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Understanding the role of procurement in new product development

Procurement can play a key role in product development to help you remain competitive

What is new product development?

New product development is the process of bringing a product or service into the market, from start to finish. This includes the idea from product concept through to the manufactured product or delivery of the service. The following stages are key processes within new product development:

  • Idea generation:
    The first step is the search for new product ideas and it’s often best to generate lots of new ideas, then research the market to find out which one is best to pursue. Consider what customers want and what is lacking in the market and what your competitors are doing to find a gap in the market.
  • Technical assessment:
    It’s important to gather your ideas to see which ones are worth pursuing, build specifications to support suppliers understanding of what you are aiming to achieve, undertake some cost analysis to identify which offerings can generate value and which may not be worth pursuing. This could be done through market research and an analysis of suppliers to see if your idea can be brought to life.
  • Product concept:
    An idea needs to be developed into a product concept. A product concept is a more detailed version of your idea, keeping the customer in mind. Once the concepts are developed, you’ll need to test these on consumers. A physical presentation will often be a better option to test your concept, rather than simply using an image of the idea.
  • Product engineering and design:
    Product engineering and design is a large investment. It’s critical that as much research regarding technical and product assessments is done early in the process to ensure this stage is successful.
  • Prototype build:
    Building a prototype can be done quickly at usually at low cost and is a vital stage for ensuring customers get excited about the product. Test your prototype under laboratory or field conditions to ensure the product performs safely.
 

What are the benefits of new product development?

In an ever-increasing competitive market, organisations need to stay competitive and keep up with rapidly moving markets. New product development can help you stay ahead of the game, increases revenues, drives value, and improve overall customer satisfaction. Look below at some of the benefits of new product development.

  • Increased revenues:
    New product development provides new revenue streams for your organisation. The redesign of existing products can decrease costs, as products are designed with better quality through better designs and assembly methods.
  • Increased customer satisfaction:
    Delivering new products to customers and meeting their needs improves customer satisfaction. The innovation of products can contribute to improve functionality and customisation.
  • Competitiveness:
    New product development helps you to stay one step ahead of competition. Responding quickly to produce niche products helps you take advantage of the market gap, resulting in increased revenues and brand reputation.
  • New technology:
    Bringing new products to market can help you to take advantage of new technology and recognise the other production methods to produce your product. This can help to improve the quality and reduce time and costs.
 

What is procurement?

Procurement involves the buying of goods and services that enables an organisation to operate their supply chains, in a profitable and ethical manner. Explore deeper into how procurement is defined, the role it plays and a how a career in procurement can benefit you.

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