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Lean Launch: Managing Product Introduction Risk Through Response‐Based Logistics
Author(s) -
Bowersox Donald J.,
Stank Theodore P.,
Daugherty Patricia J.
Publication year - 1999
Publication title -
journal of product innovation management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.646
H-Index - 144
eISSN - 1540-5885
pISSN - 0737-6782
DOI - 10.1111/1540-5885.1660030
Subject(s) - postponement , supply chain , new product development , business , process management , product (mathematics) , supply chain management , marketing , geometry , mathematics
New product launch research has identified four strategic issues that involve activities essential to introduce a new product to its target market. The sum of these decisions is critical to new product success. Substantial research has focused on decisions guiding the proper product, price, and promotion mix to favorably impact market goals. Considerably less research has centered on determining how place capabilities such as logistics and supply chain relationships impact launch performance. Logistics and supply chain collaboration—the processes involved in planning, implementing, and controlling the efficient, effective flow and storage of goods, services, and related information from the point of origin to point of consumption for the purpose of conforming to customer requirements—can greatly reduce risk associated with new product launch. They combine to provide a structure to facilitate rapid response to developing demand by location and intensity. In this article, an effort is made to fill the gap in extant knowledge regarding new product launch strategies by reviewing relevant literature and comparing traditional launch strategies based on anticipatory demand forecasts with alternative lean launch strategies based on the principles of response‐based logistics. The result is a lean launch model for continued empirical testing and managerial review. The article contrasts traditional logistics support of new product launch with an emerging logic called lean launch strategy. The traditional launch strategy is forecast driven and is based on anticipatory logistics (push). The lean launch strategy is formulated on principles of postponement and is based on response‐based logistics (pull) and supply chain management. Response‐based logistics systems provide flexibility that enables better management of inventory levels. Improved replenishment times and in‐stock availability of products from a centralized inventory allows managers to rapidly react to actual demand. Lean launch enhances successful introduction by allowing greater flexibility in product variant selection while minimizing out‐of‐stock potential. Lean launch also can cut losses in product launch failures by reducing launch inventory exposure. Finally, lean launch can improve chances of new product success by helping limited volume technical successes achieve profitability.