New Product Development and Introduction (NPDI)

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Introduction " What Is NPDI?

New product development and introduction (NPDI ) is probably the most important process for many companies, but also one of the least understood (and, perhaps, executed). Important because, as we will see, NPDI is responsible for the revenues and margins that a company can achieve and its ultimate value. It is the least well understood process because few companies assign a single individual to be responsible for the whole process. Instead, it is usually driven through a series of functional "silos," causing delays to build up and, often, the original market requirements to get lost.

But let's start with a definition. Our definition of NPDI starts with the identification of an opportunity in the market ("somebody needs a product to do this") and ends with the successful launch of the product. In between are many activities to define the requirements, develop and test a product concept, fully define and develop the product, source for suppliers involved, plan the manufacturing and supply chain, and prepare marketing programs. On top of that, it's about defining the product strategy, managing the overall product program, and monitoring all the projects and activities needed to drive the NPDI process.

Most functional areas of the company get involved at some time or another, including marketing, engineering, supply management, manufacturing, finance, and so on. As the people in these functions use enterprise systems to help them do their jobs, all of these systems are involved in NPDI: for example customer relationship management (CRM), enterprise resource planning (ERP), product life-cycle management (PLM), supply chain management (SCM), supplier relationship management (SRM), and many others.

Our definition is important because it includes all of the processes that "change" the company. Think of the company as a giant machine: raw materials and parts go in one end, are turned into products by machines and labor inside, and are shipped out to customers at the other end. Many of the people inside of the company are solely dedicated to nurturing and managing this "machine." All well and good until we want to "change" what the company is making. This is what NPDI does: it changes what we buy (and who we buy it from), changes what we make (and how we make it), changes how it gets to the customer, and changes how we market it to the customer. Typically, a different group of people are responsible for making the changes. Once the changes are complete, stability is restored.

NPDI can create change on a number of levels, including:

• Incremental product changes, which may have minimal impact on sourcing and manufacturing, but may entail a new marketing program
• New product introductions, which may require significant market research and engineering and entail more significant changes in sourcing and manufacturing, as well as a major marketing program
• New category introductions, which entail all of the above plus dealing with the risk of introducing a product that the market is completely unfamiliar with

Is NPDI the same as innovation? Innovation is clearly part of the NPDI process, without it there would be no new products or no new ways to make, market, and sell them. But innovation would be useless without the ability to change how the company operates, to successfully introduce the new product. The job of NPDI is not done until the product is in the market, shipped at the right time, delivered to the right customers, and in the right volumes.

Why Is NPDI Important?

Let's look now at the reasons why NPDI is important. We see four separate drivers for NPDI.

Trends In New Product Introductions

In most markets and especially those relating to consumer products, the number of new product introductions per annum has increased dramatically. For example, a study into the consumer packaged goods market showed that new product introductions had increased around tenfold over an 18-year period (see Table 1).

Number of ProductLaunches	1980	1998
Cereals	34	192
Ice cream, frozen yogurt	57	556
Spices, extracts, seasonings	61	403
Deodorizers, air refresheners	53	372
Paper towels, napkins	11	126
Milk, yogurt drinks	26	255
Coffee	11	384
Beer, ale	25	187

(Source: University of Nottingham; Cox WM, Alm R (1998), The Right Stuff: America's move to mass customization, Federal Reserve Bank of Dallas. Annual Report 1998, Dallas)

Table 1: An 18-Year Comparison of Consumer Packaged Goods Product Launches

Driven by consumer demand and fueled by advances in technology, companies have to bring more and more products to market in order to remain competitive. The companies best able to execute NPDI will clearly have an advantage. This is partly about reducing time to market but also about making effective use of scarce internal resources.

Revenue Expectations

Partly as a consequence of the increasing rate of new product introductions but also because of the drive of technology advances, product life cycles are shortening. As a result, companies are increasingly dependent on revenues from new products to drive their top lines each year. A recent study by Deloitte showed that, for the companies most dependent upon new products, the proportion of their revenue derived from these products will increase from around one third to nearly a half over the next three years (see Figure 1).

New Products = New Revenue Streams
	Now	+ 3 years
Top Quartile	36%	45%

Median

15%

20%

The implication is that companies good at NPDI will see the benefits sooner, those who are less effective will feel the pain sooner. In the future companies will have fewer opportunities to live on past successes.

Growth And Balance

NPDI allows companies to grow revenues and retain high margins by launching new products and creating new customers in new markets. Even when a company's top line isn't increasing, it needs NPDI to replace existing products that are reaching the end of their life. Newer products typically command higher margins in the market while older products are impacted by competitive challenges and waning customer interest. Wellexecuted, NPDI keeps a pipeline of new, high-margin products flowing to the market.

Value

Successful companies have higher stock market valuations than their less successful counterparts. This is because the market factors in the value of future growth and margins. And, as we have seen, this is largely a function of the NPDI process. Put directly: NPDI drives growth, which drives value. By investing in the NPDI process, companies are directly investing in themselves " and the returns are high. A recent study by CSFB/HOLTand Deloitte Consulting, published in the book The Innovator's Solution by Christensen and Raynor, shows how successful companies have valuations that far exceed the value of their underlying assets (see Table 2).

% of Valuation Based on:
Company	Share Price	Growth Companies	New Investments	Existing Assets
Dell Computer	28.05		78%	22%
Johnson & Johnson	56.20		66%	34%
Procter & Gamble	90.76		62%	38%
General Electric	32.80		60%	40%
Lockheed Martin	62.16		59%	41%
	36.94	Past Cash Cows	8%	92%
	49.40		5%	95%
	35.00		3%	97%

Sources: CSFB/HOLT; Deloitte Consulting Analysis, from The Innovator's Solution,

Table 2: Stock Market Valuations Exceed Existing Asset Values

High valuations allow companies to raise money in the markets at the best rates, acquire competitors, and attract the best people. All of these companies have one thing in common: a track record of growth and margins fueled by new products.

Who Cares About NPDI?

Given the importance of NPDI, it's not surprising to find out that most people in business care about it. A recent study conducted by AMR Research showed this clearly. Asked what initiative would have the most impact on the overall business, NPDI was the clear winner, ahead of more established investments such as CRM and SCM (see Figure 2).

Brand Manager	NPDI excellence is key to managing brand equity
Sales	NPDI makes my business more profitable
Marketing	NPDI is all about hitting the target
Engineering	Excite customers with great products
Manufacturing	NPDI must meet consumer quality needs
Supply Chain	NPDI best practice is designed for supply chain
Finance	NPDI has to meet my business goals

Table 3: What Different Functions Within a Company Say About NPDI

And when people care about the same thing but for different reasons, conflicts may arise.

NPDI Needs Help

Put bluntly, for all its importance, the NPDI process is in trouble. For example, according to AMR Research:

• 95% of new consumer products (1996-2001) lost money or broke even
• Mean new vehicle development costs are $500 million higher than best in class
• Poor NPDI costs apparel makers 30% of annual revenue in markdowns
• Food retailers spend $957,000 per store on new products that fail

No company would today tolerate a manufacturing operation or supply chain that was wasteful, unreliable, and unpredictable. And yet, for many companies, that's what NPDI is.

Top CEOs Recognize The Importance Of NPDI

The CEOs of top companies have long recognized the importance of NPDI. Here are two recent examples:

"The companies that know how to develop things are ultimately going to create the most shareholder value. It's as simple as that." Jeffrey Immelt, Chairman and CEO, General Electric MIT Technology Review, October 2003

"You only get a position in the future by investing, creating something new, and staying ahead of the competition. So it's simple: invest or die." Craig Barrett, CEO, Intel Business 2.0, January/February 2004

What's Going Wrong?

In order for a product launch to be successful, many different factors have to come together in just the right way. If one is wrong, it's likely the whole launch will fail. For example:

• The product has to meet the customer's requirements " it has to do the job.
• Increasingly, it has to meet the customer's aspirations " it has to feel right.
• The manufacturer's reputation for quality, reliability, and service may also be important.
• And, of course, it has to be available at the right time and the right price.

The challenge of NPDI is to make sure that all of these things are achieved all of the time.

NPDI is Difficult To Manage

One of the often heard comments is that the NPDI process is difficult to manage and this is certainly true for two reasons:

• At the beginning of a project, the outcome and the work that will have to be undertaken are often uncertain.
• For many groups in the company, such as supply chain management and manufacturing, NPDI is disruptive, causing them to interfere with processes that have been painstakingly optimized.

So NPDI is not "business as usual." As a result, the NPDI process is out of control in many companies. A recent study by AMR Research asked companies if their NPDI process was under strategic control (are we developing the right products?) and financial control (are we on time and within budget?) and found that less than one third could claim to be both (see next page, Figure 3).

Lack Of Process Ownership And Executive Sponsorship

Many companies lack an overall process for NPDI. Instead, the new product passes through a number of organizational "silos" with no single individual or group being responsible for the outcome. Each function in the company makes its best efforts, but also applies its own views on priorities and so on. The result is often that the opportunity in the market is missed. For example: marketing sees an opening in the market for a variant of an existing product " the opportunity is significant if the company moves quickly, however:

• Engineering reinterprets the marketing requirements to allow them to introduce an unproven concept that they have been working on " resulting in an overpriced product with features the market is not really looking for.
• Or, manufacturing and supply chain management are unwilling to divert capacity from existing products " resulting in insufficient products being available to meet the demand in the market.

Successful NPDI requires clear strategic objectives and priority setting and effective execution across the enterprise.

Poor Communication

But even if the priorities are clear, poor communications can still frustrate the NPDI process. This is even more likely today as product teams work across distributed locations and with far-flung partners and suppliers.

The following are some examples of poor communication during the NPDI process:

• Marketing did not follow up with engineering to ensure that the requirements were being met.
• Engineering introduced many new parts at the last minute, causing headaches for manufacturing and procurement.
• Supply chain management was not fully aware of what was coming down the line and was unable to get enough capacity with key suppliers.

Economies Need NPDI As Well

Successful companies create successful economies. By creating environments in which company leaders are able to invest their profits back into their businesses and develop the next generation of high-margin products, politicians and leaders can drive the economic prosperity of their region.

". . . the real engine of productivity growth, which leads to long-term sustainable GDP per capita growth, is innovation."
Diana Farrell, Director of the McKinsey Global Institute International Herald Tribune, December 6-7, 2003

How Can NPDI Be Fixed?

So how can companies improve their NPDI process and access to the benefits it brings? There are three critical capabilities required:

• Better portfolio strategy
• Better product management
• Better functional execution

Better Portfolio Strategy

Portfolio strategy is the top priority for the NPDI process. Driven from the top of the company, it sets out such things as:

• The markets that a company wishes to be in and the customers served
• Technologies and products that it wishes to develop and market
• The basis of competition (such as features, style, value, reliability, and so on)

Most companies have a process for capturing product ideas and market opportunities and developing them into products. This process needs to be well organized and subject to regular management review to ensure alignment with company objectives and that the most promising ideas are getting through the filtering processes.

Typically a company will have a portfolio of NPDI projects running in parallel and all at different stages. Companies with good strategic control are constantly looking at the health of their active and future products " constantly reassessing the opportunity and risk in each of them. This allows them to make tradeoffs between concepts, projects, and products " cutting back on one in favor of increased investment in another, for example.

Good portfolio strategy helps a company to build and maintain  a good cross-functional consensus. When an opportunity presents itself in the market, several functions in the company may offer an opinion on how best to address it " from a partnership suggested by marketing to an innovative technology offered by engineering. But, through discussion and review of alternatives, a company with good strategic control can arrive at a consensus that is maintained as the product is brought to market.

Portfolio strategy is also about guiding a product through the key stages of the NPDI process, ensuring that it stays strategically on track " but also being able to react to new and evolving information, for example:

• A competitor brings a similar product to market
• Marketing reduces its estimate of the potential market
• A critical technology will take three months longer to bring to market than forecasted

Better Product Management

Good product management is about ensuring that NPDI projects are on time and on budget. To implement effectively, product management requires cross functions working to roll up cost and status information to a single project. Status information must be collected frequently and reported quickly, allowing management to see all aspects of a project at one time. In this way, delays and overspends can be easily seen and management can quickly "drill down" to find the underlying cause. Decisions are made at the project level and implemented within the relevant function.

Financial control is also critical in the planning phase. Even though a business opportunity may have been identified, the availability of constraining factors, such as financial and human assets, must be checked.

Ensuring that projects are on time and on budget means having good resource management (for both human resources and capital assets). This requires a complete and consolidated view of resource supply and project demand, thereby enabling resource managers to have a detailed and up-to-the-minute look at capacity across different organizations as well as job functions. This enterprise-wide view of resource capacity ensures that organizations are deploying their scarce talent in the optimal way.

Better Functional Execution

Although many of the benefits of improved NPDI will result from improved portfolio strategy and the implementation of improved methods for product management, the ability to execute effectively and to avoid costly errors is the final essential step.

Today, most business functions rely on one or more enterprise systems to manage the business processes for which they are responsible. For example, the engineering function will use a PLM system to manage product information and processes; the manufacturing function will use an ERP system to manage processes, such as scheduling and purchasing. In order for different functions to be able to work together through the NPDI processes, these systems need to be configured to work together.

Enterprise systems that are configured to work together will allow information to flow smoothly through the NPDI process and give the company the ability to react quickly to changes. For example: marketing can update the market requirements that engineering is using as soon as new information is available; engineering can release an updated bill of materials to manufacturing as soon as it is approved.

Excellent functional execution is only possible if everybody involved in the process has direct access to the same, up-to-date information. Therefore, the data has to be consistent within systems as well as across systems. This is especially critical for ongoing change processes that affect multiple disciplines, for example, from design to purchasing and financials.

Better Process Visibility

In addition to the capabilities described above, good NPDI requires timely information: about the size and nature of the market opportunity, the activities of competitors, the progress of product development, or the readiness of the supply chain and manufacturing organizations. An NPDI dashboard is needed. A dashboard should present management with all of the critical information needed to provide proper strategic control. The majority of the information shown on the dashboard must be extracted from the company's enterprise systems, ensuring that it is accurate and up-to-date. Management no longer has to rely on painstakingly crafted presentations or spreadsheets (which may be biased towards a certain point of view) but, instead, can "see the world as it is." With an NPDI dashboard, management has at its fingertips all of the information required to provide good management of the NPDI process.

How Not To Fix NPDI

Over the years, companies that recognize the importance of NPDI have tried a number of different approaches to making it work more effectively. Here are two of the more common approaches along with the reasons that they don't work.

Increase the R&D Budget
It's very tempting to believe that a simple increase in the R&D budget will magically improve NPDI success. However a recent study by AMR Research found that manufacturers are unable to consistently drive revenue increases with increases in R&D spending. The reason is fairly straightforward and is that no amount of good R&D can account from failures elsewhere in the R&D process, for example: failure to match the product features to the market requirements, failure to meet the target price or launch date; poor quality or insufficient products on the shelves.

Implement a Stand-Alone PLM System
Product life-cycle management (PLM) systems help companies bring products to market faster by managing the information and processes involved in product development. They make a great contribution to improving the productivity of engineers. But this benefit can only be fully leveraged if the PLM system is fully integrated with other enterprise systems, for example: ERP, SCM, and CRM. Stand-alone PLM systems come from suppliers who do not provide these other enterprise systems and leave the integration problem with the customer. Experience has shown that many companies lack the resources to do this effectively; those that do can spend large sums of money and lose out on valuable business benefits while they attempt to tie their systems together.

SAP'S Solution Support For NPDI

Only SAP can provide all of the critical elements required to support the entire NPDI business process. SAP's solution for the NPDI process is shown in Figure 4.

 

Portfolio Strategy ►►	Portfolio Mgmt
Product Management ►►	.Project Resource and Cost Management
Functional Execution ►►	Operational Systems

The critical elements of SAP's NPDI solution are:

• NPDI process visibility " The NPDI dashboard enables management to monitor and control the overall product portfolio and pipeline, as well as NPDI-related key performance indicators. An example screen shot from the dashboard is shown in Figure 5.
• Portfolio strategy " The portfolio management capabilities allow companies to make the right decisions about which concepts and products to develop and how to prioritize the use of resources.
  • Innovation management allows companies to improve the way that they identify and prioritize business opportunities and align them with promising product concepts. Ideas for new products can be collected, classified, and linked to new product concepts. Concepts then progress through a business filter process and go/no go decisions are made based on expected commercial potential.
  • Portfolio management is used to bring improved rigor to the process of prioritizing products for development and monitoring the performance of the overall portfolio. Companies can define critical success factors (objectives) for their business and determine the potential impact of each proposed and active project on achieving the objectives. They can then evaluate the entire portfolio or individual projects using various key performance indicators.
  • Resource management manages the demand for resources across projects and optimizes their use. Companies can report and consolidate demand for resources across multiple projects via global roles. In addition, they can perform simulations by varying resource demand and allocation, budget allocations, and time frames.
• Product management " Project, cost, and resource management capabilities help companies improve the management of the entire product development and introduction process.
  • Project management capabilities allow projects to be managed actively with current schedule information and for formal project status reviews to be conducted periodically. Project templates for methodology-based development processes can be used to structure new projects. Managers can then define the development phases, tasks, and task hierarchies. The outputs from each phase can be used as a checklist to drive project status reviews.
  • Resource management allows likely project resource demand to be forecasted and for specific resources to be assigned to projects. Project managers define project roles based on time demand and a qualifications profile. Resource managers can then assign resources to roles according to their availability and qualifications. The high-level resource demand on a project level can then be reviewed before approval of resource assignments. Planned resource demand can also be considered in what-if simulations.
  • Cost management allows the creation of realistic project cost estimates based on past experience and for active project management based on current cost information. The solution for internal controlling requirements is based on mySAP' ERP. Projects costs and revenues can be planned using the Easy Cost Planning interface. Actual costs can be collected using internal orders in mySAP ERP.
• Functional execution " Support is provided for all process steps at the functional level from initial ideas capture through product development, strategic sourcing and supply chain planning, down to prototyping and production ramp-up and market launch. In addition, the underlying infrastructure provides everything for the management of the product related data and information, including quality engineering as well as change and configuration management. More details may be found in the appendix.

The NPDI solution portfolio is fully integrated with the mySAP ERP backbone and utilizes the full scope of mySAP Product Lifecycle Management (mySAP PLM) capabilities and the related new SAP® xApps' packaged composite applications. It makes use of the NPDI-related capabilities of the other enterprise solutions from SAP, including mySAP Customer Relationship Management (mySAP CRM), mySAP Supplier Relationship Management (mySAP SRM), and mySAP Supply Chain Management (mySAP SCM) to build up the most complete NPDI solution offering in the industry

Industry Applicability

Across different industries there are many similarities, but also significant differences. These differences have an influence on the NPDI process on two levels: variations in the processes themselves and variations in the capabilities required to support these processes.

Process Variations

For industries like consumer products or pharmaceuticals, with a make-to-stock environment, the product-definition phase and the monitoring of the overall project and product portfolio are extremely important. Another focus area in this environment is the market launch where campaigns and trade promotions have to be managed.

For industries with more complex products and a make-to order or assemble-to-order environment, such as automotive, high tech, or specialty chemicals, the sequence is similar, but other areas deserve more attention. In particular, there is a strong emphasis on product development where the product with its features and options is defined as well as prototyping and production ramp-up, where concurrent engineering is key.

Finally in industries with highly customer-specific products, like industrial equipment or ship building where we find a typical engineer-to-order environment, NPDI starts to a large extent with the customer order. Order-specific development and engineering are essential and project management is very important.

Capability Variations

Capability variations are found most in the product development and process engineering area. While discrete industries need tight integration of mechanical and electronic CAD systems, product structure management for configurable products, routings, and engineering change management, the process industries count on specification and recipe management, with its capability to create enterprise-wide general recipes that can be transferred into area-specific site recipes, and machine-related master recipes.

When it comes to prototyping, discrete industries will use project-specific purchasing and production while process industries need trial management. Even in areas like quality management, specific requirements have to be taken into account, for example, the automotive industry needs advanced product quality planning (APQP), whereas the chemicals industry needs stability studies.

Since requirements are so diverse, only a company like SAP with its broad solution offering and its unique industry experience is able to provide a solution that fits all environments.

Regulatory Drivers For NPDI

Having a strong NPDI process is not just about getting the right products to market. It's also about making sure that they are safe products " for all of the people involved from users, to manufacturers, service personnel, and so on. Proactively, companies need to and are required to do more and more to make sure that their products are safe at all stages in their life cycle.

A good NPDI process can help ensure this and the right systems will generate the necessary regulatory documentation to demonstrate compliance. They also have to be able to react quickly when something does go wrong whether it's in the factory or the field, to assess the problem and deal with it. And when matters end up in court, being able to show that all of the right steps were taken can save companies from costly and damaging lawsuits and fines.

The Architecture Impact

SAP's solution for NPDI is built on the SAP NetWeaver' platform. It is a comprehensive, best-in-class, integrated technology based on SAP's long-standing experience in developing mission-critical business solutions. SAP NetWeaver helps leverage a company's existing IT investment and provides the foundation for future  innovative cross-enterprise processes. Based on open standards and Web-based architecture, it supports a heterogeneous IT landscape and is fully interoperable with Microsoft .NET and Java 2 Platform, Enterprise Edition (J2EE) environments.

SAP NetWeaver benefits SAP's NPDI solution in a number of ways, as shown in Table 4.

Innovative Business Processes	Flexibility in Business Strategies	Sustainable Cost Structure
End-to-end processes Across system and organizational boundaries Better business decisions Analytical insight from across the company Strategic advantages Harmonized master data across system Reaching every individual Role-specific, easy access to all systems	Configure projects quickly Across system and organizational boundaries Add new suppliers Link with suppliers' systems for easier collaboration Involve customers Get direct customer feedback on designs and proposals Optimize global resources Utilize all of the resources of the extended value chain 24x7	Integrate new systems Across system and organizational boundaries Reach new users Provide reliable access to information and processes Ensure consistent data Harmonize data across multiple systems

Implementation Scenarios

To completely benefit from a fully supported, integrated NPDI process, some companies may implement the entire solution offering, whereas others may want to focus on closing some gaps in their current environment. In either case, there are different ways to implement an NPDI solution on a step-by-step basis. Possible starting points include:

• The project and resource management area as the central hub for the management and coordination of the NPDI process
• The product development area to ensure that the results of the work of research and development (R&D) and design are available to anybody in the enterprise immediately for the subsequent steps in production, purchasing, and sales

From each starting point, natural extensions exist, for example, from project management to portfolio management or from development towards the early phases of product definition including idea and concept management.

SAP's field organization with its solution consulting groups can help companies decide how individual requirements are translated into an implementation road map. Packaged applications, such as SAP Easy Document Management, SAP Recipe Management, SAP Collaborative Product Development, or SAP Collaborative Project Management can also be used to speed up the process.

What Happens When NPDI Is Managed From Within The Organizational Silos

Financial control of NPDI is about making sure that NPDI projects are on time and on budget. Many companies are limited today to doing this within their functional silos. Getting an overview of where a project stands requires a significant amount of data gathering and analysis. Project status information is reported infrequently and is often weeks out of date by the time management sees it. As a result, most management decision making takes place within the organizational silos and based on the objectives and priorities of that function. Thus the different functions (marketing, engineering, manufacturing, and so forth) can become significantly misaligned.

In situations where the company also lacks strategic control, trade-offs between projects also happen within the functional organizations. In the worst case, each function in the company could be said to have its own product plan " allocating budgets and resources based on its own priorities.

Appendix: Functional Execution Capabilities Of Sap'S NPDI Solution Support

The key capabilities of the functional execution layer of SAP's NPDI solution are listed in Figure 6 and are explained further below.

Product development •CAD integration •Product development •Product costing •Process engineering •Design collaboration	Strategic sourcing •Supplier evaluation •RFQ and auction management •Contract management	Prototyping •Prototype building and testing •Trial management	Market launch •Campaign management •Trade promotion management •Hand over to sales •Configuration and pricing
	Supply chain planning •Demand planning •Supply network planning	Production ramp-up •Tooling •Hand over to production •Pilot production
Change and configuration management •Engineering change management •Order change management •Audit trail •Configuration management	Quality engineering •Inspection planning •Advanced product and quality planning (APQP) •Production part approval process (PPAP) •Stability studies	Life-cycle data management •Document management •Specification management •Product structure management •Recipe management •Routing management •Variant configuration management

Product Development

Based on the available product definitions and specifications, requirements have to be transformed into features, product concepts, and finally into the product structure. For discrete industries it is key that CAD systems are seamlessly integrated to provide all documents and bill of materials for subsequent processes like creation of routings, definition of tools, and product costing. In process industries, recipes are defined based on raw material specifications and consist of both the product composition and the product formulation process. In all environments, external development partners such as suppliers have to be more and more integrated: Web-based exchange platforms enable closed-loop collaboration in a secure environment.

Product development is mainly based on central components of the mySAP PLM solution, such as: Document Management, Products Structure Management, Variant Configuration, CAD Integration, Specification Management, Recipe Management, and Collaboration Folders (cFolders).

Supply Chain Planning

As soon as first versions of the product structure are known, demand planning and supply network planning help to identify the best locations for in-house production or suitable suppliers. Make-or-buy decisions are supported, and new purchasing parts are identified, for which suppliers are needed. Supply chain planning is mainly based on central parts of the mySAP SCM solution and its integration with mySAP PLM and mySAP ERP.

Strategic Sourcing

This includes sourcing analytics, supplier evaluation, requests for proposal and quotation, and auctions as well as contract management. As soon as potential suppliers are identified, tight integration between SAP's sourcing and engineering collaboration capabilities allow for parallel commercial and technical negotiations throughout the request for proposal (RFP) and request for quotation (RFQ) processes. By bringing engineering and sourcing closely together, companies can better optimize product costs at the early design stage and significantly shorten the strategic sourcing process.

Strategic sourcing is mainly based on central parts of the mySAP SRM solution and its integration with mySAP PLM " especially cFolders.

Prototyping And Production Ramp-Up

In parallel to the development process, prototyping is used to ensure technical feasibility and to optimize the production process. Therefore product structures, recipes, or routings are released for prototyping or trials. Test results are used to optimize the product in an iterative process. As soon as regular production should be started, the production or assembly lines are prepared step by step for the production or larger volumes. If necessary, running production orders can still be changed according to product or sales order changes due to the integrated order change management capabilities.

Prototyping and ramp-up is based on central parts of the mySAP PLM, mySAP ERP, and the mySAP SCM solutions.

Market Launch

All the work comes to fruition when the market accepts a new product. Market launch includes planning and definition of marketing campaigns and trade promotions. The solution equips sales reps with collateral materials and sends pricing information to their mobile devices. An online and offline order management system provides fast, efficient order processing. Top-down and bottom-up demand planning deliver the best possible forecast. For configurable products the product structure is provided to sales to include pricing information as well as conditions for available features.

Market launch is mainly based on central parts of the mySAP CRM solution and its integration with mySAP PLM.

Appendix :SAP NetWeaver

The SAP NetWeaver platform combines best-in-class components (such as an enterprise portal and business intelligence) into a business-ready platform. Figure 7 shows the SAP NetWeaver technology stack.

Composite Application Framework	People Integration		Life-Cycle Management	◄Microsoft .NET
	Multichannel Access
	Portal	Collaboration
	Information Integration			◄WebSphere
	Bus. Intelligence	Knowledge Mgmt
	Master Data Management
	Information Integration
	Integration Broker	Business Process Mgmt.
	Application Platform
	J2EE	ABAP
	DB and OS Abstraction			◄...

All solutions are built on the SAP Web Application Server (SAP Web AS) component and common development, administration, and security environments are used across all components. Although SAP NetWeaver's Web Dynpro environment is used to develop and run the user interface for applications across the platform, the portal is the information delivery framework for all applications " SAP or non-SAP. The Integration Broker and Business Process Management components provide process-centric integration for SAP and non-SAP systems within and beyond enterprise boundaries based on open standards such as Extensible Markup Language (XML), Java, and Web services standards. SAP NetWeaver integrates and harmonizes both structured data (with best-in-class business intelligence and master data management capabilities), and unstructured data (with knowledge management capabilities). Business intelligence (BI) capabilities include a robust BI platform a complete suite of BI tools (including reporting, analysis, and information delivery); data warehouse management and administration; and extract, transformation, and loading (ETL) capabilities.

SAP Master Data Management (SAP MDM) enables companies to store, augment, and consolidate master data, while ensuring consistent distribution to all applications and systems within the IT landscape. Working across heterogeneous systems at multiple locations, SAP MDM leverages existing IT investments in business-critical data, delivering vastly reduced data maintenance costs through effective data management. And, by ensuring cross-system data consistency, SAP MDM accelerates the execution of business processes, greatly improves decision making, and helps companies maintain their competitive advantage.

The new SAP Composite Application Framework (SAP CAF) built into SAP NetWeaver enables SAP to create new applications targeting cross-functional business processes. These include, for instance, an object access layer that allows customers to abstract from the underlying heterogeneity and to create a unified development and deployment environment.

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Contents

• Introduction " What is NPDI?
• Why is NPDI Important?
• Who Cares About NPDI?
• NPDI Needs Help
• What's Going Wrong?
• How Can NPDI be Fixed?
• SAP'S Solution Support for NPDI
• Industry Applicability .
• The Architecture Impact
• Implementation Scenarios
• Appendix:
  Functional Execution Capabilities of SAP'S NPDI Solution Support . SAP NetWeaver .
• Sidebars:
  • Top CEOs Recognize the Importance of NPDI .
  • Economies Need NPDI as Well .
  • How Not to Fix NPDI .
    • " Increase the R&D Budget
    • " Implement a Stand-Alone PLM System.
  • Regulatory Drivers for NPDI
  • What Happens When NPDI Is Managed from Within the Organizational Silos