Once you decide what software or hardware your business will be developing, a question arises – how should the product development process be organized? Should you outsource part of the process, or develop the product completely in-house? And then there is the constant make-versus-buy dilemma which mostly comes down to what is more cost-effective.
What is Product Development Sourcing?
The world is becoming more and more integrated into many ways, particularly in product development and manufacturing. So sourcing and product development are starting to be more intertwined by the day.
The sourcing function in product development is sometimes a confusing topic in today’s organizational structures. It encompasses product development, sales, merchandising, production, and other areas, too.
With the growing inflation and a strained supply chain due to global conflict and the pandemic, sourcing needs your special attention these days. There are a myriad of reasons why your suppliers and sourcing techniques should be important to you. After all, product development heavily relies on customer needs as its guiding light. So you need to ensure you are staying on top of trends and properly sourcing for your process.
The Three Primary Types of Product Development Sourcing
There are a few key things to keep in mind when choosing your preferred type of product development:
- Production capacity
- Team capacity
When you get to the end of this article, you will probably find that the best solution for you is the combination of more of these approaches that we will list below.
#1 In-house Development
There are obvious benefits to the in-house product development process. Building internally and with a somewhat DIY approach gives you creative and innovative freedom. Other key benefits to this are:
- It gives you total control over the product development process
- Complete ownership of the intellectual property
- Total freedom to innovate and lots of flexibility
- Space to allocate budget freely
Wondering about some disadvantages? You’ve probably guessed some of them already, but the main ones are:
- Building a team means you’ll need to do in-depth product development work. That has a significant upfront and ongoing cost.
- You’re much more vulnerable to the risks that come with skipping regular check-ins.
- Capacity requirements are unlikely to be consistent over time unless you have an ongoing product development pipeline, resulting in inefficient resource use.
#2 Outsourcing Teams
Outsourcing parts of the product development process is one of the more popular options these days. Using your organization’s existing strengths and relying on the experience and expertise of an external team to help you with other aspects of your product development journey is an excellent way to maximize your results.
This product development model gives you the chance to collaborate with a team that knows everything there is to know about the product design process, and all of that for a lower cost. And without the cost or commitment of developing all of these capabilities in-house, a product design and consultancy team can help you navigate your way around both the common and unique pitfalls of taking a product from concept to market.
With outsourcing growing in popularity, you should know which functions should be outsourced, and which components should be built in-house, which should be commissioned, and which ones should be bought off-shelf.
Consider these things when choosing outsourced partners:
- Choose a team of proven experts with a track record in business
- Pick options that are cheaper than in-house product development
- Find teams that worked on projects similar to yours, so they can catch on quickly
- Concentrate on your goal and don’t lose focus
- Figure out at which stage you need outsourced help
# Off the Shelf Product Development
And here we arrive at the make or buy dilemma – the key decision as to whether to develop something in-house or buy it from an external supplier.
A make-or-buy means you are comparing the expenses and pros of manufacturing a product or service with your in-house team to the expenses and advantages involved in hiring an outside supplier for the resources.
Any successful product development process begins with identifying a need and devising a solution to that problem. However, this does not always imply that you must create a new component or element from the ground up. Any market has a plethora of gaps that can be filled with a few creative edits to an existing product. And by this, we mean getting at least a portion of the solution you’re working on from somewhere else, then tweaking and adapting it for a new purpose.
The time to market is a key strength of this strategy. Because so much of the work has already been done, you don’t need to go through as many developmental steps to come up with a viable solution.
Not every business is able to allocate all of its budgets to innovative manufacturing and solutions. Especially with the growing challenges of today’s world, you need to look elsewhere for assistance for getting to your goal.
That is why you should strive to combine all three sourcing techniques for product development. In order to create a great action plan, you must weigh the benefits against the challenges for each scenario.
The integrated approach to development and merchandising means that there needs to be a revitalized upsurge of the purchasing and engineering relationship. Collectively, businesses, outsourced teams, and trusted vendors and suppliers can walk the challenging economic path together to great results and answer customer needs.