The most decisive factor that survives enterprises under stiff competition is the development of new product (NPD), and when entering the product development stage after the fuzzy front end, a best project portfolio should be finalized in order to potentially create expected revenue and competitive advantage. However, even it reaches the end of the fuzzy front stage; the NPD project is still significantly involved with uncertainties, complexities and fuzziness. To assist R&D managers making decision in this environment, this study proposes a new approach which combines fuzzy set theory and multi-criteria group decision making method into a NPD project portfolio selection model. This model takes into account project performance, project delivery and project risk, and formulates the selection decision of NPD project portfolio as a fuzzy linear programming problem. The illustrative example shows that the model proposed can generate projects with the highest success rate under limited resources and manpower.
Campbell and Cooper indicated that, in this chaotic and fast-changing environment, the continuing growth and ever-lasting existent of enterprises depends upon successful new product development (Campbell & Cooper, 1999). However, the in-coming new competitors, endless technology innovation and dynamic customer demands have significantly shortened the product life cycle. Lin and Chen concluded that, though the new product development requires complex management processes and involves high risk, a successful NPD project can certainly generate vast profit and competitive advantage (Lin & Chen, 2004). Unfortunately, although managers acknowledge the importance of new product development, most NPD project failed. Stevens and Burley observed that only 60% of NPD projects survive from the fuzzy front end to commercialization, even systematic stage-gate processes are employed (Stevens & Burley, 2003). The primary reason is that the NPD processes were not strictly controlled so that projects that are unlikely to be beneficial survive from the Go–Kill gate, leading to product outcomes nonconforming to market requirements.
Because NPD processes consists of fuzzy front end stage (FFE), product development stage and product launch stage, Kim and Wilemon implied that decision of NPD project selection is tangled with uncertainties of technology, market, resources, environment and capability (Kim & Wilemon, 2002). Zhang and Doll observed that uncertainties of NPD are due to customer demands, competition and ever-changing technology (Zhang & Doll, 2001).
Machacha and Bhattacharya pointed out that, when selecting the project portfolio, the most difficult task that manager faces is screening the project with the best potential profitability and meeting enterprises objective (Machacha & Bhattacharya, 2000), especially, if the decision is to be made within dynamic environment and under competition pressure. Therefore, a good project portfolio is extremely important for enterprises to generate competitive advantage. Cooper revealed three cornerstones affecting new product development performance as product development processes, new product strategy and resource commitment, and most organizations allocated more resources to maintain high quality product development processes than others (Cooper, 1996). Avineri et al. recognized that the problem the enterprises need to solve is to select the best project out of a vast amount of NPD projects within resources constraints, thus, an effective resources allocation system is highly needed (Avineri, Prashker, & Ceder, 2000). In other words, a NPD project management system should be established to ensure that those with high feasibility and conforming to business strategy while meeting customer needs can be finally selected.
To help ease the decision of finding the best project portfolio, this study proposes a new fuzzy multi-criteria group decision making approach to select the NPD project portfolio which considers project performance, project delivery and project risk, and a fuzzy linear programming model is formulated to analyze the best NPD portfolio that most suits enterprises objective.
Even after the fuzzy front end of the new product development, the project portfolio decision is still fuzzy in nature. In other words, decision makers are inevitably troubled by the uncertain decision environments under limited resources and stiff competition, however, selecting the best project portfolio that most suits the strategic benefits of the enterprises and optimizes the resources usage to maximizes the success rate of product development has been the primary concerns for business managers. The most common methods for NPD project selection is to extract internal and external expert’s judgments, nevertheless, experts tend to apply fuzzy means to solve complex and fuzzy problems. To improve the quality of fuzzy NPD decisions, this study proposes a new multi-criteria group decision making model which takes into account the project performance, project delivery and project risk. The fuzzy group decisions are collected, consolidated, defuzzfied and formulated as a fuzzy linear programming problem. Based on the illustrated example, it is concluded that the proposed model can be a useful technique for making project portfolio decision.
