Structural factors of NPD (new product development) team for manufacturability

Abstract

We explore whether structural factors of NPD (new product development) team such as its physical co-location and team composition are still relevant and important in enhancing manufacturability as part of NPD performance in this highly virtualized coordination era as much as in the past before the Internet. We also examine how the analysis result is affected by the product’s innovativeness as well as other control variables like project duration and product type. In order to answer the research questions, we collected data on 127 projects of new product development at a global consumer electronics company. Based on our analysis, we conclude that whether the NPD members are physically co-located throughout the product development process and whether the team membership is balanced have profound implications for enhancing manufacturability.

Introduction

Developing a new product successfully is an important competitive advantage for a firm. For successful new product development (NPD), a firm must be able to develop an innovative product that appeals to the customer and manufacture it in large quantity in order to reap profit from the mass market [40]: its ability to manage the ramp-up production effectively, i.e., manufacturability, is essential to the eventual success of new product development. Manufacturability is a quality of new product development that ensures the product can be produced efficiently and reliably in the manufacturing process. It is measured by the time required to ramp-up production to desired volume levels, by production yields, or by product cost and quality levels [33]. That is, a major link between developing a new product and manufacturing lies in the ability to restore the production system to high productivity and low yield loss as quickly as possible following the new product’s introduction [39], [37].

From an operations strategy perspective, therefore, reducing the defect rate during the ramp-up production process is an important measure for introducing the new product to the mass market fast and reliably. In this research, our primary focus is on such manufacturability: we explore how structural variables such as NPD team’s physical co-location and composition affect manufacturability. These variables represent structural characteristics of the NPD team, distinct from more qualitative, behavioral factors.

In the past, especially during 1980s and early 1990s, i.e., before the concept of ‘virtual coordination’ was fully developed, researchers identified key variables, behavioral and structural, that could determine the cross-functional team (CFT) performance in new product development: physical proximity [29] and balanced composition [2] of the CFT membership were two of the most important structural variables, proposed in the literature. More recently, notably since mid 1990s, however, there have been fundamental changes in organizations, relating to emergence of virtual organizations [13]: researchers [5] suggested that these virtual organizations would be logical forms for organizations in the future, weakening or even nullifying some of the research outcomes in the past. In this context, our research was motivated by a question, whether the structural variables such as physical proximity and CFT composition still remain relevant and important in deciding the NPD performance in this highly virtualized coordination era as much as in the past before the Internet. To answer the question, we collected and analyzed actual data on 127 new product development projects conducted in 2006 and 2007 at a global consumer electronics company.

The paper is structured as follows. In the next section, we survey relevant literature. Then, we formally develop the research framework, explain the data and their collection process in detail, and suggest key hypotheses. In Section 4, we present data analysis and major outcomes from the analysis: the primary methods are multivariate and stepwise regression analysis and path analysis. Based on the analysis result, we derive managerial implications and discuss conclusions along with potential contributions of this research to the literature.