Time-to-market (TTM) refers to the time from which a company initially
conceives a product idea to the point when the actual product is accessible to
buyers in the market (Afonso et al., 2008).
"In a market with 20% annual growth and 12% price-drop per annum, technological products which arrive on the market six months late but on budget generate 33% less profit over five years, whereas getting the product to market on time but 50% over budget only reduces profits by 4% (Ali et al., 1995)."
The speed at
which companies can introduce products into the market is critical for
sustaining competitive advantage, and the reduction of product development
cycle time has become a strategic objective for many technology-driven firms
How New Product “Time To Market” Impacts Revenue and Profitability
Considering that 80% of new products miss the launch date,
companies have an enormous opportunity to increase sales and profitability by
improving new product time to market (TTM). You probably have such an
opportunity in your company. How do you go about making this improvement in a
sustainable manner so that it continues to improve over time for the long term?
Achieving new
product development (NPD) time to market goals generates more sales and
greater profitability because products that get to market on time:
·
Maximize the window of
opportunity in the market, seasonality, changing customer demand and
other factors
·
Avoid revenue loss from:
- Being late
to market.
- Missed
opportunities caused
by the late launch.
- Having
less time in market by being late and competitor(s) seizing the
opportunity.
Products that get
to market in time command premium prices early in the
lifecycle.
Lost sales caused by a late product launch occur at various stages of
the market life cycle. In today’s environment, markets, products, technologies
and customer demand change rapidly, and an increased number of companies are
competing for market share. Product commoditization usually occurs after only a
short time in the market, leading to lower margins and profits. This means that
new product time to market is a critical factor that not only affects a
particular product’s revenue and profitability, but can impact the overall
success of your company.
"The longer the period of missed time to market, the larger the lost opportunity, revenue and profits"
A 5-Step Approach to Reduce
Time-to-Market
Organizations
pursue TTM improvement for a variety of reasons. Some variations of TTM are
- Pure speed, that is, bring the product to market as quickly as possible. This is valuable in fast-moving industries, but it is not always the best objective
- More predictable schedules. Rather than reaching the market as soon as possible, delivering on schedule, for example to have the new product available for a trade show, can be more valuable. In addition to processes such as Stage-Gate or Six Sigma
- Minimizing resources, especially labor. Many managers figure that the shorter the project the less it will cost, so they attempt to use TTM as a means of cutting expenses. Ironically, a primary means of reducing TTM is to staff the project more heavily, so a faster project may actually be more expensive.
- Flexibility to make changes: Product innovation is intimately tied to change, and often the need for change appears midstream in a project. Consequently, the ability to make changes during development without being too disruptive can be valuable. For example, one’s goal could be to satisfy customers, which could be achieved by adjusting product requirements during development in response to customer feedback. Then TTM could be measured from the last change in requirements until the product is delivered.
These types of TTM
illustrate that an organization’s TTM goals should be aligned with its business
strategy rather than pursuing speed blindly.
Thanks a million
Regards
Mob: +91 9178075915, email: arif.aasia@gmail.com, Skype: mohammed.arif2601
Thanks a million
Regards
Arif Mohammad, ME CMgr FCMI CEng MIET
Chartered
Engineer & Manager-UK
