Keywords: product portfolio management, PPM, product life cycle management, R&, amp, D resources, multiattribute decision analysis, research and development, resource constraints, engineering-to-order, ETO, new product development, NPD, product design, product portfolios, performance values, product substitution, computer manufacturing
A strategic product portfolio management methodology considering R&D resource constraints for engineering-to-order industries
New product development projects usually incur high cost and high risk for corporations. For engineering-to-order industries, where each order requires a certain degree of new product design and customisation, R&D resources must be properly utilised for the highest possible profits. Thus, Engineering-To-Order firms often search for optimal product portfolios that effectively allocate limited enterprise resources to projects with the greatest potential for success. This paper develops a Product Portfolio Management (PPM) methodology that systematically analyses product portfolio strategies at the beginning of the product life cycle. Multiattribute decision analysis estimates the performance values used to construct plausible product portfolios during the early Engineering-To-Order design stage. An activity group concept evaluates resource requirements and the potential risks of product portfolios. The revenue of a product portfolio considers the levels of substitution among products. Finally, an industrial computer manufacturer, that is, a typical Engineering-To-Order company, adopts the methodology for its PPM to demonstrate the practical application of the research.