Contents

u Why Focus on New Product Development

u New Product Development Process Overview
u Project Management Dilemma
u Lessons Learnt
u Backup

1
 Why Focus on New Product Development

u We are targeting 40% of total sales from new

products
u Generating new products is becoming more
challenging in today's business environment
u Pressure to reduce product costs and product development
costs
u Desire to leverage new markets and channels
u Need to accelerate time to market
u Keep a good market position for better profittability

2
 Why we need NPD Process
1. Product offering not based on real 2. Products missing the life cycle sweet spot
market needs
Main Causes of New Product Failures TTM
Percentage of Companies Citing Improvement

Inadequate
24%
Market Analysis
Margin/
Product Problems 16% Sales Price

Lack of 14%
Effective Marketing Margin
Improvement
Higher Costs
10%
than Anticipated
Inadequate
Factors relating
Competitive Analysis
9% to R&D-market
interface
Poor Timing
8%
of Introduction

Technical/ Revenue Uplift

6%
Production Problems Time
Source: DARPA RaDEO Project
All Other Causes 13%

3. Cost control occurring too late 4. Cost issues arent addressed during design

Committed Cost vs. Lifecycle Change Costs vs. Time

100 95% Cost of Processing a
85% Life Cycle Cost
Determination 1000X
80 70%
Change

60
100X
40 35%
22% Cost Reduction
1X 10X
20 Opportunities
Release to Manufacturer
Conceptual Detailed Production Operations
Design Design Support Design & Develop Build Support

When 70% of total product cost is locked Including manufacturing, service, quality,
during Concept Design

3
All of which can dramatically impact profitability
 NPD Process - Design for Sourcing
Focusing Resources Throughout NPD Cycle
Sourcing Review

Gate 1 Gate 2 Gate 3 Gate 4 Gate 5 Gate 65 Gate 75

Evaluation Execution
Key Idea Concept Concept
Design
& Ramp Up
Launch
&
Production
Projects Generation Feasibility Development
Development
Production
Start Up

Develop & Implement

Sourcing Strategy

Preferred Suppliers
Project Feasbility

Project Feasbility
Re-Use Parts Run ES
Events /
Qualify
Multiple Sources Parts &
Suppliers
e-Sourcing
NPD Process Overview

Gates
Gate 1 Gate 2 Gate 3 Gate 4 Gate 5 Gate 6

Concept
Phases Development Design
Launch
& &
Market Idea Concept &
Project Development Ramp Up Production
Research Generation Feasibility Production
Planning Start-Up

Update Plan Process

Business Final Check
& AR Audit
Project Plan
Idea Charter
Submission
=Iteration

Phase Definition: Cross functional Gate Definition: Pre-scheduled meetings

teams executing actions to meet pre-
defined deliverables within a specified
timeframe to allow the gatekeepers to
make informed go/no-go decisions
during gate meetings.
5
designed to review progress of an new product
development project. The primary purpose of
gate meetings is to gain the commitment,
alignment, and active support from cross
functional senior leadership. Commitment to a go/
no-go decision is based on a summary of the
deliverables defined in the preceding phase.
NPD Process Gate Reviews

Phase-Gate Review Funnel

Does this What is the

product align Gate 1 Gate 2 Gate 3 Gate 4 Gate 5 Gate 6 market
with our potential for
business
Concept

this product?
Development Design
Launch
& &
Market Idea Concept &
Project Development Ramp Up Production

objectives?
Research Generation Feasibility Production
Planning Start-Up

Update Plan Process

Business Final Check
& AR Audit
Project Plan
Idea Charter
Submission

Project Can we
Will we make
money on this design, source
Is this project & build this
product?
6
on track? product?
 NPD Gate Approvals

Gate 1 Gate 2 Gate 3 Gate 4 Gate 5 Gate 6

Concept
Development Design
Launch
& &
Market Idea Concept &
Project Development Ramp Up Production
Research Generation Feasibility Production
Planning Start-Up

Update Plan Process

Business Final Check
& AR Audit
Project Plan
Idea Charter
Gatekeepers Submission

Idea Project Business Updated Process

Functional Area Submission Charter Plan Plan & AR Final Check Audit
Product Planning Director Director VP/GM VP/GM VP/GM Director
Marketing Director Director VP VP Director Director
Engineering Director Director VP VP Director Director
Manufacturing Director VP VP Director Director
Finance Director VP VP Director Director
Sales Director VP VP Director Director
Procurement VP VP Director Director
Service VP VP Director Director
Quality
7 VP VP Director Director
Gate Management Phase/Gate
Summaries
Evaluation Stage
Gate 1: Opportunity Summary; Are There Sufficient Ideas for
Assessment?
Gate 2: Is it Feasible One or Two of the Ideas will Satisfy the
Opportunity?
Gate 3: Strong Enough Business Case to Justify Developing Product?

Execution Stage
Gate 4: Willing to Commit Capital and Resources for Product Qualification
and Manufacturing?
Gate 5: Willing & Ready to Proceed with Limited Production?
Gate 6: Comfortable with Full Launch of Product?

Assessment Stage
Gate 7: Is Product Delivering as Expected? Lessons Learned?
8
 Gate Management Is Scalable
2nd Screen Go to Develop Go to Test Go to Launch

Truly New Product,

Higher Risk Phase 2
Gate Phase 3 Gate Phase 4 Gate Phase 5 Gate
Phase 6
2 3 4 5

Scoping Project Development Ramp Up Launch

Planning

Idea
Screen Go to Develop Go to Launch

Idea Gate Phase Gate Phase Gate

1, 2, & 3 3 4&5 5 Phase 6
Stage 1

Enhancements/
Discovery Modifications Scope & Development
& Testing
Launch
Planning

Decision to
Execute

Phase Gate Phase

1, 2 & 3 3 4, 5 & 6

Marketing Requests,
9 Low Risk Scope & Execute:
Planning Development,
Test & Launch
Source: Product Development Institute, 2006
Project Management Dilemma
TIME
This triangle reflects the fact
that the three properties of a
DESIGN project are interrelated, and it
SPEC / is not possible to optimize all
QUALITY COST
three one will always suffer.

In other words you have three options:

Design something quickly and to a high standard, but
then it will not be cheap.
Design something quickly and cheaply, but it will not
be of high quality.
Design something with high quality and cheaply, but
it will take a relatively long time
Material Types
Part Quantities
Plant Locations Facilities
Lot Sizes Processes Office Processes
Tooling Equipment
Process Complexity Tooling
Quality
Trade Compliance Vendors
Inventory Logistics
Logistics Lead Times
Payment Terms
New Suppliers
Forecast / Scheduling
Spec Maintenance

Design has the lowest direct cost but the most influence
 NPD Lessons Learnt
Resource planning
u Focus not only on Engineering resources but also the rest of the
organization since some other departments can create bottle-necks based
on workload
u Limit the number of major projects to 2 or 3 in case common resources are
utilized

Priorities and Risk Assessment

u Priorities must be defined clearly Cost / Time / Spec
u Risks and mitigation actions must be identified and periodically reviewed

Cost targets
u BOMs must be adequate to go for first feasiblity check and to be able to
check progress on later phases
u Cost expectation should be clear on Part Number level use Cost Targeting
techniques
u Competitive product assement must be done before starting a project use
Value Engineering principals
u Project Scope should not change after the project has passed Gate3
otherwise targets will be missed
Last Words

Always take time to get ready !!!

 BACKUP

14
Emre Aytac
Personal Information :
Born in Istanbul, Turkey, 28.09.1971 , Married, with twin girls.

Education :
Boazii University
MSc. Engineering Technology Management, 2005
Boazii University
BSc. Mechanical Engineering, 1994

Current Assignment:
Manager Supply Chain Projects, ECT Europe

Previous Positions:
2009- 2014 NPD Program Manager Emerson Climate Technologies, Istanbul
2007-2009 Commodity Manager, Mechanical Parts Emerson Corporate, Budapest
2006-2007 Materials Manager, Turkey - Emerson Corporate, Istanbul
1999-2006 Supplier Quality Engineer Copeland, Istanbul

Hobbies:
Kitesurfing, Sailing, Paragliding, Trekking, RC Planes, Archery
 NPD Gate Process

16
 Market Research Phase
Definition
Market Research is a continuous process that aims to: ensure innovation is
focused on relevant problems/opportunities from the customers perspective;
determine the unmet needs of the end-user, all intermediaries, and what our
direct customer would like to experience from the final products they interact with
and build the environment required for innovation. Emersons products are
typically contained within the final products, but the end user may not be aware of
the impact Emersons product can have on the end product.

Gate 1 Gate 2 Gate 3 Gate 4 Gate 5 Gate 6

Concept
Design
Development Launch
&
Market Idea Concept & Project &
Development Ramp Up Production
Research Generation Feasibility Planning Production
Start-Up

Update Plan Process

Business Final Check
& AR Audit
17 Project Plan
Idea Charter
Submission
 Idea Generation Phase
Definition
Idea Generation is a continuous process that aims to:
build the environment required for innovation
ensure innovation is focused on relevant problems/opportunities
develop creative solutions for business needs
sort ideas based on customer and strategic fit as well as cursory feasibility
assessment in order to move from idea to concept proposal (capable of entering
the phase-gate process). The idea proposal should not consume more than 40
hours of engineering and marketing time.

Gate 1 Gate 2 Gate 3 Gate 4 Gate 5 Gate 6

Look for Unmet Needs/

Concept
Design
Opportunity
Development Launch
Market Idea Concept
Feasibility
& Project
Planning
&
Development Ramp Up
&
Production
Production
Competitive Assessment
Research Generation
Start-Up Alternative Technology
Update Plan Process
Assessment
Business Final Check
& AR Audit
18 Project Plan
Idea Charter
Submission
 Gate 1 Is this idea aligned with
strategic objectives and does it solve
a customers unmet need?
Definition

The proposed idea/concept is reviewed by the Gatekeepers for strategic

importance and fit with the business objectives. The idea/concept is then judged
against preliminary information available on market attractiveness and technical
feasibility and if the product solves an unmet need(s) identified in the market
research. Any potential (external) variables that may kill the project are also
identified to determine whether this idea warrants investment and tracking in the
phase-gate funnel.

Gate 1 Gate 2 Gate 3 Gate 4 Gate 5 Gate 6

Concept
Design
Development Launch
&
Market Idea Concept & Project &
Development Ramp Up Production
Research Generation Feasibility Planning Production
Start-Up

Update Plan Process

Business Final Check
& AR Audit
19 Project Plan
Idea Charter
Submission
 Concept Feasibility Phase
Definition
The Concept Feasibility phase aims to quickly define the product in sufficient
detail to determine its feasibility from both technical and commercial perspectives.
A preliminary business case is developed to justify the formation of a cross
functional team and the concepts fit with strategic business objectives is
assessed.

Define Functional
Requirements
Gate 1 Gate 2 Gate 3 Gate 4 Gate 5 Gate 6
Intellectual Property
Estimate Cost, Sales,
Investment
Start Concept Work
Concept
Design
Development Launch
&
Market Idea Concept & Project &
Research Generation Feasibility Planning
Development Ramp Up
Production
Start-Up
Production
Manufacturing Feasibility
Project Resources & Budget
Business
Update Plan
& AR
Final Check
Process
Audit
Project Schedule
Project Plan
20 Idea Charter
Submission

* Sample template available in Appendix

 Gate 2 Is this concept feasible?
Definition
The project charter is presented and reviewed by the Gatekeepers to assess the
potential return on investment, fit with the strategic business objectives, and
commercial and technical feasibility. A determination is made to form and fund a
cross functional product development team to proceed through the Concept
Development & Project Planning Phase.

Gate 1 Gate 2 Gate 3 Gate 4 Gate 5 Gate 6

Concept
Design
Development Launch
&
Market Idea Concept & Project &
Development Ramp Up Production
Research Generation Feasibility Planning Production
Start-Up

Update Plan Process

Business Final Check
& AR Audit
Project Plan
21
Idea Charter
Submission
 Concept Development & Project
Planning Phase
Definition
In the Concept Development & Project Planning phase, the cross functional team
collaborates to substantiate the market (customer) need and product value based
on the functional requirements, to complete a concept design and demonstrate a
proof-of-concept. Several product alternatives are developed with various
features and combination of features that deliver the benefit to the customer.
Assess and justify the required resources and capital investment, and develop a
project plan to meet the project objectives, with reasonable certainty, within
required timelines.

Final Schedule/Resources
Gate 1 Gate 2 Gate 3 Gate 4 Gate 5 Gate 6
Build and Test Prototype
Intellectual Property
Concept
Development
Design
Launch
Preliminary AR
&
Market
Research
Idea
Generation
Concept
Feasibility
& Project
Planning
Development Ramp Up
&
Production
Production Manufacturing Strategy
Start-Up
Design/Process FMEA
Update Plan Process
Material Sourcing Review
Business Final Check
22
Idea
Project
Charter
Plan
& AR Audit
Naysayer Chart
Submission
Exhibit 10M
 New Product Development Roadmap

Gate 3 Are we ready to design &

develop?
Definition

The product concept and product launch plan have been developed based on
extensive customer validation. The project business plan is reviewed for potential
return on investment, fit with the strategic business objectives, and likelihood of
commercial and technical success to determine the authorization of funding and
capital investments required in the Design & Development phase.

Gate 1 Gate 2 Gate 3 Gate 4 Gate 5 Gate 6

Concept
Design
Development Launch
&
Market Idea Concept & Project &
Development Ramp Up Production
Research Generation Feasibility Planning Production
Start-Up

23 Update Plan Process

Business Final Check
& AR Audit
Project Plan
Idea Charter
Submission
 New Product Development Roadmap

Design & Development Phase

Definition
In the Design & Development phase, detailed design, development, and system
integration are completed using best cost components and processes.
Additionally, a preproduction run is completed that proves the supply chain is
ready to execute and provides testing with a small number of prototypes to
ensure product requirements and specifications have been met. In parallel,
Sales and Marketing finalize pricing, complete product literature, and develop
field sales/service training programs.

Final AR
Start Reliability Testing
Gate 1 Gate 2 Gate 3 Gate 4 Gate 5 Gate 6
Conduct Design Review
Trade Compliance
Concept
Development
Design
Launch
Final Mfg Plan
Production Do Field Test Plan
&
Market Idea Concept & Project &
Development Ramp Up
Research Generation Feasibility Planning Production
Start-Up
Supplier Tooling Qualification
Update Plan Process
e-Sourcing
Business Final Check
24
Idea
Project
Charter
Plan
& AR Audit
Start Cost Tracking
Submission

* Sample template available in Appendix

 New Product Development Roadmap

Gate 4 Are we ready for Ramp Up?

Definition
The project business plan, appropriations request, proven design (pre-production
prototype), market and sales forecasts, cost estimates, manufacturing
processes, regulatory approval plans, sales and service training and product
introduction plans are reviewed for authorization of funding and capital
investments required to bring the product to market.

Gate 1 Gate 2 Gate 3 Gate 4 Gate 5 Gate 6

Concept
Design
Development Launch
&
Market Idea Concept & Project &
Development Ramp Up Production
Research Generation Feasibility Planning Production
Start-Up

Update Plan Process

Business Final Check
& AR Audit
25 Project Plan
Idea Charter
Submission
 Ramp-Up
Definition
In the Ramp Up phase, the product design is validated, customer beta testing is
completed and manufacturing processes are verified. In parallel, Sales and
Marketing set up order entry systems, and announce the product to the field.
Manufacturing, field sales, and service training programs are implemented. The
product is maintained throughout this phase under change control.

Application Bulletin/
Gate 1 Gate 2 Gate 3 Gate 4 Gate 5 Gate 6 Launch Package
Final Regulatory Approval
Concept
Design
Perform CFM
Market Idea Concept
Development
& Project
&
Development Ramp Up
Launch
&
Production
Supplier Gate Process
Feasibility Planning Production
Research Generation
Start-Up Complete PPAP
Update Plan Process
Business Final Check
& AR Audit
26 Project Plan
Idea Charter
Submission

* Sample template available in Appendix

 New Product Development Roadmap

Gate 5 Are we ready for

Launch?
Definition

A validated design with pilot production parts is presented along with the updated
AR financials, and business plan forecasts as a final check to determine the
products readiness and address any emergency issues that may affect product
launch.

Gate 1 Gate 2 Gate 3 Gate 4 Gate 5 Gate 6

Concept
Design
Development Launch
&
Market Idea Concept & Project &
Development Ramp Up Production
Research Generation Feasibility Planning Production
Start-Up

Update Plan Process

Business Final Check
& AR Audit
27 Project Plan
Idea Charter
Submission
 New Product Development Roadmap

Launch & Production Start Up

Definition
The Launch & Production Start Up phase the product is available to customers.
Production is ramped up to meet forecast sales volumes, and meet target quality,
yield and cost objectives. An project audit of the development effort is completed
soon after launch.

Gate 1 Gate 2 Gate 3 Gate 4 Gate 5 Gate 6

Exhibit 10M
Final Product Spec
Concept
Development
Design
Launch
Price Management
&
Market
Research
Idea
Generation
Concept
Feasibility
& Project
Planning
Development Ramp Up
&
Production
Production Service Parts
Start-Up
Review Business Plan
Update Plan
Final Check
Process Start Production
Business & AR Audit
28
Idea
Project
Charter
Plan Cost Tracking
Submission

* Sample template available in Appendix

 New Product Development Roadmap

Gate 6 Process Audit

Definition
The compiled production data and initial commercial results are reviewed against
business plan forecasts to determine if the project objectives have been met. A
brief report is presented to gatekeepers based on these results including
recommended improvements to the new product development process. This
review is completed no later than 6 months after the product launch and the
output is used for future new product development projects.

Gate 1 Gate 2 Gate 3 Gate 4 Gate 5 Gate 6

Concept
Design
Development Launch
&
Market Idea Concept & Project &
Development Ramp Up Production
Research Generation Feasibility Planning Production
Start-Up

Update Plan Process

Business Final Check
& AR Audit
Project Plan
Idea Charter
29
Submission
 Gate 7 Post Launch Review & Metrics
Definition
A Post Launch Review Looks at the following Points: Qualifies whether the
project was a success or not; What are the lessons learned that can help
improve product performance in the market place; and What are the lessons that
can help improve the way that your overall Business approaches New Product
Development
A brief report is presented to gatekeepers by the project team for review and
action

Gate 1 Gate 2 Gate 3 Gate 4 Gate 5 Gate 6 Gate 7

Exhibit 10M
Lessons Learned
Concept
Design
Review 5-Year
Development Launch
Market Idea Concept
Feasibility
& Project
Planning
&
Development Ramp Up
&
Production Production
Business Plan
Research Generation
Start-Up
Review Reliability,
Update Plan Process
Cost, QC Objectives
Business Final Check Post
& AR Audit Launch
30 Project Plan
Idea Charter Review
Submission
 Gate 6 Basis for Exhibit 10M
Division: Emerson Electric Co. Exhibit 10M
Program Name: Tracked New Product Metrics
Submitted by: Fiscal Year 2004
Telephone Number: (US$ Thousands)
Instructions for Completing Exhibit:
(1) Complete the contact information highlighted in yellow above.
(2) Enter data into the green fields below. (Non-hilighted boxes are calculated values and should not be edited)
(3) Selecting a particular field will produce instructions on how to complete that field.
(4) For additional information or definitions, consult the accompying instruction sheet.

Time to Market
Charter Date (MM/YYYY)
Planned Introduction Date (MM/YYYY) Planned CAPEX $ -
Actual Introduction Date (MM/YYYY) Actual CAPEX $ -

Financials
Year FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 Cumulative
Sales Forecast ($) $ - $ - $ - $ - $ - $ - $ -
Gross Profit (%) 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Average Unit Price ($) $ - $ - $ - $ - $ - $ -

Price
Emerson Price Plan Review (Y/N) N Replaced Product
If Yes, Enter Date Replaced AUP $ -
Replaced G.P. (%) 0.0%
Engineering
Low Cost Country - Emerson E&D Hours - hours Low Cost Country - Emerson E&D Resource Expense $ - #DIV/0!
Low Cost Country - Contract E&D Hours - hours Low Cost Country - Contract E&D Resource Expense $ - #DIV/0!
High Cost Country - Emerson E&D Hours - hours High Cost Country - Emerson E&D Resource Expense $ - #DIV/0!
High Cost Country - Contract E&D Hours - hours High Cost Country - Contract E&D Resource Expense $ - #DIV/0!
Total Project - E&D Hours - hours Total E&D Resource Expense $ -
Global Engineering Resource Ratio #DIV/0! Other E&D Expense $ -
Total Project Expense $ -
Total Forecasted Project Expense $ -
Actual vs. Forecasted Budget #DIV/0!

Emerson Design Review (Y/N) N Software Center of Excellence Design Review (Y/N) N
If Yes, Enter Date If Yes, Enter Date
Scope of Review(s) Enter scope of review here

Materials Materials / Mechanical Electrical / Electronic

% by Cost % by Number % by Cost % by Number
Division Corporate Division Corporate Division Corporate Division Corporate
% Preferred Suppliers 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
% Preferred Components 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
% by Cost % by Number % by Cost % by Number
% Parts Multi-Sourced 0.0% 0.0% 0.0% 0.0%
% Reverse Auction 0.0% 0.0% 0.0% 0.0%
% Globally Sourced 0.0% 0.0% 0.0% 0.0%

Please Submit Electronically to: corp.tech@emrsn.com Contact scott.ziffra@emrsn.com 314-553-1233 for questions
31