The Product Design Process

In today' world, companies often outsource major functions rather than support these functions in-house. Companies that specialize in manufacturing products for other companies have become very successful. These companies are called contract manufacturers and they have become successful in industries such as electronic products, clothing, drug, plastics, and custom manufacturing. A simple definition of a contract manufacturer is an organization capable of manufacturing and/ or purchasing all the components needed to produce a finished product or device.

The use of contract manufacturers has dramatically changed the way traditional manufacturer companies now operate. Depending on the situation, contract manufacturers will take various roles for a company.

Similar to the outsourcing of manufacturing, many companies outsource the product design function. Product design differs significantly depending on the industry. For consumer products, understanding consumer preferences and market testing prospective products are very important activities. For pharmaceuticals, extensive clinical test are often required that involve carefully controlled experiments to test both the safety and the effectiveness of a potential product. Companies that specialize in the design of products have highly developed processes to support the activities needed for an industry.

Given the potential advantages of using contract manufacturers for producing products and specialized design firms for designing their products, a firm must decide what their core competency should be. A company's core competency is the one thing that it can do better than its competitors. A core competency can be anything from product design to sustained dedication of a firm's employees. The goal is to have a core competency that yields a long-term competitive advantage to the company.

A core competency has three characteristics:

1. It provides potential access to a wide variety of markets.

2. It increases perceived customer benefits.

3. It is hard for competitors to imitate

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