NPI Supply Chain Craft

Practical Techniques for Holistically Taking Over Existing New Product Programs.

Part 1: Get into the right mindset and learn the foundational rules (Steps 1&2).

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• Part 1: Right mindset & the foundational rules (Steps 1&2)
• Part 2: Program requirements and status (Step 3)
• Part 3: Manual BOM, Bill of Materials (Step 4)
• Part 4: BOM conversion to materials tracker (Step 5)
• Part 5: Priorities and execution (Steps 6&7)
• Part 6: Combo BOM Trackers (Step 8)

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The ideal time for a Buyer to start supporting an NPI program is during these periods:

1. Proposal Phase. This is the period after receipt of a customer’s RFP for a New Product design. During this short time frame, the Buyer and Planner provide cost input (hopefully) into the material and internal labor cost estimations to be embedded in the final proposal quote to the customer.
2. Post-Award of Contract. This is the period immediately after receipt and acceptance of a customer’s purchase order for the new product that was quoted during the proposal phase.

It is during these two phases that the Buyer and Planner are best able to proactively ensure on-time delivery, cost savings or avoidance, optimal manufacturability, and conforming or improved quality. I will cover this in greater detail in a separate blog post.

Meanwhile, this post addresses the most common scenario for newly hired or reassigned Buyers: taking over NPI programs that are already in progress. Each one could be in a different stage. One might still be in design, another undergoing qualification testing, and another making a systemic transition to production. The variation makes supply chain prioritization challenging, especially if the Buyer has limited work time and a heavy workload. In my opinion, NPI procurement cannot be handled efficiently if done the same as production procurement.

My method for handling NPI procurement is proactive, holistic, and collaborative. It involves learning all the relevant requirements (company, departmental, program, and material), catching up on all program statuses, and organizing based on BOMs. After setup, it’s a daily routine of prioritizing, executing, updating, monitoring, and driving action items. I also take a “macro-to-micro” approach. This puts me in a project-oriented mode to not only focus on supply chain goals (the “micro”) but to also contribute toward successful product and service deliveries to the customer (the “macro”). Because the supply chain is such an integral part of new product introduction, I advocate advanced project team collaboration in order to not only meet but exceed the supply chain requirements.

DISCLAIMER. This won’t work perfectly because, from week one, you will inevitably be confronted with “hot” issues or parts shortages needing immediate action. Some “micro” actions just can’t be postponed so you’ll do what you have to do. But you’ll find the job much more satisfying if you drive progress in your programs rather than letting them drive your days.

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Step 1 – Get in the Right Mindset.

I’ve found supply chain management of multiple NPI programs to be a mental adventure. But not all Buyers do.

In my opinion, a new NPI Buyer faces more challenging conditions than other buyers. For starters, they may be the sole buyer leading new product and R&D programs procurement. The higher the number of responsible projects, the greater the workload with more competing priorities that must be juggled. Most likely, they will have to perform a greater range of supply chain tasks. Besides the standard purchasing duties, I’ve had to perform cost estimating, strategic sourcing, supplier technical collaborations, contract writing, project management, bill of material creations, and overseas logistical arrangements. I wonder if this why variations of this job title and role description have been emerging lately.

There are other differences. NPI Buyers have to often operate flexibly and forwardly thinking when the digital production structure (MRP, master parts data file, released drawings, released BOM) is not in place yet. They also have to deal with issues and obstacles not seen in production programs. Basically, every day is different, you’ll often feel outside of your comfort zone, a whole day could be spent reacting to urgencies, and there is limited time to accomplish a wide range of tasks.

When you tackle this type of work, it helps to have the following attitudes and skills. Otherwise, most days will be a struggle.

• Organization. You have to be able to organize, then prioritize. Some weeks will seem chaotic, meaning full of situations marked with disorder or confusion. You’ve got to embrace the chaos, understand it, and re-establish order as soon as possible. Try to run your day more than letting it run you. Working to a BOM Tracker will enable you prioritize and execute your work in an organized manner.

• Leadership. This means taking charge, being proactive, and inspiring important things to be started that require other team members and that affect the supply chain. Using the method described here will give you necessary leverage. It also means starting procurement setup and activities in advance of MRP setup because I can almost guarantee that, if you wait for it to happen on its own, you will find yourself immediately late to schedule.

• Flexibility. If you have a “by-the-book” mentality, you will become frustrated often or contribute to supply chain delays. We often encounter situations where procedures, work instructions, and “rules” are non-existent or murky. To be effective, you’ll probably have to guide or establish processes collaboratively. This also means not self-restricting yourself under the cloak of “not my job” reasoning in situations where such boundaries don’t actually exist except in a “should be” world.

• Acceptance of Change. As Heraclitus put it, “Change is the only constant in life”. Well, this also applies from the R&D stage to the qualification stage. There will be changes that cause problems with sourcing, costs, purchase orders, materials, and schedules. You have to accept in advance that plans will change and be OK with it.

• Collaboration. They’re called IPT’s (Integrated Project Teams) for a reason. Especially in the early phases, most of your procurement work will require linkage and coordination with Engineering, Quality, Planning, Project Management, and Supply Chain Management. Operating unilaterally on a materials problem that might affect the schedule, quality, design, etc. without consulting other team members can make the problem worse.

• Open to Learning. Many engineering issues will occur during the development and qualification phases. Being situations of a technological, mechanical, design, or scientific nature, you may think that they don’t concern procurement. But if it could affect the fit, form, or function of a BOM item sooner or later, then you will have to get involved. Whenever you hear about them, you should ask questions and understand enough detail to answer the question, “Will this affect a current or pending order, supplier sourcing, lead time, cost, manufacturability, or quality in some way?” If so, you’ll be better equipped to take proactive strategic or tactical action.

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Step 2 – Learn Company Systems and Procedures (aka “the Rules”).

Timing: This step takes as long as it takes, depending on the extent of your company’s training system. Just know where and to whom to go in case you forget anything.

NPI Programs are filled with lots of changes in areas such as requirements, design, schedule, processes, priorities, and team roles. Oftentimes, new obstacles and conditions will thwart not only the project’s daily goals but also your daily supply chain goals. Schedule, cost, or quality becomes at risk. If you don’t have any sense of urgency with a default “it is what is” response, then this blog will be unhelpful. But if you are determined to overcome these challenges, then you must be adaptable to changing circumstances and flexible enough to advocate solutions that may deviate from the production standard processes without breaking the rules (unless approved). Crudely put, you can’t bend the rules until you know the rules (and have the support to do so).

So, the first step is to thoroughly understand the company rules affecting NPI procurement or planning. You should also understand your company’s capabilities. (This should be done anyway via training as a new employee). Knowing all this will give you a strong foundation in order to creatively resolve issues without ignorantly causing other problems. If you’re already knowledgeable of these, feel free to skip to Step 3. Otherwise, here is a short list.

• Supply Chain Procedures. Purchasing, request for quote, sourcing, supplier management, material requirements planning, work orders, material returns, nonconforming material, purchase order approvals, etc.
• Other Dept. Procedures. Quality, quality codes, supplier quality, inspection, shipping & receiving, drawing design and release, bill-of-material creation and maintenance, specific product assembly, invoice processing, etc.
• Development Procedures. Procedures strictly for NPI or R&D programs.
• Operating System. The Enterprise Resource Planning (ERP) system, MRP and Master Data parameters, and software operating instructions.
• Purchase Orders. All standard elements, including format, critical data, flow down clauses, and terms and conditions.
• Your Company. Relevant NPI products, mission and goals, core competencies, equipment, other departments’ functions, NPI-supportive personnel, workload capacity, operations done in-house and outside, chain of command, etc.

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Part 2 of this blog, I’ll cover program requirements and status (step 3).

To be continued. Stay tuned for Part 2!