The Phases OF Any Product Development In Supply Chain

10 years ago, I used to work as a material planner and almost the frequency of the change in the category portfolio for relaunches was a bit speedy.

This needs a proper and careful liquidation plan for all the Raw, Pack, SFG, and FG unique materials for SKU outs, just to avoid any business waste which would dilute the category margin%.

Some questions were attached to my mind with no answers, one of those questions:

What is the process of developing a new product and who is involved in this process?

There are mainly 4 phases in the development stage of any product and the name of the phases could vary from one company to another but the same concept is used.

• The idea phase.
• The possibility phase.
• The ability phase.
• The deployment phase.

1-The Idea phase

The hallmark of this stage is building a "Business case" for the organization and understanding if this product will be profitable or not.

Brand marketing, trade marketing, sales, supply chain, and finance are involved in this stage of product development.

The initiative of the product is always coming from brand marketing whether it's a relaunch/tactical promotions or innovation.

They collect all the data required about the product on the downstream side and set the price point of the product (Listing price) based on the price index on the market.

Brand marketing sets a meeting with sales and trade marketing to the build-up up the volumes by customers based on the channel strategy.

After building the volume by the customer and setting the trade market investment (Promotional intensity, promotion depth, brand activations, flyers Activision, marketing campaigns, etc...).

Finance calculates the top-line overview based on Net sales after deducting the trade investments.

Now it comes to the supply chain role, which is the supply chain cost "Material cost +Production cost+ Logistics cost" by exploding the BOM in case it's locally manufactured.

And calculating the Landed cost in case it's an imported material.

After getting the Net sales and the supply chain cost, the profit could be calculated easily.

Then calculate the Margin for these products and in case it's below the range, the business case will be rejected and if it's ok, then move to the next phase.

2-The Feasibility phase:

The aim of this phase is to assess if the customized product would fit technically with the technology used on the available resources or not.

And if not, what kind of CAPEX for manufacturing or even for the supplier's development is needed.

In case there is an extra size part or equipment needed, it should be added to the business case under the supply chain cost and re-assess the margin again.

Engineering (R&D), quality, operations, maintenance, safety, and procurement are the engaging functions at this stage.

After getting the prototype product and running it on the current resource, if it passes the technical part, then move to the next phase.

3-The Ability phase:

This is the most crucial phase in the development stage where a real trial for the end product takes place:

A-The Supplier part:

Procurement and engineering develop all the unique materials with the corresponding suppliers related to the new product.

B-The Ordering part:

After developing the materials with the suppliers, The material planning department places a trial order with the uniquely raw and pack materials based on the agreed production trial run.

For instance, the agreement is 8 hours continuous run on the resource, the order will be based on that run and not extra to avoid any business waste.

C-The Technical part:

Here comes the manufacturing part, where engineering, operation, and quality run the product contentiously for a long run to trigger any challenges in the product design or quality design.

Also setting the Nominal speed at the resource is an essential step here to control the O.E.E.

If the product passes, then we move into:

D-The Transit trial part:

Here comes the logistics and handling part to the downstream or the targeted markets whether by sea (Containers), by road (trucks), or by air.

Where a real shipment takes a place for the new products to tackle any handling or quality go to market points related to the product design.

If the transit trial passes, then we move to the last stage.

4-The Deployment phase:

The supply chain is totally responsible for this phase end to end.

The main aim of this stage is to balance two things :

1-Ship to trade timing.

2- Business waste across each supply chain node.

For instance, if the forecasting level is at the distributor level, then demand planning will take the distributor inventory + The factory finish goods inventory + the equivalent finish goods for the uniquely raw and pack materials) and calculate the forecast cover.

instantaneously, after reflecting on the new forecast STT, the MRP will stop ordering any unique raw and pack materials for the SKU outs and start ordering the new unique materials for the SKU in.

Then the supply chain will back to sales and marketing and give the details on the launch date for the product in the market based on the current cover on each supply chain node.

S&OP Connects all those phases together and to get more business acumen, you have to master S&OP.

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