Enabling effective product launch decisions

Abstract

The present work looks into the question of optimizing the performance of product launch decisions-in particular, the decisions of product development duration and manufacturing ramp-up. It presents an innovative model for measuring product launch performance and optimizing the decisions by integrating a design structure matrix model for product development, a technical cost model for manufacturing, and revenue and warranty models for customer reaction to product quality into one model using net revenue as a metric. The model shows that overlooking the interactions between product development and manufacturing leads to suboptimal decisions. Furthermore, it points out that product quality is apparently the most important driver for product launch performance and that the effects of product launch decisions on resulting product quality need to be considered. Results from case studies demonstrate that improving firm's tactical strategies will help shorten product launch and improve its performance, while factors such as low reputation or high product failure rate will require lengthening product launch to minimize their impacts. Finally, the model results are analyzed to yield direction for firms relative to strategies that can be implemented to improve product launch performance. The most effective strategy is one that improves the PD capability (higher ability to find and fix problems) and the second most effective is to improve problem solving in manufacturing ramp-up.