manufacturing Engineer. Their role in the project is to 1) look at the product from a manufacturing perspective, and 2) transition the new product into the normal production processes. For many large projects, they must be a dedicated resource, not part time. If the project is not their top priority, then they will not take the project seriously.

I have seen projects where there is a lack of commitment. The Manufacturing lead, for instance, might not attend early product design reviews, or if they do, are not fully engaged. Then, later in the project, they suddenly realize that a particular design will create manufacturing problems. They might object, which results in many consequences. In some cases, changing the design at that point leads to project delays. That, plus the ill-will created within the team can damage relationships and trust impacting not only the current project, but future projects as well.

directionFinally, and related to this last point, all involved with the project must have their reward systems aligned. This goes beyond the R&D and Manufacturing functional leadership previously described, but is true at the project level as well. It might even be more important at that level.  The R&D project manager will likely be judged on various metrics related to project success. If the key Manufacturing personnel are being judged and rewarded for something else entirely, there will be conflicts that affect the schedule as well as ultimate quality.

As an example of this issue and the consequences, I recently consulted with a small manufacturing company. Senior leadership was concerned that the quality of their recent new product launches was declining. During my assessment, I met with individuals from R&D and Manufacturing. As I discovered, the Manufacturing organization was being rewarded and judged on their implementation of “lean” (2): projects in R&D were far down on their list of priorities. The result was that R&D was having difficulty getting Manufacturing committed and engaged in projects. For the types of products being engineered and manufactured, this was a critical mistake. The responsibility for this was not at the project level. The company owner was responsible for not being truly knowledgeable about the importance of this alignment and the impact on the ultimate product quality.

So in conclusion, innovation success in a manufacturing company is not simply the responsibility of R&D. Companies that view innovation in this manner will suffer in the long term. While there are many other factors that lead to new product success, the senior manager must set the expectation that Manufacturing and R&D are jointly responsible. How functional management and the team are rewarded and motivated must be aligned. Finally, the NPD process itself should be designed to institutionalize robust Manufacturing input on projects. Without strong and early project engagement by Manufacturing, quality will be compromised. By following these three suggestions, a company is more likely to introduce successful, high quality new products on schedule (3).

Notes:

  1. Refer to this article entitled Why the New Product Development (NPD) Process is Unique.
  2. See this article entitled Abusing Lean Methodologies.
  3. Interested in learning more about all the ways to improve your organization’s ability to manage innovation, introduce successful new products and grow revenue? You might be interested in the Innovation Coach Workshops.

Jeff Groh is President of New Product Visions located in Flat Rock, NC. New Product Visions helps companies drive revenue and earnings growth by improving their innovation management practices. We focus on processes, organization, management engagement and culture. Services include consulting, Innovation Coach™ Workshops, and MyInnovationCoach online training. Mr. Groh spent 30+ years in industry in a variety of management roles in sales, manufacturing and new product development prior to starting New Product Visions. For additional information or to join our mailing list, contact us. Available for select speaking engagements.

Specialties: NPD consultants, new product development consulting, developing new products, new product development seminars, small business consulting, new product development expert, product development process, new product development strategies, integrating NPD for mergers & acquisitions, organizing for innovation, management role in NPD, project risk analysis, innovation management

7 thoughts on “Aligning Manufacturing and R&D in New Product Development (NPD)

  1. Dear Mr.Groh,
    I will not say that your article is wrong but covers a very seldom and minor issue.
    The main mistake that happend and I had more than 35 successful start-ups is the priority level in any company. As long as the NPD project is on the highest level especially at the CEO and board level and this is communicated well, things will not go wrong. In such a case R&D and Manufacturing will go hand in hand as they both understand that they both will be evaluated on this success. I even find it poor to add additional incentive for things which should be the normal tasks of different teams in a functional operating company. I never needed tools like this. The vision of success – which needs to be communicated very well too – is motivation enough for everybody involved. The one who needs money reward for such aligning tasks should be fired.
    In conclusion with the s-curve students at the first semester of engineering are learning that the design process of R&D will be responsible for 80% of the future manufacturing costs and this is all I need to explain R&D and manufacturing at the beginning of a new NPD-Project to explain why it is absolutely essential to work together hand in hand right from the beginning. One slide is enough and everybody understands this.
    The art to create successful business is to simplify everything in an organisation and do not make things difficult as long as you can do them on the easy way.
    I’m a consultant or let’s say supporter and feedbacker for now 19 years and all I see is that “real consultant” doing things complicate instead of simple. This is the problem! The higher the people in their hierarchy the more complicate they are and unable to think in simple, pragmatic terms. You need to master the basic before experimenting at the higher level.

  2. I am responding to the comment by Thomas Wagner. Perhaps he is correct when a company only has one or two NPD projects that report directly to the CEO, but this is not always the case. I have worked for 16 years as a consultant for product development improvement. All of this work has been with large – greater than 10 Billion Dollar – companies, that are also multinational. It is not uncommon for these companies to have more than 100 NPD projects running in parallel. The CEO cannot be involved in all of these, and they cannot all be of the highest priority. Many are initiated and managed at a business unit level, and may involve engineering and manufacturing organizations that report to different managers in different countries.

    In these cases it is imperative that the goals of the people in the different organizations are aligned, especially in products where the manufacturing cost and quality are critical. So while your statement that 80% of the product cost are determined in the design process is correct, it can also be that the designers established a higher than necessary manufacturing cost due to poor decisions or lack of understanding about how the manufacturing process in the company works. This is where the active involvement of a manufacturing engineer in the early phases of a project is critical.

    • Tom, I completely agree. In the case of a start-up or small organization, almost by definition there is at least alignment between the various key players. My experience lines up with yours when considering larger organizations. That alignment does not necessarily happen on it’s own, but has to be institutionalized.

  3. I see and agree in international, worldwide acting organisations with plenty of NPD launches you need to take R&D and manufacturing by hand otherwise enormous cost can arise in future.
    I was referring to smaller up to midsize companies with 1000 employees which is my usual business.
    But nevertheless I’m not a friend of financial incentives. The motivation needs to be intrinsic. I’m not working less ambitious when my variable Bonus is lower than in another of my projects. Always do my best and think in different and most possible ways.
    I worked three times in global players when I was younger but in each of this companies I ascertained that their systems works to slow for me. There is not really pressure, as all things takes too long!
    But thanks for your aspects!

  4. I don’t think this issue is seldom or minor. I think successful companies have techniques for handling this apparent conflict in priorities, but it usually exists. I have worked at companies where KPIs for different departments weren’t properly aligned and it does lead to tension. Working as a project team across departments helped to find ways to work through the competing demands but this would have been easier with more closely aligned departmental goals. The use of financial incentives to motivate employees is not, in my mind, the best way but I wouldn’t get hung up on that point. I tended to make the point that design and production weren’t separate processes, merely different stages in the same process of getting products to the customer. the key thing as you pointed out is to get the project team set up early and the inter-departmental collaboration occurring as soon as possible in the design process.

  5. I have multiple experience as project leader and definitelly priorities alignment between departments are key, utb not only for manufacturing function. So, project KPIs must be clear to all and sharing them to each functional head will help that. But another critical aspect would be having functional representatives, early in the process and with high priority (if not full time) at a senior engineer level as they must know the processes and the people in their functions to be truly effective.

    And at the end of the day, it is imperative that the marketing function works as part of project team to ensure that consumer goals will be met. A great quality product can be made but consumers must be willing to buy it…

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