Development of new products process and performance metrics for Mister Donut Philippines / Maria Carmela T. Ambayec

Year : 2007

Number of Pages : 40 leaves

Adviser : Prof. Edison D. Cruz

Executive Summary

This project aims to provide a new products process and a set of performance metrics customized for Mister Donut Philippines. This is in response to the many problems that the Company encounters with its new products after launch, when the products are already out in the market. Specifically, the project objectives are to make a brief assessment of the standing of Mister Donut Philippines in terms of its current new product development system and its quality effectiveness and efficiency, to provide the Company with a company wide perspective on systematic and preventative quality planning through the new product development process and performance metrics to be developed, and to incorporate quality in every phase of the new product development process. With this, the project is expected to yield major contributions in the areas of company efficiency in general, and those of the Research & Development and Marketing. In the development of the new products process, a review of the organizational profile of the Company and an assessment of its current situation as a whole and its current new products process (NPD) were done in order to put into context the process recommendations of the project. The organizational profile of Mister Donut Philippines identifies the Company as a food manufacturer and vendor of donuts (which is its core product) and other baked products, with franchising as its main business. There are over 60 variants of donuts available, and the Research and Development unit adds an average of 10 variants every year. On the current competitive position of Mister Donut Philippines, it places second to Dunkin Donuts, which currently dominates the donut market at 70 percent, as well as the top-of-mind brand awareness at 78 percent. On the other hand, in terms of distribution network, Mister Donut leads at 89 percent with 1,162 retail outlets. It is on this ground that Mister Donut has set for itself the vision of becoming "the preferred, top-of-mind brand in the fast-food category of donuts and related products," despite being second in the competitive environment it currently belongs to. Assessment of the current situation of Mister Donut Philippines highlights new product development (NPD) as one of its major value creation processes under the category of process management, and is considered key to achieving the Company's vision of becoming top-of-mind. Initial assessment shows that the current new products process of Mister Donut Philippines consists of three (3) major parts, which is seemingly too short and incomplete as compared to the basic new products process recommended by NPD professionals in literature. Further assessment also led to the identification of five (5) key assessment result areas that are indicative of the current status of the Company's NPD process. The second key assessment result area is the independent quality department. Yes, the Company has an independent quality department that reports directly to the President, and which performs audit functions, mostly for existing products and production systems only. For new products, the involvement of the QA Department is at Product Roll-out stage only (which is at the latter part of the current new product development process. This explains why the assessment results show that the current influence gravity of the Quality Assurance Department and its quality audits are just minor in reference tot he whole NPD process. The third key assessment result area is the product development cycle, where the project leader assigned to each new product development is a marketing person. There is also a process being followed, but the outline of activities and responsibilities for each process step is not yet documented and clearly established, thus, leading to a degree of uncertainty and confusion for some of the team members. The fourth key assessment result area is product and marketing plan, where Mister Donut Philippines has already reached a degree of maturity in terms of NPD. This is reflected in the Company's acknowledgement of the new products process as actually the development process of both the product and the marketing plan. This is reflected in the company's organization chart, wherein the Marketing Department and the Research and Development Department are clustered under one Vice-President. The fifth and last key assessment result area is the launch program, which is still lacking in reference to the Company's current new products process. This is reflected in the fact that, with the Company's current NPD process, most problems are encountered during the launch stage. In developing the new products process and performance metrics for Mister Donut Philippines, the conceptual framework used was the Stage-Gate Framework by Robert G. Cooper. This new product approach is a conceptual and operational model for moving a new product project from idea to launch. It is a blueprint for managing the new product process to improve effectiveness and efficiency. Stage-Gate methods break down the innovation process into a predetermined set of stages, each stage consisting of a set of prescribed, cross-functional and parallel activities, The entrance to each stage is a gate. These gates control the process and serve as the quality control and Go/Kill checkpoints (Cooper, 2005).

For lower-risk projects, Cooper suggests the use of the three-stage Stage-Gate Express framework, which is the one that is actually being recommended in this paper. This is designed for smaller projects, which include modifications, extensions, improvements, simple sales requests, and single-customer projects (Cooper, 2005). The recommended new products process for Mister Donut Philippines consists of five (5) stages, namely, Discovery Stage, Scoping and Building the Business Case Stage, Development and Testing Stage, Launch Stage, and Post-Launch Review Stage. In-between these stages are three (3) gates, namely, Idea Screen Gate, Go to Development Gate and Go to Launch Gate. For the Discovery Stage, suggested activities include Ideation and capture system, Fundamental, directed technical research, Discussions with lead or innovative users and/or suppliers, Product value analysis with customers, Voice-of-customer research (to capture unarticulated customer needs), Competitive analysis and reverse brainstorming or competitive products, Idea suggestion scheme (to stimulate ideas from Company employees), and Strategic planning exercise (to uncover disruptions, gaps, and opportunities in the marketplace). For the Scoping and Building the Business Case Stage, two (2) major activities are involved, namely, the Preliminary Market Assessment and Preliminary Technical Assessment. The former consists of activities such as internet search, library search, contacts with key users, distributors, and salespeople, focus groups and quick concept tests with potential users, while the latter involves preliminary in-house appraisal of the proposed product. For the Development and Testing Stage, major activities are In-house product tests, Product roll-out and trial/pilot production, and Production equipment acquisition, installation, and commissioning. Under the Product roll-out and trial production, the Product Roll-out Checklist is recommended to be used as a tool for evaluating the product and process at production level. For the Go to Launch Gate, the rejection rate is recommended to be used as criteria in making the decision to proceed to launch or not. Among the stages and gates in the recommended new products process for Mister Donut Philippines, Development and Testing Stage (Stages 3 and 4) and Go to Launch Gate (Gate 5) are believed to be the most critical. This is because it is at the Development and Testing Stage where the viability of the project is tested, and validated, which include the product itself and the production process, among others, while the Go to Launch Gate is the final point at which the project can still be killed.