Using principles of just-in-time to improve new product development process.

ABSTRACT

Quick new product design and development is crucial for companies to be competitive in a global market. This article shows that the principles of just-in-time (JIT) in manufacturing can be used to improve new product development (NPD) process. Analysis and comparison of key factors show a high degree of consistency between traditional manufacturing and sequential NPD. Likewise, comparison of the same factors shows remarkable similarities between JIT manufacturing and simultaneous engineering. Statistical results indicate that compared with traditional organizations, companies who adopted JIT principles developed new products with 61 percent better quality, 52 percent less development time, 38 percentage less development cost, and 33 percent less manufacturing cost. Also, frequency of new product introduction for JIT organizations is 71 percenta faster than the traditional companies. Five tests of hypotheses were conducted to test the statistical significance of NPD performances before and after JIT implementation. The data from 51organizations strongly support the hypotheses. The P-value for all five tests is less than 0.05 percent.

Key words: New Product Development, JIT

INTRODUCTION

In today's global market, price, quality, and manufacturing speed are not sufficient to stay ahead of competition once the product reaches the maturity stage of its life cycle. World class manufacturers understand that to sustain their competitiveness in the market, in addition to price, quality, and manufacturing speed, they must develop competencies to innovate, design, and introduce new products to the market quickly. Creating new product ideas that are consistent with organizational strategy, and moving these ideas through the stages of design, development, and introduction quickly has been the hallmark of successful world class organizations (Bebb, 1989; Chase, Aquilano, and Jacobs, 2001; Towner, 1994). Introducing new products to the market ahead of competition has several strategic and operational advantages. It often means charging premium price, building name recognition, controlling a large market share, and enjoying the bottom line profit. Better competitive position in the market makes it also difficult for competition to enter the market (Blackburn, 1991; Bayus, 1997; Cooper and Kleinschmidt, 1994; Crawford, 1992; Franza and Lucas, 2000; Zahra and Ellor, 1993).

Who are the market leaders in introducing new products to the market fast? During the last two decades, through their JIT systems, world class manufacturers have dominated their competitors not only in the areas of price, quality, and manufacturing speed but also in new product development speed and quick commercialization of new technologies (Bebb, 1989; Dumaine, 1989a & b; Blackburn, 1991; Clark and Fujimoto, 1991; Ulrich and Eppinger, 2000). To understand the relationships between JIT manufacturing and simultaneous NPD process, let's briefly review the principles of JIT systems.

Just-in-Time (JIT) production has been a great force in the world of manufacturing since the early 1980's. Some of the main benefits of JIT in the area of manufacturing such as inventory reduction, lead-time reduction, quality improvement, and cost savings have been well documented (Billesbach, 1991; Cook and Rogowski, 1996; Hobbs, 1994; Inman and Mehra, 1990; Payne, 1993; Temponi and Pandya, 1995; White, 1993; Deshpande and Golhar, 1995; Handfleld, 1993; Lawrence and Hottenstein, 1995; Golhar, Stamm, and Smith, 1990; Moras and Dieck, 1992; Sohal and Howard, 1987; Schoenberger, 1986). In the simplest form, JIT requires production of the right parts in the right quantities and at the right times. The core component of a JIT system is based on two fundamental principles: elimination of waste and respect for people (Chase, Aquilano, and Jacobs, 2001; Hobbs, 1994; Payne, 1993; Wantuck, 1983). Waste as defined by Toyota's Fujio Cho, is "anything other than the minimum amount of equipment, materials, parts, and workers, which are absolutely essential to production" (Suzaki, 1987). In a JIT system, elimination of waste is achieved by adopting the following elements: total quality management, continuous quality improvement, focused factory, reducing setup times, flexible resources, group technology layout, and pull production system (Gargeya, and Thompson, 1994; Sohal, Ramsay, and Samson, 1993; Suzaki, 1987)). Respect for people includes elements such as worker participation in manufacturing planning and decision making, team work, fair compensation, worker training, and new attitude toward suppliers (Sohal, Ramsay, and Samson, 1993; Wantuck, 1983).

Unfortunately, since its beginning in Japan in the early 1980's, a narrow view of JIT, mainly inventory reduction and frequent deliveries, has been accepted and used in U.S. and European manufacturing organizations. Application of JIT to reduce inventory is only a small fraction of the full potential benefits of a JIT system (Blackburn, 1991; Gilbert, 1994; Towner, 1994). To take advantage of the full benefits of JIT, one needs to have a much broader view of JIT principles (Blackburn, 1991). In other words, the principles of waste elimination and respect for people can be applied to other areas such as new product development, supply chain management, and even to service organizations in which there is no physical inventory. A number of recent studies showed the existence of strong relationships between manufacturing practices and organizational performance on other areas. Mohan and Montoya-Weiss (2000) studied the relationships among organizational process factors and product development capabilities. They found that organizational process factors are positively associated with new product development factors. Cua, Schroeder, and Mckone (2000) and Cua, Mckone, and Schroeder (2001) studied simultaneous practices of TQM, JIT, and TPM and found that manufacturing performance is positively associated with the level of implementation of three programs.

As mentioned earlier, during the last two decades world class manufacturers who have been successful in their JIT system have also been successful in their NPD. The primary question of interest in this article is to investigate whether this phenomenon has been coincidental or if there is a correlation between JIT manufacturing and NPD speed. The objective of this article is two fold: (1) to show that the principles of JIT in manufacturing can be used to improve NPD process by analyzing and comparing important factors in both areas; (2) to hypothesize and demonstrate statistically that organizations with successful JIT manufacturing systems have also been successful in NPD. The remainder of this article is organized in the following manner: First, we briefly review two different NPD methods, sequential and simultaneous engineering. Comparison of traditional manufacturing versus sequential NPD and JIT manufacturing versus simultaneous NPD are presented next. Measures of successful NPD, research hypotheses, research methodology and results, conclusion and managerial implications are the final sections of the article.

TRADITIONAL NEW PRODUCT DEVELOPMENT PROCESS

New product development is an inter-linked sequence of information processing tasks where knowledge of customer needs is translated into final product design. Traditional NPD process also known as sequential or "over-the-wall" approach typically involves the following phases: Idea generation and validation, preliminary design, final design, process design, pilot production, and ramp-up (Wheelwright, and Clark, 1992; Russell, and Taylor, 1998). In traditional NPD, the design process is managed sequentially by personnel from various departments in the organization with very limited or no contacts. Although ideas for a new product came from different sources, traditionally it has been the marketing department's responsibility to generate ideas for a new product, and conduct a feasibility study of the product. Historically, a very large percentage of new ideas fail the validation phase. They fail because they are either incompatible with the corporate strategy or infeasible in terms of marketing, manufacturing, or financial strategies. If the ideas for a new product passes validation phase, then performance specifications for the new product are developed and passed to the design engineers in order to develop a preliminary design by means of building, testing, and revising the prototypes and making sure that the design is viable in terms of appearance, function, reliability, and maintainability. After successful completion of this phase, the product enters the final design phase where design engineers finalize the design, often by listing detail specifications, formulas, and drawings. The final design specifications are then sent to the manufacturing department for pilot production and ramp-up. The manufacturing department develops a process plan that includes specific requirements for resources to manufacture the product.