NPI – New Product Introduction | 2023 Definitive Guide | TCGen

A Definitive Guide

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What is New Product introduction (NPI)?

New Product introduction (NPI) is the step-by-step process that takes an idea at the concept stage, moves it through a working prototype stage, and into mass production and commercialization. It is called the new product introduction process rather than the new product development (NPD) process because NPI looks at the product from the manufacturing viewpoint. As such, it also differs from product development life cycle management.

New Product Introduction NPI Definitive Guide

Typical manufacturing processes involve the ongoing production of existing offerings; NPI “introduces” new products into the process.

New Product Introduction Overview

New product introduction process [NPI] in steps
New product introduction [NPI] in steps

The new product introduction process is a set of repeatable steps or stages a company uses to realize the new product to satisfy a market need. 

In today’s global environment, a manufacturing partner in low-cost regions often carries out this manufacturing process. This is called sourcing and is most often done by a contract manufacturer who either designs it for you or builds the product based on your design (the development cost is usually built into the product cost if the contract manufacturer does the design and certifications).

While nearly every company develops new products or services, the latest product introduction process differs substantially from one company to another. Variables include the industry, the product type, the amount of innovation, materials, supply chain considerations, key components, time-to-market constraints, and labor cost.

Why is NPI process so important?

New Product Introduction (NPI) is crucial for businesses because it helps streamline the entire product launch process, from engineering and design freeze to production line ramp-up. By establishing efficient, on-time workflows, NPI enables companies to lower costs, optimize resources, and ensure timely product delivery to the market. Effective NPI processes involve close collaboration between internal team members, including engineering, design, marketing, and regulatory departments, allowing for comprehensive risk assessments and identifying potential issues before they become critical. Engaging contract manufacturers early in the process can also contribute to a smoother transition from development, reducing costs and risks.

A vital NPI process allows companies to identify and reach the appropriate target audience, ensuring that the product effectively addresses market needs and expectations. By focusing on enhanced product quality, NPI helps improve customer satisfaction and brand reputation, ultimately driving sales and revenue growth.

Moreover, NPI is crucial in material forecasting, ensuring supply chain management and inventory control are optimized for the production line. This not only minimizes waste but also helps companies remain agile and responsive to fluctuations in market demand. In summary, a well-executed NPI process is essential for maximizing a product’s chances of success and achieving a competitive edge in today’s fast-paced market landscape.

New Product Introduction Steps

Although cross-functional processes differ depending on these factors, an accepted approach to the NPI process is to define a series of steps. At the end of each of the steps, the Senior Management team (and critical stakeholders) makes an up-or-down decision in a formal review (often called a “gate”). Lean practices are becoming more common, where lean cross-functional workshops replace the rigid steps. Product Introduction processes vary depending on the type of product and relative risks. Often, it is broken into between five and seven stages.

A typical NPI approach has six steps with five gates:

  • Step 1: Define / Ideation (Initial Idea)
  • Step 2: Feasibility / Product Definition
  • Step 3: Develop / Prototyping
  • Step 4: Validate / Detailed Design
  • Step 5: Manufacturing Ramp / Pre-Production (Validation/Testing)
  • Step 6: Evaluation / Manufacturing

Step 1: Define / Ideation (Initial Idea)

This first step or stage of the NPI, often called “Ideation,” is where a new product idea originates from the product team. Usually, businesses form a small team to explore the idea generation and initial definition of the product concept to move the product forward; the team also performs business analysis and market research and explores technical and market risk. The idea stage, brainstorming new products, is often the most critical step. It is where most product ideas come from.

Getting the product concept wrong at this early stage wastes time and increases opportunity costs. Getting a contract manufacturer on board should start at this step — because costs and constraints are designed in very early stages. Making the wrong sourcing decisions could result in headaches later on, such as cost overruns, schedule delays, or product quality issues.

Step 2: Feasibility / Product Definition

Sometimes called “scoping” or concept development, this step involves refining the definition of design concepts and gathering product requirements. In a startup, this step is often called Discovery. This is where you explore customer needs deeply. The team creates the first detailed assessment of the new product concept’s technical, market, and business aspects and determines core functionality. This stage is a make-or-break for ensuring a successful product, and although early, it can also be beneficial to review process performance.

Developers and managers, especially the project manager, explore and define the critical points of differentiation for the new product and get customer feedback. If done improperly, this second step can increase time to market or cause the product developers to misunderstand the market’s needs. This step often comes before you ramp up the team, and this is where you define the initial marketing strategy. Although it is early, couples frequently make estimates of metrics such as ARR (Annual Recurring Revenue) or Acquisition Costs. Also, the product development cost is estimated at this stage, and the design specifications are fixed.

Even though it is early, now is the time to line up a contract manufacturer or several manufacturing companies (for competitive quotes). Teamwork between procurement, manufacturing, and R&D is essential to minimize product costs by shopping for the best manufacturing company.

Step 3: Develop / Prototyping

This phase in the NPI process justifies the company’s investment in product development by requiring the team to create a detailed business plan. This plan usually involves intensive market research in parallel with proving the product’s feasibility. The team thoroughly explores the competitive landscape and where the proposed product fits within it. They also create a financial model for the new offering that makes assumptions about market share. Pricing is determined at this step. At this stage in the NPI process, the company will invest substantially in the project (prototypes are expensive).

The team also considers the manufacturability or Design for Manufacturing (DFM) of the proposed new product for tangible new products, such as hardware or mixed systems. By the end of this phase, Senior Management should have a clear idea of what they’re investing in and how it will perform in the marketplace. This step in the product development process is critical because it reduces the market risk for the new product and can be essential to optimize performance and minimize cost to maximize profitability.

Companies sometimes pilot early production runs managed by manufacturing and the quality control department. This is also the stage where the cross-functional team reviews its supply chain management to ensure it can use the current supply base since new supplier qualification can take a long time. 

Step 4: Validation / Detailed Design

In this phase, the focus is on the product design process. It begins by refining the prototype of the product. By this point, the prototype is largely full-featured and working as a natural product. In most cases, teams alpha-test the prototype, iteratively working with customers, getting their feedback, and incorporating it into the prototype. After this stage, design changes can be costly, so this is a critical step in the NPI process.

At this stage of the NPI process, a bill of materials (BOM) is generated. The design team can become quite large, given the volume of work required. In this phase, the organization will also scale up manufacturing services to ensure that the design is high quality (so yields will be high). Procurement will also be heavily involved at this step.

In parallel, marketing, sales, and manufacturing create the launch and manufacturing platforms to support the emerging product. They may begin implementing early-stage marketing tests. This fourth step in the new product development process, sometimes called Develodevelopment, sometimes incorporates the next step, “Validation/Testing.” Program Management may lead this step, or in some cases, the responsibility is handed over to the production team. The most effective NPI process has brought in products at even earlier stages than Detailed Design, but better late than never.

Step 5: Manufacturing Ramp / Pre-Production (Validation/Testing)

Validation and testing means ensuring the prototype works as planned. It also means validating the product in the eyes of the customers and markets while testing the viability of the financial development model. Note that if the company plans to move existing product production, you will enter the NPI Process at this stage.

Everything in the business case learned from customers during the Development phase is scrutinized and tested as much as possible in “real world” conditions. The marketing strategy is also confirmed at this point. If anything in the business case or prototype needs revising, this is the team’s last chance to do so. This is the last step before the final product is ready for the market. A quality assurance check is often made at this stage to ensure the product meets the desired standards and customer expectations.

Step 6: Evaluation / Manufacturing

During this step, the team realizes everything required to bring the final product to market (often called a product launch), including marketing and sales plans (or sales training if necessary) and significant investments by the manufacturing company (or your company, if not outsourcing manufacturing). The team begins to operationalize the manufacture and customer support for the product. A manufacturing organization that employs continuous improvement will ensure they build high-quality products.

Note that even in the manufacturing stage, influential companies continuously optimize the production process and manage the product lifecycle, which includes the end of product life.

Gate Reviews

If you visualize the process flow diagram, each of these six phases ends in a gate review. In this review, the team presents specific, pre-defined deliverables to management and demonstrates the outcomes required to move on to the next phase of the product development process. Each of these reviews ends in a go/no-go decision. In other words, management has five opportunities to kill the project before committing to its launch.

Agile for NPI – Yes!

Waterfall Product Development

Currently, there are two primary approaches to the product development process. The first is a waterfall approach, a generic term for a traditional new product development process with discrete steps and milestones. It is called waterfall product development because, in this approach, teams continue to the following stages only after milestones are met, i.e., the flow is one-directional. We often see these stages in management consulting engagements.

However, the world is moving away from this waterfall product development approach. It is too process-heavy and encourages unnecessary meddling from Senior Management. Compare your gate reviews and other process aspects with our product development checklist.

Agile Product Development

Agile product development processes, on the other hand, are increasingly more common because they can create new products that delight customers while economizing on resources. The Agile approach relies on sprints, cycles that combine development and customer testing. Almost all organizations that say they are Agile use it to develop their products between significant milestones. This is a hybrid approach that offers the best of both worlds. It is the approach we take in our agile consulting.

Another example of a light framework for New Product Introduction is explained in detail in this article.

Who is involved in the New Product Introduction Process?

New Product Introduction is a cross-functional activity in process management performed by product developers (from all different business functions). It is common for a cross-functional team to assemble to realize new products in the idea generation stages to develop the initial product concept. In many industries, these functions might include design engineering or coding, testing, product management methodology, sales, finance, and others, led by a team leader or scrum master. A cross-functional team stays together throughout the new product development process.

In addition, a Senior Management team oversees and approves the project as it develops. They are responsible for the investments they make in new product development. The best product development processes have clearly defined roles and responsibilities for the development team and the Senior Management team to limit management meddling.

A Modern, Lean Approach to New Product Introduction [NPI]

Old-fashioned, sequential phases and gates processes tend to take a one-size-fits-all approach to new product development. They put projects through rigid milestones, whether or not they apply to the task. In a Minimum Viable Process, the project only needs the milestones.

Lean New Product Introduction Example: for Incremental Products

For example, if you are developing an incremental improvement on an existing product, there may be no need to demonstrate the Concept Fit. If your product succeeds, you’ve already proved the concept and the Product/Market Fit. Such a project might need only one check-in between the team and management, and much of the development is done through lean workshops.

There’s no need to have three check-ins where they don’t add value – and if there’s no reason to have three, there’s certainly no reason to have five! Having three check-ins might subtract value by adding waste and bureaucracy. Have only the milestones that make sense for your project.

Define the exit criteria for each check-in regarding the boundary conditions the development team and Senior Management have defined for the project. This approach, combined with a Minimum Viable Process with only three check-ins, enables management by exception. Control intervenes only when the team violates one or more boundary conditions.

And this is what the Minimum Viable Process is all about. Call it the Goldilocks Approach: getting the process just right. Not so little process that chaos ensues, but not so much process that the team is distracted from its most important priority: creating products that delight customers and meet business objectives.

TCGen Principal & Founder

John Carter

John Carter specializes in product development, from the strategy and innovation processes to product definition, execution, and launch. He has helped companies cut time to market, rapidly scale their product program, and improve innovation with customer-led insights. His work leads to greater profitability, reduced costs, and improved customer satisfaction.

John currently serves on the Board of Directors of Cirrus Logic (CRUS), a leading supplier of mixed-signal semiconductors. He is involved with company strategy and sits on the Compensation and Audit Committees.

Before starting the consulting firm TCGen, John was the Chief Engineer of BOSE Corporation. John is the inventor of the Bose Noise Cancelling Headphones and shares the original patent with Dr. Amar Bose. He was one of the initial contributors to BOSE’s entry into the automobile OEM business. He led the product and business development of BOSE’s patented noise reduction technology for the military market.

John Carter, TCGen Principal & Founder