Business pressure on manufacturers: Part 1

- [Instructor] What is agile project management for new product development? That's a great question, one this course will answer. To establish some context, one may wonder why are we talking about changing the new product development process when it has worked so well for so many years. The short answer is we need to counter competitive pressures on manufacturers in the new product development area. In a recent survey, an overwhelming majority of manufacturers cited shortened product development schedules as their biggest challenge to overcome, adding credence to a previous survey that found that time to market fell by nearly 50% in 10 years. These are considerable challenges. It's very difficult to discuss new product development without the context of external pressures on the manufacturers doing the development, since after all, if time and money were no object, bringing new products to market would be rather relaxed and calm, but obviously that's not the case. Other pressures that the manufacturers are facing, as found in various surveys, our demand for new products has increased dramatically, customers are asking for new innovative products more and more, there's an increasing complexity of the products, as many products now are smart and connected, in addition to being the standard durable goods or the standard products that were designed before. There's an acceleration in the product commoditization. Customers are demanding that new technology be democratized and available to the market in shorter times than ever before. And there's an increasing emergence of threatening competitive products as manufacturers move into different markets than they had previously worked in, taking advantage of these new opportunities. The overall message from this evidence is that manufacturers are being asked to develop more complex products in an increasingly short amount of time, on a smaller budget. This drives manufacturing businesses to seek solutions to these formidable challenges. Let's take a look at them in a slightly different fashion. Manufacturers are faced with the challenge of creating better products at lower price points from a wider range of requirements under dramatically shortened time to market and lastly, they have to be smart and connected, and if you think about the current generation of products on the market from cellphones to tablet PCs, most new cars have an interface where you can integrate your technology into the vehicle. Those are all dramatic pressures on manufacturers to come out with these products that are better, cheaper, and delivered quicker. Lastly, some of the pressures on manufacturers from a macro scale or from a global new product development scale, are that savings from economies of scale are offset in other areas. For example, we have taken process improvement about as far as we can go in many areas. Manufacturers have found that they are no longer able to improve their processes or shorten their processes anymore, and in fact, some of the opportunities that they have to create better products and smart connected products are offsetting the economies of scale from manufacturing efficiencies. Next, the new features introduced in these products must be easier to integrate and assemble. And if you think about any consumer product, like a new Smartphone or a tablet PC, you know that the final assembly and the final integration actually happens at the customer site, when the customer's holding it in his hand. So the customer expects that these new products will be able to turned on, configured quickly, and used right away, and lastly, from a global manufacturing scale, the material and labor costs are rising around the globe. Manufacturers are no longer able to take product or manufacturing, or product design, and ship them off to lower cost countries or lower cost areas of the world. That environment is normalizing, causing products everywhere to rise at a steady rate.