A Techno-Economic Model Applied to the Development of New Products and Improved Processes

The paper reports both practical and theoretical results from some 82 projects conducted with 70 small and medium-sized enterprises (SMEs) over the last 8 years. The companies are found in the plastics, chemicals, food, metal fabrication and electrical components sectors of manufacturing industry. The objective of the projects has been to develop new science-based products and/or processes, or improvements to these-occasionally all of these things. The initial choice of a project and its subsequent management have been subject to a specific techno-economic assessment procedure evolved by the Centre for Manufacture's partnership with NEPPCO Ltd-a company specializing in research and development for the process industries. As described in the paper, this procedure now deploys a techno-economic model (TEM) which links quantitatively the inputs and outputs of: research and design, investment and production, sales and marketing over any given time period. The TEM allows market share and return on investment trajectories to be generated for an innovative change under various assumptions about the competition and the company management's own characteristics. The paper demonstrates the importance of what may be termed the stoichiometric principle of innovation, i.e., optimum financial performance requires the resources devoted to product design, process efficiency, investment in plant and in selling, to be kept in strict proportions to each other.