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How to use SIPOC to standardize New Product Launch
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SIPOC and New Product Launch
byVivek Naik
http://viveknaik.net
How to we launch new products without disturbing the flow of our current products and processes?
Is this new product(s) right fit for our business?
Hot Lead will buy thousands
Need S
am
ple
s Parts available ?
Manufacturing Drawings
Costing
Pro
cess
Cap
acit
y
QU
ALIT
Y
MarketingMATERIAL
Kanbans
DELIVERY
Size of opportunity
TRAINING
DemandSetup Required C
ompetition
ASSEMBLY DRAWING
Procurement
overwhelmed?What about stable operations?
get
rig
ht
pro
du
cts
to m
ark
et
on t
ime
Very short window of opportunity
What is the solution?
Where do we start?
Focus
We need to Focus on the Right type of Products,Follow a Standardized
ProcessAnd
Communicate
How do we accomplish this without wasting too much time?
DEFINERight Type Products
Product Platforms and their extensions
Select Products that uses existing process flows
DEFINE and AVOIDWrong Type Products
Product which are not part of the platform
Products with just onetime demand
Products which may violate certain regulations or copyrights
How toStandardize the Process Of new product launch?
SIPOC
SIPOC ustomer
We start
here
What does the Customer want?
Does it fit into our definition of rightType of product?
What is the opportunity size ($)?
What is Demand?
What is the profit margin?
SIPOCutputs
What is the Product Definition?
Do we need to have FGI? how many (quantity)?
What are the quality requirements?
What is are delivery requirement?
What is maximum allowed cost?
SIPOCrocesses
Which Processes are needed to produce this product?
What are the cycle times?
Do we need new process, tooling or setup?
Do people need training, SOP?
Does process have capacity to meet the demand?
What process setup cost and running cost?
SIPOCnputs
Which parts/items are required?
Are these existing parts or new parts?
What is the BOM Qty. and Inventory Qty.?
What is unit cost and in process inventory cost?
What is minimum order qty.?
SIPOCupplier
Are these existing suppliers or new suppliers?
What are their lead times?
What are their freight terms and cost?
How is their quality?
How reliable are they for on time delivery?
What is the frequency of price fluctuation?
S I P O C
Communicate
Custome
r xyz
Product AWith yearlyQty. of 10,000 unitsAt $500/unit
Process routing and capacity
CommunicateWe need to share all the know facts about the Product and its setup with the entire Team During all the Project phases
How to Communicate and What Information is needed during different phases of new product launch?
Let’s take a look at a story of new product launch
“would you like to buy our great product?”
Mike the salesman visits a customer
But Alan the Customer has a Different need
“Actually we needed to solve this problem, can you help us?”
“We don’t have that right now……But we can develop a new product just for you!”
And so starts the project to launch a new product in shortest possible time
The new product promises a greatIncrease in revenues
Sales presents the idea back at the Company
Jerry the CEO wants to make a good business decision
“Do we really need this now?”
“How many units can be sold?”
“Are we capable?”
“Do we have capacity?”
“How soon can we realize ROI?”
Opportunity Assessment Phase
Opportunity Assessment Phase
What we need to know1. Product definition2. Does it match our right type
product3. Potential Demand and time to
reach that maximum demand4. Expected selling price and profit
margin
Mike the salesman fills out all the details about this opportunity to prove it is worth selling this new product
S I P O C
Custome
r xyz
Product AWith yearlyQty. of 10,000 unitsAt $500/unit
Process routing and capacity
Use SIPOC to get understanding of what is involved and potential
Capability, Capacity, and Cost Risk
Opportunity Assessment Phase
30 Minute SIPOC evaluation
Operations and Engineering Prepares the SIPOC for evaluation
Jerry the CEO makes a good business decision based on the Report of the Opportunity Assessment
Initiation Phase
If project is approved Initiation Stage starts
In-depth SIPOC begins to evolve
Procurement is initiated
Prototype is built
Output of Initiation Stage
Prototype Ready for customer testing
Precise Costing
Manufacturing Capacity verified
Quote is prepared
Approval Phase
Mike the salesman visits the Customer and presents them the prototype/ Sample along with the Quote
$$
Changes may be made to the product and pricing till the Customer approves and it is profitable for the company
Once approved……
Setup Phase
If Product is approved Setup Stage startsParts are ordered
Tooling/fixtures designed and fabricated
Inventory is setup in its location
Production run is carried out
Output of Setup Stage
Production Ready
People trained
Manufacturing operation’s SOPs and pull systems in place
Production schedule adjusted
Once Setup is complete regular Production begins
How do you guaranty
Sales Process Phase
Sales Process is setup to track and meet the target sales goalsAll potential location are Identified
Sales and profit forecast is made
Action plan is setup to reach the maximum sales potential of this product
Output of Sales Process
All potential location are reached
Sales and profits tracked against the forecast
Demand is adjusted based on learning
Monthly Reports of sales growth for this product
When properly launched New Products can lead to steady increase in revenue
Vivek NaikEmail: [email protected]: http://viveknaik.netTwitter: @viveknaik
All images from Microsoft Office Media @ office.com