Product Lifecycle Management

Product lifecycle management (PLM) links an organization's business strategy to support the management of a portfolio of projects, products and services -- from early ideation through development, commercialization, launch and retirement.

 

Leaders who envision a strategic approach beyond basic brand-building and achieve a working process for successful PLM can significantly enhance business performance, according to a 2006 study done for Business Week by The Boston Consulting Group using data from Standard & Poor's Compustat. Today's consumer goods companies face enormous pressures at both the macro- and micro-levels: globalization, consolidation, commoditization and competition from without vie with cost-efficiency measures, quality assurance and product innovation needs from within.

 

Consumers and other stakeholders are increasingly demanding innovative products with unique features that differentiate them from others in the same category. The pace of growing demand for innovation and differentiation has accelerated at least as fast as globalization during the past decade, and appears to be on a warp speed trajectory as we progress into this millennium.

 

Success or failure in overcoming these challenges rests largely on a company's ability to manage the product development lifecycle effectively. Those who innovate have achieved a median profit margin of nearly 3.5 percent year-on-year during the past decade, which exceeds the 0.4 percent median profit margins of the S&P 1200 global index.

 

Innovative companies tend to develop a deep understanding of the shift in market dynamics they face, and are able to move ahead of their competitors by making critical risk, investment and payback decisions that put them at an advantage despite changing market scenarios. In addition, innovators are characterized by an almost detached dismantling of barriers to innovation, like cutting cycles for product development and making gaining critical customer intelligence a priority.

 

Reducing time-to-market, enhancing product quality and better conforming to regulatory compliance are all objectives that today's consumer products organizations are seeking. Executing a flawless launch and proactively managing all post-launch processes, including scalability and support, comprise the key ingredients for lasting success, separating the wheat from the chaff in the PLM mix.

 

The people, process and technology threads take center stage with effective PLM implementations in most organizations. The concept of form, fit and function also adds new dimensions to the evolving consumer marketplace. A growing, worldwide consumer base is constantly influencing how businesses operate.

 

Tools that help retailers and manufacturers understand changing consumer patterns, and that also are aligned with product development and planning, are de rigueur for competitive sustainability and longevity. Distribution channels linked to myriad functions and interconnected with back-office systems and front-end, client-facing channels are equally critical to advancing innovation and efficiency in today's global environment.

 

There is no silver bullet -- but there is a missing link. While most organizations try to organize and plan around a reactive, demand-driven new-product pipeline, some are taking proactive control and leveraging a different strategy.

 

From product initiation to post-launch, the product development lifecycle can be broken down into six discrete stages using the Stage-Gate methodology. (Stage-Gate is a registered trademark of R.G. Cooper and Associates Consultants Inc., a member of the Product Development Institute.)

 

The model builds the underlying processes that allow your organization to progress successfully through each stage: Initiation (stage 0.0), Ideation (stage 1.0), Development (stage 2.0), Commercialization (stage 3.0), Launch (stage 4.0) and Post-Launch (stage 5.0).

 

Each "gate" marks the entry and exit points for each stage. Projects must meet specific performance criteria in order to pass through these successive gates, in sequential order, to advance through the development life cycle. Each gate-opening triggers a series of parallel, cross-functional processes that transform output from the previous stage into deliverables for the next stage.

 

This methodology leverages the power of cross-functional teams, providing the underlying governance to support the overall product development lifecycle. It tends to prevent different functional teams from isolating their progress into an operational vacuum, which can be a common pitfall in many product development efforts. The Stage-Gate approach also embeds quality and cost controls into the process, helping you bring products to market with few mistakes, higher margins and stronger success rates. The phased-process approach works in tandem with cross-functional decision making and information-based enterprises.

 

But the path is not always easy. Some of the lessons learned during a typical company's transformation can be difficult but revealing. Implementing an effective PLM approach brings, inevitably, fundamental process change that impacts the organization as a whole. This in turn calls for a larger-based, organizational change management program to be initiated and implemented.

 

The learning curve for people involved in these momentous changes can require more time than is typically applicable to an ERP implementation. PLM is not something to undertake lightly; it is a mission-critical, organizational transformation that, when done right, requires significant commitment. In fact, the hotter your "burning platform," the better chance of achieving your objectives.