New Products — Opportunity or Threat

From a supply chain standpoint, the introduction of a new product is both an opportunity and a threat. It is an opportunity to the extent the new product will increase sales and invigorate a company s offerings. It is a threat if the introduction somehow misses the mark with prospective 

Both Rhino and Au Bon Pain rely on a fixed supply chain into which they launch new products. The supply chain processes for each product introduction are common, but each new product will have some variation that must be incorporated into the introduction procedure. For Rhino, the promotion budgets and expected sales volume will vary widely from one release to another. Timing is also critical if the release is to take advantage of external events or to a developing market opportunity. For example. Rhino heavily promoted a release of Oscar-winning tracks at Oscar award time. Au Bon Pain can mn a special on a new sandwich to draw customers into their stores. Or it might introduce sandwiches regionally that cater to local preferences. 

For Rhino and Au Bon Pain, the supply chain is a central, vital process. ITowever, it is likely to be stable — not changing much fundamentally, but yet susceptible to continuous improvement modifications. Individual new products do not vary significantly from item to item. Each Rhino CD or tape and each Au Bon Pain sandwich has a lot in common with those that preceded them. But speed and efficiency in the process that produces them continues to be quite important. 

At the other extreme are new products that require new product technology, production processes, product development partners, and supply chains. These product introductions are anything but routine. Often, these projects represent bet your company investments. In the middle of these extremes are many, many products that are neither routine nor radical. And often, the likely conclusion is that existing supply chains and production facilities will suffice to produce market success. 

Section 5.1.3 describes the differences between innovative and functional products. One observation is that similar products, like automobiles, may be different. An example is a Taurus being a functional product while a fashionable new convertible is an innovative one. The supply chains for these products should be different. The differences may not be so much in the physical flow, but in the decisions regarding inventory and availability of product. Because the products cater to different segments, they are likely to produce different margins and require different inventory economics. 

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