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New Product Development (NPD) and Sales & Operations Planning (S&OP)

By Anna Watson December 3, 2019 by Anna Watson

Many of us have heard the saying, “If you’re not first, you’re last” or “First is the only place that really matters.” Although that isn’t entirely accurate, it can truly feel that way when you miss the opportunity to be first to market with a new product. While Research & Development, Marketing, and Sales may be heading full steam ahead with their plans to get the latest product on the shelves, one area often overlooked is ensuring new products are part of Sales & Operations Planning (S&OP).

Product Life Cycle Management (PLM), refers to the process of managing the entire product life cycle, from inception through end of life. In efforts to support the product as it progresses through the four product life cycle stages (Intro, Growth, Maturity, and Decline), it is imperative that we account for where a product is within its life cycle stage in our Sales & Operations Planning process. During New Product Development (NPD) the organization will still be researching, developing, and testing exactly how they plan to manufacture the product. The earlier you have visibility, the sooner your supply chain can react to support the product introduction.

A new product launch can have numerous impacts on your supply chain; how will it affect current product demand, impact on strategic sourcing, how will it overload manufacturing capacity or quality resources, and how will logistics support the added volume, etc.? All these questions can be answered as you bring in NPD to your Sales & Operation Planning process. The collaborative cross-functional nature of the S&OP process lends well to supporting a new product launch, as well as visibility to any potential issues before they arise.

5 Core Processes

Make the New Product Development Part of the S&OP

One common area of concern is “Why should I include the new product when I haven’t finalized how I am going to make it?” This doesn’t mean that you shouldn’t include the product, only that you should accompany the inclusion with assumptions of any potential changes. The assumptions can cover anything from which resources it may utilize, the timing of when it will be ready, or even the percentage of likelihood that the new product will successfully make it to market. It’s not about having a perfect plan because we know there will be changes and execution will almost always differ, but by driving visibility throughout your supply chain it better prepares your organization to make informed decisions as changes occur.

Consumers expect innovation and want to see companies continue to push those barriers and bring more new products and services. They also expect that once these products are launched that companies can seamlessly support them from an agile supply chain. Making the New Product Development part of the Sales & Operations Planning process keeps the entire organization focused and aligned with the organizational strategy of taking a product to market.

Read the next blog in this blog series, product life cycle management to understand how to be effective at PLM by seeking to be cross-functional.

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