The document discusses the product development process. It describes the key stages as concept generation, design, development, and production. It also discusses tools and techniques used in product development like quality function deployment, value engineering, design for manufacturability, and mass customization. Performance measures to assess the effectiveness of the process are also outlined. Management accounting tools like life cycle costing and target costing help control product costs throughout the development cycle.

2. CHAPTER NO :11
THE PRODUCT DEVELOPMENT PROCESS

3. OBJECTIVES:
Strategic
benefits of a
good
product
development
process
01 Stages of
the product
developmen
t process
02 Tools and
techniques
used by
organization
in product
03 Performance
measures
used to access
the
effectiveness
of a product
development
process
04
product
development
initiative
• Role of
management
accounting in
product
development
05

4. PRODUCT DEVELOPMENT: THE KEY TO
COMPETITIVE ADVANTAGE
The product development process provides a
Broad set of tools, techniques and concepts
That enables an organization to provide
Distinctiveness in its offerings by rolling
Out new products and services faster and
At a lower cost.

5. Product development is an important aspect
of operations management .An organization focuses
on product development process will be in a better position to
bring new products and services in the market and will be able to
retain its customers and increase the market share through
competitive advantage.

6. OUTCOMES OF SOUND PRODUCT
DEVELOPMENT PROCESS:
• Enables faster new product
introduction
• Reduces cost of product
• mass customization
• Simplifies manufacturing
process
• Simplify the assembly process
• Minimize the need of change
• Simplifies product use
• Addresses environmental
issues
• Reduces cost of use over
product life time
• Unique benefits and features
to customers
• Meet customer expectations
• Provides better quality
• Innovative offerings
OPERATIONA
L
ADVANTAGE
S
STRATEGIC
ADVANTAGE
S
CUSTOMER
DIMENSION
S
SUSTAINED
PERFORMAN
CE

7. STAGES IN THE PRODUCT DEVELOPMENT
PROCESS
The product development process consists of four stages:
1. Concept generation
2. Design
3. Development
4. Production

8. CONCEPT GENERATION:
• The first stage in product development process is concept generation.
• It include the analysis of customer needs.(Quality, price, service)
• Customer needs are compared with current portfolio and gaps are
analysed.
• The idea is generated and the needs of customers is translated into
New products design
• After idea generation the next step is feasible study (technology ,

9. DESIGN:
• The second stage in the product development process is to incorporate
more details in the design.
• The physical attributes of product are analysed.
• Detailed specification of the product is drawn.
• The product planning activity provides details of the product
being designed
• The feasibility of design is analysed again.

10. DEVELOPMENT:
• The third stage of the product development process is the physical development of
product.
• In this stage the details drawn on drawing board are Translated into
reality
• Detailed manufacturing specifications, assembly and testing are established.

11. PRODUCTION:
• It is the last stage of product development process
• It involves the establishment of a system for volume production.
• The dedicated equipment and assured sources of supply are
established.
• The product is manufactured in large quantity.

12. THE PRODUCT DEVELOPMENT
PROCESS:
-
Desig
n
ok
Prototype
developing
and testing
Prototyp
e
Ok
Product
feasible
?
Idea
generation
Feasibility
study
Preliminary
design
Process
planning
Cost
planning
Final design &
manufacturing
specification
Commercial
production
Concept
generation
Design
No
Yes
Development
Yes
No
Ye
s
No
Production

13. THE STAGE GATE APPROACH: AN ALTERNATE
REPRESENTATION OF PRODUCT DEVELOPMENT
PROCESS:
• AN ALTERNATIVE REPRESENTATION OF THE PRODUCT DEVELOPMENT
PROCESS IS THE PRODUCT DEVELOPMENT FUNNEL WITH STAGES AND
GATES.
• STAGES:
Stages are the intermediate time points between two gates. The concept
generation is expected to take 7months.The other stages takes 5, 8 and 4
months respectively.
• GATES:

14. ProductionConcept
Generatio
n
Produ
ct
Desig
n
Developme
nt
Prototyp
e testing
7 months 12
months
20 months 24 months

15. ORGANIZATION FOR PRODUCT
DEVELOPMENT:
• An appropriate organization structure is vital for product
development process.
• Several functional areas of the organization are directly involved in
the product development process.
• There is a constant interaction between the various
functional areas in the organization for product development .
MARKETING
FINANCE
PRODUCTION
PLANNING
DESIGN

16. TRADITIONAL APPROACH:
• In traditional approach of product development process the functional areas of
the organization perform their function One by one .At a time one functional area
performs its function .
DRAWBACK:
As it is the longer process so the cost of development would be greater.
The process takes 48 months to bring the product in the market
and the chances of change in demand of product increases.

17. CONCURRENT ENGINEERING:
• Concurrent engineering is a process of putting together a team of
Cross functional professionals and providing them with required
Resources and mandate for the product development process.
BENEFITS:
The development lead time will reduced.
The chances of change in demand will decrease.
A team structure promotes consensus based decision making.

18. Marketin
g
Design Planning
Procureme
nt
Productio
n
Finance
Custome
rs
Supplier
s
Plannin
g
supplie
rs
Concurren
t
engineerin
g team
structure

19. TOOLS FOR EFFICIENT PRODUCT
DEVELOPMENT:
• Several tools and techniques can be used for efficient new product development.
• These tools address various stages of the product development process. Such as:
Understanding customer needs
Quality function deployment
Value engineering
Design for manufacturability
Tools for mass customization

20. UNDERSTANDING CUSTOMER NEEDS:
• In the concept generation phase the customer needs are analysed.
• It is very important input for the process.
• It includes:
Market research
Competitor analysis

21. MARKET RESEARCH
• QUANTITATIVE ANALYSIS: target group is identified
and appropriate sampling is done within the target
group by using structured data collection method such
as questionnaire surveys and interviews
• FOCUS GROUPS: several individuals from the target
group are simultaneously met and interviewed together.
• IN DEPTH QUALITATIVE INTERVIEWS: in depth
interviews can be collected from potential customers on
individual basis

22. COMPETITOR ANALYSIS
• Understanding of what the existing offers are and how gaps can
be eliminated offer value to concept generation.
• This method is a proxy for understanding customer needs ,it
includes
REVERSE ENGINEERING: The competitor’s products
are dismantled down to the individual components and
detailed studies are conducted on them.
PERCEPTUAL MAPS: Perceptual maps are graphical
representation of the various competitor offerings and that of
the proposed product and service.

23. QUALITY FUNCTION DEPLOYMENT
Quality function deployment (QFD) is a Japanese tool that helps
organizations translate customer requirements into design, process,
planning and manufacturing specifications using a four stage process.
Each stage is known as house of quality
• Linkage between customer needs and design attributes.
• Design attributes form the basis of action.
• Specific decisions are made
• Implementation of decision

24. TYPES OF DATA USED IN THE HOUSE OF
QUALITY:

25. • Value engineering is a set of
activities undertaken to
investigate the design of
components in the product
development process strictly
from a cost value perspective.
VALUE ENGINEERING

26. DESIGN FOR MANUFACTURABILITY
• Design for manufacturability(dfm) is a
structured approach to ensure that
manufacturing requirements and
preferences are considered fairly early in the
design process without the need for
extensive coordination between the two.
• Dfm addresses three sets of requirements:
i. Reducing the variety
ii. Considering operational convenience
iii. Reducing cost

27. • Mass customization provides a structured set of ideas and tools to
provide high level of customization without increasing the complexity of
planning and control of operations
• Techniques for mass customization:
Variety reducing technique
Modular design
Product platform
Tools for mass customization

28. PERFORMANCE MEASURES FOR
PRODUCT DEVELOPMENT PROCESS:
Cost based measures
 Target cost achievement status
 Cost of first production run
 Quantum of value engineering
efforts
 Cost overrun
Design effectiveness
 Time to return to normal quality
 No of revisions in the product
design
 Percentage standard parts and
processes
 Cost of field repair
Strategic measures
 Time to market
 Concept to market
 No of new products
Market impact
 Total product cost
 Market share of new product
 Total product sales

29. MANAGEMENT ACCOUNTING TOOLS
FOR PRODUCT DEVELOPMENT:
• Management accounting helped
the product development
process
• Management accounting
proposed advocated ways and
means of controlling the final
cost of product and service
• Two concepts of management
accounting are:
i. Life cycle costing
ii. Target costing

30. LIFE CYCLE COSTING
• LIFE CYCLE COSTING IS A METHODOLOGY THAT FOCUSES ON
THE COST AND CONTROL ASPECTS OF A PRODUCT OR A SERVICE
THROUGHOUT ITS LIFE CYCLE.

31. LIFE CYCLE COSTING GRAPH

32. TARGET COSTING
• TARGET COSTING IS A METHODOLOGY TO IDENTIFY COST
REDUCTION METHODS AND PURSUE THEM RELENTLESSLY SO
THAT AS THE PRODUCT IS DESIGNED AND MANUFACTURED ,IT IS
WITHIN THE SET TARGET.

33. SOFTWARE PRODUCT DEVELOPMENT:
• A software development process consists of four stages:
1. Requirement analysis
2. Design
3. Development
4. Testing