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Determining Quality Metrics for New Product Development Operations
- 1. Determining Quality Metrics For New Product Development Operations Comprehensive Process Guide By: Masheika Allen
- 2. Operational Missions of HVOs vs. NPD High Volume Operations New Product Development • Produce large quantities of input in short periods of time ▫ Key Performance Indicators Speed Volume Efficiency Quality • Produce a new product or service for the market ▫ Key Performance Indicators ≠ ≠ ≠ Quality
- 3. Different Missions = Different KPIs High Volume Operations New Product Development - Speed - Volume - Efficiency Quality
- 4. Critical Success Factors and corresponding KPIs
- 5. I. Determine Critical Success Factors (CSF) • Where do PQO/Editorial projects fit within the: ▫ New Product Development Life Cycle Product Selection PQO/Editorial Business Analysis Commercialization
- 6. The Product Selection Process Internal Process PQO/Editorial Process Internal Process
- 7. How do PQO/Editorial’s missions translate into CSFs? Concerns Critical Success Factors • Each project has specific demands • Must access a variety/range of services, infrastructure and skills • Internal customer focused (sells services internally) • Value uniqueness and creativity • Tight timelines • Flexibility • Multifaceted • Strongly focused • Intellectual space • Execution oriented
- 8. II. Determine Initial KPIs for the Product Selection Process of NPD High Volume Operations New Product Development - Speed - Volume - Efficiency Quality
- 9. - Flexibility • Flexibility can be measured in terms of Delivery Performance ▫ Efficiency rate of business operations when preparing and delivering an order to a customer ▫ KPI - Delivery Precision 𝐷𝑒𝑙𝑖𝑣𝑒𝑟𝑦 𝑃𝑟𝑒𝑐𝑖𝑠𝑖𝑜𝑛 = 𝑆ℎ𝑜𝑟𝑡 𝐿𝑒𝑎𝑑 𝑇𝑖𝑚𝑒 + 𝑂𝑛 𝑇𝑖𝑚𝑒 𝐷𝑒𝑙𝑖𝑣𝑒𝑟𝑦 + 𝐶𝑟𝑖𝑡𝑒𝑟𝑖𝑎 𝐹𝑙𝑒𝑥𝑖𝑏𝑖𝑙𝑖𝑡𝑦 𝐷𝑃 = 𝑂𝐹𝐿𝑇 + 𝑂𝑇𝐷𝑅 + 𝐹𝑂𝐹𝐶 o Order Fulfilment Lead Time = time it takes from the moment an order is placed until it arrives o On Time Delivery Rate = the frequency of occurrence of delay in delivery of data o Flexibility of Order Fulfillment Criteria = the ability to respond to changes based on the customer’s demand, budget, order frequency and order volume*
- 10. - Multifaceted • The multifaceted nature of the process can be measured in terms of Reliability ▫ Ability of the submitted data to meet targets & expectations ▫ KPI - Reliability 𝑅𝑒𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑦 = 𝐶𝑜𝑚𝑝𝑙𝑒𝑡𝑒𝑛𝑒𝑠𝑠 + 𝑃𝑢𝑛𝑐𝑡𝑢𝑎𝑙𝑖𝑡𝑦 + 𝑃𝑒𝑟𝑓𝑒𝑐𝑡 𝑂𝑟𝑑𝑒𝑟 𝐹𝑢𝑙𝑓𝑖𝑙𝑙𝑚𝑒𝑛𝑡
- 11. - Strongly Focused • The level of team focus can be determined in terms of Responsiveness ▫ Ability of the PQO/Editorial teams to be responsive to PM changing project requests and deliver high value data ▫ KPI – Order Rate Fulfillment 𝑂𝑟𝑑𝑒𝑟 𝑅𝑎𝑡𝑒 𝐹𝑢𝑙𝑓𝑖𝑙𝑙𝑚𝑒𝑛𝑡 = 𝑂𝑛 𝑇𝑖𝑚𝑒 𝐷𝑒𝑙𝑖𝑣𝑒𝑟𝑦 + 𝑂𝑟𝑑𝑒𝑟 𝐹𝑖𝑙𝑙 𝑅𝑎𝑡𝑒
- 12. - Intellectual Space • The amount of intellectual space allotted can be determined in terms of Flexibility ▫ Ability of the submitted data to meet targets & expectations ▫ KPI - Order Rate Fulfillment Flexibility 𝐹𝑢𝑙𝑓𝑖𝑙𝑙𝑚𝑒𝑛𝑡 𝐹𝑙𝑒𝑥𝑖𝑏𝑖𝑙𝑖𝑡𝑦 = 𝑃𝑟𝑜𝑑𝑢𝑐𝑡 𝑀𝑖𝑥 + 𝑆𝑒𝑟𝑣𝑖𝑐𝑒 𝐿𝑒𝑣𝑒𝑙 𝑁𝑃𝐼 ∗ +𝑂𝑛 𝑇𝑖𝑚𝑒 𝐷𝑒𝑙𝑖𝑣𝑒𝑟𝑦
- 13. - Execution Oriented • The effectiveness of the execution of the processes employed by PQO/Editorial teams can be determined in terms of Productivity ▫ Effective use of resources ▫ KPI – Execution Productivity 𝐸𝑥𝑒𝑐𝑢𝑡𝑖𝑜𝑛 𝑃𝑟𝑜𝑑𝑢𝑐𝑡𝑖𝑣𝑖𝑡𝑦 = ( 𝐿𝑎𝑏𝑜𝑟 𝑐𝑜𝑠𝑡 𝑂𝑟𝑑𝑒𝑟 ) + ( 𝑅𝑒𝑣𝑒𝑛𝑢𝑒 𝑊𝑜𝑟𝑘𝑒𝑟 )
- 14. - Quality and Compliance • Targeted KPI’s for each PQO/Editorial team as determined by the Quality Team
- 15. - Speed - Volume - Efficiency • Delivery Performance • Reliability • Responsiveness • Flexibility • Productivity Different Missions = Different KPI High Volume Operations New Product Development Quality
- 16. III. Adjust based on Customer Feedback • The client will ultimately determine the KPIs that best fit the processes involved in New Product Development: ▫ KPI Development Process Customer Input Adjust KPI Finalize KPI Preliminary KPIs PQO/Editorial Internal
- 17. Thank you for your attention.
- 18. Works Referenced • KPI Library ▫ http://kpilibrary.com/ • Improving Order Execution Performance: A Holistic View of Metrics Across Plant & Warehouse ▫ 2008 MESA International, OFC and SCE of MHIA, and WERC http://www.werc.org/assets/1/workflow_staging/Publications/822.PDF • Extracting key performance indicators (KPIs) new product development using mind map and Decision- Making Trial and Evaluation Laboratory (DEMATEL) methods ▫ African Journal of Business Management Vol. 5(26), pp. 10734-10746, 28 October, 2011 http://www.researchgate.net/publication/267691250_Extracting_key_performance_indicators_%28KPIs%29_new_product_ development_using_mind_map_and_Decision-_Making_Trial_and_Evaluation_Laboratory_%28DEMATEL%29_methods • Using Scorecard to Measure Supply Chain Performance in SMEs ▫ Journal of Supply Chain and Operations Management, Volume 12, Number 2, May2014 http://www.csupom.org/publications/2014-2/jscom_2014_2_6.pdf • Supply Chain Safety Management: Security and Robustness in Logistics ▫ Eßig, M., Hülsmann, M., Kern, E.-M., Klein-Schmeink, S. (Eds.) https://books.google.com/books?id=pRdEAAAAQBAJ&pg=PA256&lpg=PA256&dq=%22Order+Fulfillment+Flexibility%22&s ource=bl&ots=wvU- 2pzpSM&sig=okLDA1XwZEQe_3xEnxBm7cI9ORI&hl=en&sa=X&ved=0CEIQ6AEwAWoVChMI0vyf8JDwyAIVTvJjCh0RsQY N#v=onepage&q=%22Order%20Fulfillment%20Flexibility%22&f=false • Key Performance Indicators: Developing, Implementing, and Using Winning KPIs ▫ David Parmenter ISBN: 978-1-118-92510-2 https://books.google.com/books?hl=en&lr=&id=bKkxBwAAQBAJ&oi=fnd&pg=PA101&dq=+%22key+performance+indicators %22+process+developmen&ots=cXX1h5f18p&sig=QgxyFh_t6GSVdMM12UuyUp_OeW4#v=onepage&q=%22key%20perform ance%20indicators%22%20process%20developmen&f=false • Simulation of Generation of New Ideas for New Product Development and IT Services ▫ AIP Conference Proceedings·February 2015 http://www.researchgate.net/profile/Nasiopoulos_Dimitrios/publication/270787931_Simulation_of_Genera tion_of_New_Ideas_for_New_Product_Development_and_IT_Services/links/54b4db500cf2318f0f96f029.p df
- 19. Works Requiring further study • Using a hybrid MCDM methodology to identify critical factors in new product development ▫ Neural Computing and Applications March 2014, Volume 24, Issue 3, pp 957-971 http://link.springer.com/article/10.1007/s00521-012- 1314-6 • Critical Success Factors and Cluster Evolution: A Case Study of the Linköping ICT Cluster Lifecycle ▫ Environ Plan A June 2014 vol. 46 no. 6 1425-1444 http://epn.sagepub.com/content/46/6/1425.abstract?id =a46258
Notas del editor
- New Product Development processes, like those found in high-tech companies, have a fundamentally different character than High Volume processes. Yet, the same metrics are used to determine the ‘effectiveness’ of both types of operations. Can one set of metrics adequately address these vastly different processes? The answer to that question is found through an assessment of the operational missions of both processes.
- The mission of a high volume operation in the content management space is to produce large quantities of data in short periods of time. Its focus is volume and speed. Thus, metrics relating to speed, volume, and efficiency of production are key indicators of a company’s performance in this space. The mission of a new product development operation is to produce a profitable new product or service for entry into the market. That mission isn’t tied directly to volume and speed. But Quality would be a key performance indicator in this area as well.
- Due to the vast difference in operational missions, it is clear that the KPI’s for each process must be different as well. However, the area of NPD metrics is relatively new and an industry standard has not been created as of yet.
- Therefore, we must determine the appropriate methods within our team. The new product development process can be measured. If we work through the process logically, we can utilize the institutional knowledge at our disposal to determine which KPIs (and corresponding metrics), are best suited for this new process.
- PQO/Editorial Operations are the heart of the New Product Development process. They encompass the idea generation and testing portion of the Product Selection process. Since the NPD process ends with the commercialization of products developed through the Product Selection process, the success of the NPD process is measured in terms of the market viability of products vetted through that process. Thus, any initial determination of Critical Success Factors for the NPD process should begin with a determination of the key pain points/concerns in the Product Selection Process.
- Product Selection involves several process that are within the purview of different organizational groups. Idea generation and initial screening are internal processes managed by groups within the organization. PQO/Editorial is involved in the concept development and testing processes, which generate the results for the secondary screening process. Final product selection is informed by the insights gained during the PQO/Editorial processes, and is conducted internally. Then the process moves into other areas of the corporation for Business Analysis and Commercialization.
- On the left are some of the specific concerns, issues that may determine the success or failure of the product selection process at the PQO/Editorial level. The KPI determination process may assume these concerns to start, but they should ultimately be vetted and supplemented in Step 2 of this process. After identifying concerns and issues, we can research relevant Critical Success Factors. In this example, the identified concerns on the left have been linked to targeted Critical Success Factors, on the right. The Critical Success Factors are umbrella KPI categories that indicate the areas of performance that are critical to departmental success.
- After determining the Critical Success Factors, we can research those KPI categories to determine the most relevant Key Performance Indicators for each concern. We can then begin to gather metrics that will be useful in the quantitative analysis of the NPD operations. Thus ensuring that the metrics, KPI’s and CSF’s all align with the NPD mission. Now that we’ve determined 6 initial CSF categories for NPD, we can engage in the exercise of correlating those CSF with targeted Key Performance Indicators.
- The first identified CSF is Flexibility. In researching this category, we come across the sub-category of Delivery Performance. Delivery Performance is measured by the Delivery Precision KPI. The specific metrics utilized in determining Delivery Precision are presented below. *FOFC can be measured with the following Metric: - Average number of alterations made to project definitions + Number of total documents changed as % of total documents
- In researching the Multifacted category, we come across the Reliability KPI. Reliability is a standard KPI that is based on 3 heavily utilized, and familiar, metrics.
- Responsiveness, as measured by the KPI Order Rate Fulfillment, is a measure of whether the operation is fulfilling each customer’s request in a timely manner. The instead of measuring Order Fill Rate based on lines on a shipping manifest, the metric will be adapted to indicate ‘lines’ as individual data requests and changes.
- Focus was determined by the Order Rate Fulfillment KPI, a measurement of whether the operations are fulfilling each data request in a timely manner. In determining the amount of Intellectual Space the operations are demonstrating, we need to assess how well they adapt to change. This can be measured by the Order Rate Fulfillment Flexibility KPI. This KPI utilizes the Service Level metric from the New Product Introduction category. This metric can be measured a variety of ways. *Service Level for New Product Introduction can be measured with the following Metrics: - percentage of test results requiring Changes (for example targets not attainable; Changes in JpH levels) - percentage of delivered services not in the monthly forecast - percentage of consumer complaints related to NP
- Instead of overall volume, we utilize the Execution Productivity KPI to assess the effective use of departmental resources.
- Finally, the Quality Team has already developed metrics for each specific PQO/Editorial project. We should defer to these metrics when undertaking this process.
- Upon completion of this exercise, it is clear that both High Volume Operations and New Product Development Operations can be systematically measured by use of Key Performance Indicators. However, it is also apparent that each process has its own unique mission and, therefore, its own mix of relevant KPIs. The process we just completed yielded 5 targeted KPIs for assessing the success of New Product Development Processes. But this example is only the first step of a multi-step process. At the conclusion of this step, the results must be vetted and supplemented internally.
- While PQO/Editorial may make an initial determination of relevant KPIs based on its workflow, but the ultimate decisions will be made by the customers. A Customer Feedback process must follow this preliminary process, to begin the internal vetting of the CSFs, KPIs and metrics that have been proposed. Once the initial step has been completed, they should be forwarded to the customers in the form of a PM survey. This will begin the process of vetting and supplementing the proposed KPIs. PQO/Editorial may also play a role in developing alternative or supplemental KPIs as requested.
- This presentation outlines a process guide for determining KPIs for the Product Selection portion of the New Product Development Process. I hope it has been helpful. If you have any questions or concerns, please contact Masheika Allen – malle020@fiu.edu.