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simplified concept of EVA thetaplan to rede o s both aUsing the could have a negative EVA EDITORI able to pay is bills Reorganizing for New Product Develo and Ongoing Customer Management 4 1930s Ma 5. Ibid.#3. Case story about IBM 7. McMa hi Bill Johnson shook his head and sighed. His dinector. ming safmail belling him that huad lost its way in the PC business emembered mading a similar its design engineers based on h nceived by customers. It had 1BM's develpment cycle was several times Pot how were at each others' oeganiner that the they won rather than how well nhud d sighed His dinevto to the point whe 9, IBM e Fles, was developing its product life cycle. at Time Bill could see elements of all of this 680 The fighting among your staff and marketing is getting embarrassing At the marketing Various functions did not speak to eachi has got to stop; this directors meeting today, Steve (the director) claimed that your staff is both Various funct behinddifferent goals. Finance translated the into EVA measures, but no one seemed at least it wase schedule and over cost. He also said that he got a competitor is develop held accountable for achieving them, or wind at a trade show that a competitor is w. Marketing wanted a new product ing a product very close to ours, and that they may Apparently he feels that your staff spends more tine explaining why things can't work than hey cleow cost, reliable, and ready to hPcke The engineers wanted to could make their mark. Bill sighed. The next eat us to market at the pace things are moving with features market today design qual products using innovative technologies, where th do finding solutions Worse, the solutions they do obscure, expensive on of days were going to be long ones. Yet Bill knew problem had been going on for some time. product life cycles were making the problem untested technology. We're starting to look like villains and developing a real image problem throughout the rest of the company. I am going to be meeting with the business unit president in a few days. I'd like you to brief me about yourtional changes were needed and hoped he could beta perception of the situation and what you recom- ous and more visible. Bill knew that some of the solution. mend tou rowe the working relationshis and the output. I've set up a time on your calendar on CASE QUESTIONS Thursday at 1:00 P.M Thanks, Lydia 1. If you were Bill, where would you begin? Whe steps should he follow to be sure that he has nat This gave Bll2 days to come up with some answers. 2. What are the specific changes that need to occure early 1990s, and how it had cut new product develop- ment times and costs tremendously while achieving co-locating He remembered reading the story about Chrysler in the Time Flies to get the new product devel missed any of the key points? higher levels of customer opmet process in general, and this product in particula satisfaction by co-locating3. Could the target costing process be helph all the team members and making them jointly responsi- here? Explain why or why not, providing speci back on track? ble for all key elements of new product success. He reasons. 126 Part! The Building Blocks of Supply Chain StrategyExplanation / Answer
1.if I were Bill, I would begin with the basic step of Research & Development. The company should focus on improving R&D in order to reduce the product development time and the cost incurred in developing new product. Ben should follow the below mentioned steps in a sequential manner :
Research and Development------- Product Development --------- Sourcing the raw materials------ Manufacturing -----------Marketing & Sales ----------- Customer Service
R&D should be carried out to reduce the development cost and time. Raw materials should be sourced from a supplier at a reasonable cost,Manufacturing operations should also operationalize in such a way to minimize the cost of production, marketing should be done aggressively and focus more on improving the satisfaction level of the customers by offering best customer services.
2. Company should focus more on Research and Development in order to reduce the development time and cost,so that it can compete with the closed competitors effectively. All the employees of the company should align their goals directed towards a single objective, that is the profit maximization of the company so that every employee should focus on reducing the cost and increasing the sales revenue of the firm.
3. Target costing method can be an effective method as the company is competing with many competitors in terms of reducing the product development cost and time. If a traget cost for a product is set , every partcipant in the manufacturing process would direct their goal towards achieving the set cost. It would give direction to each and every individual to streamline their efforts and a sense of responsibility to achieve the target cost set by the management.
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