Every product goes through a cycle from birth, into an initial growth stage, into a relatively stable period, and finally into a declining state that eventually ends in the death of the product (Fig 1). Since there are challenges and uncertainties any time a new product is brought to market, it is useful to understand these cycles.
Stages of Development of a Product
In the introductory stage the product is new and consumer acceptance is low, so sales are low. In this early stage of the product life cycle the rate of product change is rapid as management tries to maximize performance or product uniqueness in an attempt to enhance customer acceptance. When the product has entered the growth stage, knowledge of the product and its capabilities has reached an increasing number of customers, and sales growth accelerates. There may be an emphasis on custom tailoring the product by making accessories for slightly different customer needs. At the maturity stage the product is widely accepted and sales are stable and are growing at the same rate as the economy as a whole. When the product reaches this stage, attempts should be made to rejuvenate it by the addition of new features or the development of still new applications. Products in the maturity stage usually experience considerable competition. Thus, there is great emphasis on reducing the cost of a mature product. At some point the product enters the decline stage. Sales decrease because a new and better product has entered the market to fulfill the same societal need.
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| Fig 1 Product life cycle |
If we look more closely at the product life cycle, we will see that the cycle is made up of many individual processes (Fig. 2). In this case the cycle has been divided into the premarket and market phases. The former extends back to the product concept and includes the research and development and marketing studies needed to bring the product to the market phase. The investment (negative profits) needed to create the product is shown along with the profit. The numbers along the profit versus time curve correspond to the processes in the product life cycle. Note that if the product development process is terminated prior to entering the market, the company must absorb the PDP costs.
Technology Development and Insertion Cycle
The development of a new technology follows an S-shaped growth curve (Fig. 3 (a)) similar to that for the growth of sales of a product. In its early stage, progress in technology tends to be limited by the lack of ideas. A single good idea can make several other good ideas possible, and the rate of progress becomes exponential as indicated by a steep rise in performance that creates the lower steeply rising curve of the S. During this period a single individual or a small group of individuals can have a pronounced effect on the direction of the technology.
Gradually the growth becomes more nearly linear when the fundamental ideas are in place, and technical progress is concerned with filling in the gaps between the key ideas. This is the period when commercial exploitation flourishes. Specific designs, market applications, and manufacturing occur rapidly in a field that has not yet settled down. Smaller entrepreneurial firms can have a large impact and capture a dominant share of the market. However, with time the technology begins to run dry, and improvements come with greater difficulty. Now the market tends to become stabilized, manufacturing methods become fixed in place, and more capital is expended to reduce the cost of manufacturing. The business becomes capital-intensive; the emphasis is on production know-how and financial expertise rather than scientific and technological expertise. The maturing technology grows slowly, and it approaches a limit asymptotically. The limit may be set by a social consideration, such as the fact that the legal speed of automobiles is set by safety and fuel economy considerations, or it may be a true technological limit, such as the fact that the speed of sound defines an upper limit for the speed of a propeller-driven aircraft.
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| Fig 2 Expanded view of product development cycle. |
Gradually the growth becomes more nearly linear when the fundamental ideas are in place, and technical progress is concerned with filling in the gaps between the key ideas. This is the period when commercial exploitation flourishes. Specific designs, market applications, and manufacturing occur rapidly in a field that has not yet settled down. Smaller entrepreneurial firms can have a large impact and capture a dominant share of the market. However, with time the technology begins to run dry, and improvements come with greater difficulty. Now the market tends to become stabilized, manufacturing methods become fixed in place, and more capital is expended to reduce the cost of manufacturing. The business becomes capital-intensive; the emphasis is on production know-how and financial expertise rather than scientific and technological expertise. The maturing technology grows slowly, and it approaches a limit asymptotically. The limit may be set by a social consideration, such as the fact that the legal speed of automobiles is set by safety and fuel economy considerations, or it may be a true technological limit, such as the fact that the speed of sound defines an upper limit for the speed of a propeller-driven aircraft.
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| Fig 3 (a) Simplified technology development cycle. (b) Transferring from one technology growth curve (A) to another developing technology (B). |
The success of a technology-based company lies in recognizing when the core technology on which the company’s products are based is beginning to mature and, through an active R&D program, transferring to another technology growth curve that offers greater possibilities (Fig. 3(b)). To do so, the company must manage across a technological discontinuity (the gap between the two S-curves in Fig. 3(b), and a new technology must replace the existing one (technology insertion ). Past examples of technological discontinuity are the change from vacuum tubes to transistors and from the three- to the two-piece metal can. Changing from one technology to another may be difficult because it requires different kinds of technical skills, as in the change from vacuum tubes to transistors.
A word of caution. Technology usually begins to mature before profits top out, so there is often is a management reluctance to switch to a new technology, with its associated costs and risks, when business is doing so well. Farsighted companies are always on the lookout for the possibility for technology insertion because it can give them a big advantage over the competition.
Process Development Cycle
Most of the emphasis in this text is on developing new products or existing products. However, the development process shown in Fig. 2.1 can just as well be used to describe the development of a process rather than a product. Similarly, the design process described in Sec. 1.5 pertains to process design as well as product design. One should be aware that there may be differences in terminology when dealing with processes instead of products. For example in product development we talk about the prototype to refer to the early physical embodiment of the product, while in process design one is more likely to call this the pilot plant or semi works.
Process development is most important in the materials, chemicals, or food processing industries. In such businesses the product that is sold may be a coil of aluminium to be made into beverage cans or a silicon microchip containing hundreds of thousands of transistors and other circuit elements. The processes that produced this product create most of its value.
When focusing on the development of a manufacturing process for a discrete product, as opposed to a continuous flow process like sheet steel or gasoline, it is convenient to identify three stages in the development of the manufacturing process.6 Production systems are generally classified as job shop, batch flow, assembly line, or continuous flow. Generally these classes are differentiated based on the number of parts that can be handled in a batch.
1) Uncoordinated development : The process is composed of general-purpose equipment with a high degree of flexibility, similar to a batch process. Since the product is new and is developing, the process must be kept flexible.
2) Segmental: The manufacturing system is designed to achieve higher levels of efficiency in order to take advantage of increasing product standardization. This results in a high level of automation and process control. Some elements of the process are highly integrated; others are still loose and flexible.
3) Systemic : The product has reached such a high level of standardization that every process step can be described precisely, as on an assembly line. Now that there is a high degree of predictability in the product, a very specialized and integrated process can be developed.
1) Uncoordinated development : The process is composed of general-purpose equipment with a high degree of flexibility, similar to a batch process. Since the product is new and is developing, the process must be kept flexible.
2) Segmental: The manufacturing system is designed to achieve higher levels of efficiency in order to take advantage of increasing product standardization. This results in a high level of automation and process control. Some elements of the process are highly integrated; others are still loose and flexible.
3) Systemic : The product has reached such a high level of standardization that every process step can be described precisely, as on an assembly line. Now that there is a high degree of predictability in the product, a very specialized and integrated process can be developed.
Process innovation is emphasized during the maturity stage of the product life cycle. In the earlier stages the major emphasis is on product development, and generally only enough process development is done to support the product. However, when the process development reaches the systemic stage, change is disruptive and costly. Thus, process innovations will be justified only if they offer large economic advantage.
We also need to recognize that process development often is an enabler of new products. Typically, the role of process development is to reduce cost so that a product becomes more competitive in the market. However, revolutionary processes can lead to remarkable products. An outstanding example is the creation of microelectromechanical systems (MEMS) by adapting the fabrication methods from integrated circuits.
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