Case Reorganizing for New Product Development and Ongoing Customer Management Bi

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Case Reorganizing for New Product Development and Ongoing Customer Management Bill Johnson shook his head and sighed. His director, rmembered reading a similar story about IBM: how it Lydia Jones, had just sent him an e-mail telling him that had lost its way in the PC business because it rewarded his engineering staff and marketing were at each others' its design engineers based on how many design awards throats over the new personal digital organizer that the they won rather than how well their products were received by customers. It had gotten to the point where IBM's development cycle was several times longer than company, Time Flies, was developing its product life cycle. The fighting among your staff and marketing has got to stop; this is getting embarrassing. At the Bill could see elements of all of this at Time Flies. directors' meeting today, Steve (the marketing Various functions did not speak to each other. They had director) claimed that your staff is both behind different goals. Finance translated the total product schedule and over cost. He also said that he got viability into EVA measures, but no one seemed to be wind at a trade show that a competitor is developheld accountable for achieving them, or at least it wasn't ing a product very close to ours, and that they may clear how. Marketing wanted a new product packed beat us to market at the pace things are movingwith features, low cost, reliable, and ready to hit a mass Apparently he feels that your staff spends more market today. The engineers wanted to design quality time explaining why things can't work than they products using innovative technologies, where they felt they could make their mark. Bill sighed. The next couple We're starting to look like villains and developing a real image problem of days were going to be long ones. Yet Bill knew this problem had been going on for some time. Decreasing throughout the rest of the company. I am going to product life cycles were making the problem more seri- be meeting with the business unit president in a ous and more visible. Bill knew that some organiza- few days. I'd like you to brief me about yourtional changes were needed and hoped he could be part of the solution mend to improve the working relationships and the output. I've set up a time on your calendar on Thursday at 1:00 P.M. CASE QUESTIONS 1. If you were Bill, where would you begin? What steps should he follow to be sure that he has not This gave Bill 2 days to come up with some answers. He remembered reading the story about Chrysler in the early 1990s, and how it had cut new product develop- ment times and costs tremendously while achieving 2 What are the specific changes that need to occur at Time Flies to get the new product development process in general, and this product in particular, back on track? higher levels of customer satisfaction by co-locating3. Could the target costing process be helpful here? Explain why or why not, providing specific all the team members and making them jointly responsi- ble for all key elements of new product success. He 126 Part I The Building Blocks of Supply Chain Strategy

Explanation / Answer

1. If I were Bill I would begin with by co-locating all the involved members in this project. The members are from different department and hence it is essential for Bill to co-locate them and make them jointly responsible and accountable. When this is done Bill will be able to reduce the inter-departmental fighting as well as reduce the cost and schedule overruns.

2. To get the product development process back on track several changes will have to be introduced. Firstly development cycle can be reduced by tying rewards with something tangible like how the customers like or dislike the product. Secondly team members from different departments should have regular meetings so as to be able to allow for efficient exchange of information. Thirdly responsibility of all product features should be transferred to teams. This will ensure that no time is wasted searching for the person who can be blamed.

3. Yes, target process costing can be helpful here. Target costing will enable the company to plan in advance for Time Flies and other similar initiatives that it takes in future. Through target costing the company will be able to decide in advance the price points, the margins and the costs of the new product. This will enable the company to continually monitor its product development right from the initial design phase to the eventual processes.

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