1. OPERATIONS
40 | NOVEMBER 2014 | ManufacturingToday
I
ntheJuneissue,wehadanarticletitled,“Bringingideastolife”
where we had discussed about the‘ITM – Idea to Market’ pro-
cess in detail and elaborated about various phases and mile-
stones which need to be traversed in order to convert a na-
scent idea into a successful product delivered to the customer.
Along with that, product idea management too is very impor-
tant not only for a new start up but also for an organisation that
is already active. Innovative ideas help create a better product
portfolio. Ideas in line with an organisation’s strategic intent helps
in increasing its top and bottom line and market share whereas
ideas not in line but still useful can lead to diversification of the
business into other areas.
If an organisation does not receive continuous supplement of
ideas, it is bound to become stale and will not survive for long.
While there may be multiple sources of ideas and many ways of
collecting and collating it, what is most important is to handle the
ideas properly. Analysing each and every idea carefully using a
uniform approach and finally objectively evaluating them to rank
and prioritise it will successfully convert an idea into a cognisable
and a profitable product for the organisation.
For converting an idea into a feasible product, lot of information
needs to be collected during the idea management process. Only
technical feasibility of the idea is not sufficient and a successful
product needs to consider many other parameters too. Some of
the param-
eters which need
consideration are: Newness
of the product to the market, the geog-
raphy for which the product has been planned,
any special regulatory, approbation needs, market size
and the future potential, consumer profile and targeted customer
segment, current and emerging technology trends, competition
scenario and major threats, strategic pricing, technical compe-
tency available and time to market.
All the parameters indicated above may play a role in the suc-
cess of the product in the market. The above factors may not be
totally comprehensive and depending on the product portfolio
and the external environment, one needs to add more param-
eters so as to take full view of the product idea from a complete
feasibility perspective. Portfolio management is another tool for
analysing and rating ideas and managing a portfolio of products.
Portfolio management is a dynamic decision making process
where all the new ideas, projects are reviewed periodically as a
total portfolio, prioritised; go/kill decisions are made; resources
are allocated/reallocated for a new product strategy. The con-
cept deals with future events and opportunities, multiple proj-
ects at different stages of completion and allocation of resources
across projects.
Collaborate
ideate
implement
Bring ideas to reality
through structured tools
2. OPERATIONS
ManufacturingToday | NOVEMBER 2014 | 41
The main objective of portfolio management is:
projects
product resources
technology investment that the business plans to make
Once all the ideas are received, it is important to screen them
suitably to arrive at a few really feasible ones and they can be rated
using a well defined rating mechanism. In portfolio management,
there are different methods which are available for the project se-
lection based on an idea and each one can have its own usage. For
example,
Value maximisation: The goal is to allocate the resources to
maximise the value of portfolio – long term profitability, ROI,
likelihood of success.
Methods: Net Present Value (NPV), Expected Commercial
Value (ECV), PI, Scoring model (includes many criteria like
strategic alignment, product advantage, market potential, tech
feasibility etc.)
There are traditional financial tools like forecasted NPV,
selected. However, for an innovative new product where the
unknowns are more, taking a decision based on such parameters
is not advisable.
ECV = [(pv * Pcs-C)*Pts]-D
Where, PV is the Net present value
As this method is financial and statistical in nature, again the
probability can be grossly misjudged and can lead to a wrong
interpretation. Another method is of “Productivity Index” where
the expected output is compared with the input in terms of re-
sources required to complete the projects in a given timeframe.
For new products, scorecards are emerging as a reliable meth-
od of rating the feasibility of projects because it takes into ac-
count all the parameters required for the success of the project.
i) Alignment of the product idea with respect to the strategic
intent of the organisation
ii) Uniqueness of the product or its USP with respect to competi-
tion
iii) Market related advantage factors in terms of volume, growth
potential, branding, technological superiority etc.
-
isation
v) Technical feasibility and gap analysis with respect to the pres-
ent situation
the strategic intent of making automotive components and sub-
systems for all types of passenger cars and has a vision to become
one of the top three players in the next 10 years. The vision aims
to address certain issues of a vehicle occupant while driving like
providing systems that: aid in imparting information, entertain
and enhance safety.
The company through its mission statement communicates
that it is going to realise the vision by focussing on a portfolio
standard fitment. At the same time, it will also work on products
which can be fitted in the vehicle as an aftermarket product. The
company also states that its products will meet the highest qual-
ity and reliability requirements and provide full value to the cus-
tomer for the price offered.
THE SCORING MODEL
Project Leader Strag Fit Product
Advtg
Market
Attrct
Core
Compt
Tech
feasibility
Risk-
Reward
Project
Attrct Scr
Rank People FTE Cum FTE Status
Telemetics 9 9 10 10 9 9 93.3 1 20 20
Infotainment 10 10 7 7 7 7 80 2 20 40
Driver support 8 7 7 8 8 9 78.3 3 15 55
ABS 7 7 9 9 8 5 75 4 12 67
ECU-PT 7 7 6 6 8 6 66.7 5 20 87
ECU-Engine 8 6 6 8 7 5 66.7 5 20 107
Business Creation
Phase
No.ofproductideas
No.ofleadcustomers
Filter 1 Filter 2
Filter 3
TCP-Techno
Commercial Proposal
RFQ – Request for Quote
Process
Strategic Alignment
DP0
Project Order
For a selected product idea
by acquired customer
3. OPERATIONS
42 | NOVEMBER 2014 | ManufacturingToday
K Umesh
Vice President, Plant, Operations, Business
Excellence, Car Programs, IT,Validation,
Materials, Mahindra Reva Electric Vehicles
Based on the above strategic directions, a product idea work-
shop is conducted and around 20 ideas are collected and consid-
ered after initial screening. These ideas are then grouped under
certain subgroups which are as shown under:
1) Safety enhancement products:
b. Tyre pressure monitoring device
2) Advanced safety systems
a. Anti lock braking systems
b. Adaptive cruise control
3) Instrument clusters
a. Basic convention speed and odo gauges
c. Advanced digital clusters
d. TFT based information clusters
4) Vehicle telematics products
a. Basic telematics device for fleet tracking
b. Telematics device with vehicle diagnostics
c. Advanced telematics for BPO’s, shuttles etc.
5) Vehicle entertainment products
a. Basic audio device with new ergonomics
b. Advanced entertainment system with interactive features
7) Power-train management system electronics
c. Automatic climate control
9) Other electronics for two wheelers – ignition systems, regula-
tion systems, etc.
All the above ideas were put on a score card and the objective
rating was taken on all the six criteria mentioned above. Post the
rating, the score cards looked like what is shown in the table.
Tools of portfolio management other than scoring cards have
found their usage for various applications and conditions and are
summarised as below :
Balanced portfolio: The goal is to achieve a desired balance of
projects in terms of number of parameters like:-
Across markets, technologies
Building strategy into the portfolio:The focus here is to allocate
the resources for products/projects in alignment and consis-
tent with business strategy. Two approaches are used:
Bottoms up – use scoring models and top-down or strategic
buckets – vision, business strategy, general plan
The right number of projects:The aim is to plan and balance the
number of projects with the resources available.
Methods: resource demand vs capacity chart.
Hence, it is very clear that while collection of ideas is critical it
is more important to collate the ideas and conclude it for product
realisation. This can happen through a set of systematic tools as
explained above.