Between the Lines -- September 2004

In order to remain competitive, consumer goods firms are faced with the increasing challenge of getting their products developed and to market faster than ever before. This month, CGT sat down with Chris Colyer, Industry Manager, General Manufacturing for Microsoft, who touched upon specific needs of consumer goods firms and solutions they should be evaluating. Chris draws upon his five years with Microsoft and, prior to that, over 12 years of experience in the manufacturing industry with Dow Chemical, providing insight into a variety of critical areas for consumer goods executives.

How can consumer goods firms speed time to market on new product development and launches?
Companies in the consumer goods industry are operating in a highly competitive market. Not only are they competing with core branded products, but also with retailers' private labels. Retailers are keeping a sharp eye on product turns on the shelf and which products are drawing people into the store. In order to lead the competitive landscape, or at least keep up, companies must constantly look for new ways to get products to market faster and respond quickly to competitor actions.

The first step in improving the product development process and time to market is developing a strategic approach to product lifecycle management that best fits the company's needs and goals. In reality, PLM can encompass everything from product inception to customer feedback and reengineering. When companies think about PLM, they think about everything from design, product development and manufacturing to packaging, promotion and marketing, customer acceptance, forecasting and demand feedback.

Another step for companies on the PLM path is to connect the growing enterprise of internal and external organizations involved in a product's life cycle. It's important for companies to put in place the capabilities to support constant, real-time communication and collaboration inside their organizations as well as with partners, suppliers and retailers. Building a collaborative infrastructure is important in giving all involved parties the comprehensive, immediate information needed to make decisions that decrease operating costs, speed time to market and keep the company competitive. To accomplish this, companies need to build a collaborative strategy inside and outside their organization with tools that are easy to use and can be implemented without incurring significant costs or time required for training.

Consumer goods companies also require exceptional project management tools and have to pay strong attention to detail in managing projects, timelines and milestones in order to move projects through the pipeline faster and identify successful projects in their earliest stages. Simply, they do not want to apply resources to projects that will not be viable. It's also important to make visibility of the projects available to the involved parties inside and outside of the organization, including the sales teams, product development group, manufacturing department, financial and cost accounting teams, and the customer.
What emerging technologies in PLM have had or will have the most impact on consumer goods businesses?

Advances in computing power, reach and speed of network capabilities, proliferation of devices, the ubiquity of the Internet and the low cost of establishing communications have all affected PLM technologies. With those elements in place, XML Web services will now have a big impact. Since all platforms can consume and share XML Web services data, XML allows companies to not only collaborate, but also retain and share knowledge housed in legacy systems that normally do not talk to each other. Finding a way to connect your organization without replacing old technology systems allows the IT department to generate greater returns on existing technology and break down the information silos to improve communication and collaboration, without a large capital expenditure.

Another technology making a big splash is RFID. Even though RFID is in the early stages of adoption, it appears this technology will have a significant business impact on consumer goods companies, allowing them to increase business performance and enhance customer service. RFID will make it possible for companies to better track goods in the supply chain and manage product inventory and shipping by allowing greater visibility into shelf stock needs and shrinkage. By providing an accurate view of a product's lifecycle, the technology will enable companies to improve return on investment and forecasting and distribution capabilities, and reduce inventory and labor costs. This leads to a faster time-to-market and better customer service.

What is the core competitive business advantage for improving NPDI initiatives?
To be on top of the profit curve, companies have to be faster than their competitors at innovating and getting products to market that address a market need. More than staying competitive though, companies want to increase market share and profitability. Consumer goods companies do this by gaining greater shelf space and by being on the front end of the new product curve to get greater unit profitability and brand loyalty.

Many organizations have focused on reducing costs in the supply chain and operations. But, new product development ultimately is focused on increasing top line revenue. The business advantage of implementing a PLM strategy and focusing on new product development is to increase revenue by staying at the forefront of the profit curve.

How can consumer goods companies begin implementing a PLM strategy?
To move beyond the basic solutions already in place and build a PLM strategy, companies need to evaluate where they are currently and what they want to accomplish. For example, they need to ask themselves if they want to focus on improving product design or on collaboration with sales and marketing teams.

Once they know where they are and where they are going, they can plot the best approach. For some companies, it may simply involve leveraging and connecting base collaboration technologies. Other companies may want a sophisticated corporate PLM strategy that involves solutions from a number of independent software vendors for engineering design, product data management, compliance or business process management.

In the consumer goods industry, we are seeing companies develop PLM strategies focused initially on new product development. They begin by concentrating heavily on design, product introduction and customer feedback. Two other areas where CPG companies may use PLM solutions are to manage their various recipes and product formulations, and manage their global product portfolio and brand, including packaging policy. Each company's requirements will define the PLM strategy.

How often should consumer goods firms engage their retail partners when building new product strategies?
With the collaboration tools and software available today, consumer goods companies can have an ongoing, continuous dialog with their partners. The ultimate goal for any consumer goods company is to obtain the limited shelf space that is available. The competitive need to garner shelf space makes it critical for consumer goods companies to work closely with retailers early in the new product development process.

Consumer goods organizations want to generate excitement with retail partners while new products are moving through the supply chain. They want to provide retailers with up-to-date information, gather feedback from the retailers, respond faster with necessary changes and get the product on store shelves as quickly as possible. Achieving that provides more efficient customer service and greater customer satisfaction.