Hype vs. Reality

Product Innovation and Management, often called Product Lifecycle Management (PLM), is becoming a top priority for many CG executives. The first challenge, however, is to understand and distinguish the hype versus reality. Few other corporate endeavors can be as vexing because PLM is often characterized by a lack of structure, inconsistency and no sense of completion. The end result can be an inefficient and costly process that poorly delivers product to the market.

Address the Issues

Despite all of the attention and discussion, its not abundantly clear what business issues PLM addresses, and what CG firms should consider when evaluating PLM solutions. Before embarking on a PLM improvement program, leaders within all major functional areas must be aligned and synchronized to the objectives and priorities of the company's product management function. By addressing an initial set of questions, leadership can focus the required business process, data, people and technology changes that will improve and fortify the PLM function (Refer to chart).

Three Steps For Success

After considering all of these questions, an additional question surfaces --"How?"

First, organize basic data accurately and confirm it is readily available and applicable to the product development process. Second, since specifications form the heart of a CG company's product definition, they should be structured to include all aspects of the product, including: formulas; raw materials; packaging; and finished product descriptions. Simply put, specifications drive the bill of materials required to produce the product. In addition, product claims, cost estimates and safety and regulatory aspects should be included. Third, the recipe combines the formula input and output specifications with the process steps and equipment necessary to make and package the product. Recipes should be defined on a global basis and adapted to country specific and production line specific differences. It is especiallay critical that specifications and recipes can be associated with specific products and routed for approval and key milestones across the enire development process.

Making the Right Choice

Once data is cleansed and identified, consider software that can help maintain data accuracy and accessibility. Today, many software vendors offer stable, reliable solutions for CG companies' PLM requirements. Consider the benefits of a PLM solution integrated with your manufacturing, procurement and marketing systems. This will minimize interfaces and risk, and provide a holistic view of the extended supply chain.

To drive speed-to-market and improve decision-making regarding your product portfolio, you must focus resources on a well-structured product innovation and development process. This is more difficult to change than software and involves disciplined project management and formal approval mechanisms. The implementation of change management processes --moving from flexible changes early in development to rigorous change control for products in development -- requires executive support and a vision for how your company wants to compete. All development projects need to be strictly evaluated and bad projects must be discontinued as early as possible to reallocate resources to more profitable activities.

Culture Shock

Part of process change includes an understanding of how to lead your innovation and development efforts. The most difficult aspect is changing corporate culture to align with that vision. The best software -- perfectly implemented -- will not lead to competitive advantage without the people in your organization embracing the process. Software cannot police the process -- people are creative and will always find a way to circumvent the system. The requisite cultural change can be assisted by technology, and the key to success is confirming that: (1) the software is easy to use; (2) all process changes are clearly communicated; and (3) all requests for assistance are responded to promptly.

The Bottom Line

In a time when regulations and litigation are multiplying, and in an environment where competitors can reverse engineer your products, being first-to-market is critical to reap the majority of margin. In such a time, a clear PLM strategy can provide speed-to-market, competitive advantage and higher profits -- all essential elements for top and bottom-line growth. Hot PLM trends we observed in 2003 include data management, intellectual capital management, safety, and regulatory standardization. While many CG organizations considered and reviewed these areas, they haven't translated the concept to enterprise transformation nor implemented substantive programs. In 2004, CG firms will develop programs that address at least one of these areas. The rationale for action will reach a trigger point that will set apart adopters from laggards. In addition, CG leaders will incorporate the needed qualifying questions into strategic directions for near and mid-term corporate strategy.

Robert Rhea is the senior vice president of BearingPoint's Consumer Packaged Goods Industry Segment. He is responsible for leading sales, solutions and account teams in providing systems integration, operational improvement and business advisory services to over 60 clients in the consumer products, food and beverage, apparel and tobacco industries. Mr. Rhea has worked with leading CG firms such as the Coca-Cola Company and P&G.