Innovate responsibly to weather tough economic times
Leveraging sales and customer data, exploring innovative engineering and manufacturing techniques, and taking advantage of an international supply chain are just a few of the factors involved in new product development in today’s optics and photonics markets.
Innovation doesn’t wait for the economy to get better – and neither does the competition. New products provide new revenue sources for businesses as they look to continue growth following the “great recession.”
The economic ups and downs of the past few years have been enough to force any technology manufacturing business into making difficult choices about how to spend its money. The agonizingly slow pace of recovery has boardrooms around the world worrying about the next quarter’s sales – never mind the next new product coming from R&D or product development.
At times like this, it is easy to drastically cut back on new-product budgets in the name of riding through the rough patches, but smart companies are taking advantage of this time to leapfrog the competition and position themselves for better economic days to come. They know that innovation and the market that follows it don’t wait for the economy to pick up.
Product development is one of several business processes that take time. Turning off investment will save expenses this quarter but will cause potentially ruinous results when business begins to take off again in future quarters. It is crucial for corporate management to think long-term when considering decreasing investment in new products because neglect will result in an extended downturn for the business, while innovative companies will benefit from building new offerings today.
Additionally, technology manufacturing companies that placed value on maintaining their technical staff through the “great recession” already have the personnel infrastructure in place to continue product innovation. Maintaining product innovation keeps your engineering staff engaged and ready to tackle the growth that undoubtedly will occur.
Much of the development process can be done with minimal expense, and product managers can work closely with R&D and finance to identify less-expensive ways to develop products. Continual advances in communication tools mean better collaboration between groups, and new software tools for modeling, development and simulation as well as rapid prototyping speed up design cycles while lowering residual costs.
Responsible product development means focusing efforts around specific opportunities, backed by clear customer feedback and market data. Although the occasional “wildcat” idea may be considered, product managers must prioritize development efforts around projects with clear customer demand and strategic benefit. What products is the company missing that are currently offered by the competition? What is missing that could put this company ahead? What technology improvements do customers require to address the needs of their own customers and competition?
Given limited resources and ever-decreasing development time, the product development department must work closely with sales and marketing to clearly define customer needs. It must take advantage of its sales force’s experience and customer network and work with marketing to identify trends in its customer interactions. Companies must mine their databases and transaction histories for concrete customer behavior data. In today’s “crowd sourcing” world, customers can even actively participate in product development through surveys, online forums and other direct methods for soliciting feedback. One thing no company can afford is to make product decisions in the dark.
Responsible product development comes with a price. At Edmund Optics, our team is constantly focusing on new products, and we have continually expanded our offerings over the past several years. Although we benefit from being mostly a components company, our challenge comes from responsibly expanding our inventory to meet the same service requirements on new products (roughly 2000 every year) as we have for all our products (which number above 26,250).
To achieve this balance, our team focuses on the following initiatives:
• Growth in market segments — As with most photonics companies, we benefit from optical applications in a variety of industries, including the life sciences, machine vision, materials processing and research/academics. By introducing products that address several industries, such as filters and imaging lenses, we take advantage of growth trends in some, such as the life sciences, while hedging against declining trends in others, such as defense and semiconductors. Our team also is doing more to work with sales to make sure that our new products have the right pre- and postsales technical support for the industries and applications. For example, our product line managers are spending more time searching our opportunity database to identify volume sales projects that could use a technical expert to assist in closing the deal.
• Coordination with supply chain — Developing the right products is only part of the product manager’s job; forecasting demand and working with purchasing to have the right amount of stock on the shelves is another full-time job. This is especially true for our business because of our large and varied catalog, but given today’s tighter economy, all businesses must be cash-conscious. Tying too much into one product means missing out on other opportunities, but not investing enough means disappointing prospects for a new product.
Fortunately, we were largely unaffected by the recent flooding in Southeast Asia, but the dramatic increase in rare-earth material costs has pushed us to work with our supply-chain organization to leverage our vendor and supplier networks.
• Identifying manufacturing efficiencies — The booms and busts of recent years have wreaked havoc on manufacturing, both in our own factories and in those of our suppliers. Without careful coordination between product management and manufacturing, new products can amplify the waves of an already stormy sea. As new products come online, be sure to work closely with your manufacturing engineers and technicians to identify best practices for streamlined production. Companies with flexible practices and prototyping cells can quickly incorporate new products into their mix, while still meeting any and all existing product demand.
The root of the “Technology Age” rests in the fact that people want to do more with less, and they want to do it faster and more cheaply than they did last year. For photonics companies, new products mean new sales, new markets and new market share – both now and in the boom times to come.
Meet the author
Todd Sierer is director of product marketing at Edmund Optics in Barrington, N.J.; email: firstname.lastname@example.org.
Initiatives important for responsible product development during down times:
• Growth in market segments
• Coordination with supply chain
• Identifying manufacturing efficiencies
- The technology of generating and harnessing light and other forms of radiant energy whose quantum unit is the photon. The science includes light emission, transmission, deflection, amplification and detection by optical components and instruments, lasers and other light sources, fiber optics, electro-optical instrumentation, related hardware and electronics, and sophisticated systems. The range of applications of photonics extends from energy generation to detection to communications and...
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