Product Placement

Tim Clark, Editor-in-Chief

1/1/2005

Consumer goods firms are only as sharp as the products they release. And in this day and age where consumers are constantly fixated on the next hot trend, it is vital that new products are launched with blinding speed. In addition, as RFID becomes more of an investment priority, product information will need to be cleaned up and as accurate as possible before a successful RFID strategy can be deployed.

According to a recent global survey of 650 companies conducted by Deloitte Research, new product revenue contribution is expected to average 34 percent of overall revenue by 2007, up 21 percent from 1998. While companies rank new products as the No. 1 growth factor in the next three years -- product innovation and time-to-market are ranked as the lowest of 10 supply chain priorities.

"There seems to be a perception that existing new product development capabilities can support aggressive growth targets," says Sanjay Dhar, senior manager, Consumer Business Practice, Deloitte Research. "However, any company with a high launch failure rate, long time-to-market and large developmental costs cannot reasonably have a well-functioning innovation process."

Dhar says there are many steps to consider improving upon during the product development process, including:

Disciplined, yet flexible process. Organizations need to build one basic model to support blockbuster projects, and then develop variants that support line extensions, promotions and fast-track projects.
Preparation. Nothing improves the probability of launch success more than the right focus on the first three stages of development -- idea definition, preliminary business case and prototype development.
Ruthless focus on killing ideas. The biggest problem here is the misuse of consumer research when marketers persist in repeating research on weak ideas. If an idea fails consumer research twice, dump the idea.
Streamlined decision making. "Mini-gates" create process complexity and, consequently, increase time-to-market. Organizations need to decide on a core set of gatekeepers and then be disciplined about sticking with them.

In addition, consumer goods firms often lack the tools and technology required to support new product development especially in the key area of packaging.
"Organizations do a poor job of managing packaging specifications, artwork creation and packaging execution," says Dhar. "It is common to find multiple, stand-alone, document-based systems, which makes it difficult to collaborate internally and externally, and reduce time-to-market. Organizations should consider implementing Web-based software that uses a data-enabled approach to manage packaging."

The Choice Is Yours
In 2005, investment in PLM-type offerings will expand, and so too will vendor offerings. For several years, the product innovation arena has been left alone by big vendors that specialize in selling other enterprise applications.

But all of this is expected to soon change faster than the next flavor of Coke can be introduced, according to an AMR Research report, "Microsoft is the No. 1 Vendor in NPDI but Not for Long". The AMR report found that out of more than 600 IT professionals, 43 percent of them chose Microsoft as their primary partner among software vendors in supporting the New Product Development and Introduction (NPDI) process.

The next two, in order, were SAP and Oracle, with 14 percent each. The survey also found that 42 percent of organizations are planning to increase IT spending on NPDI, while only 7 percent plan to decrease spending.

Data Synchronization Rules
As with any new technology, there comes uncertainty in the marketplace. RFID is obviously no exception to this rule as many consumer goods firms feel that the immaturity of RFID applications and hardware, not to mention a questionable ROI, means that RFID is nothing more than a sunk cost.

The rules of the game are changing, however, especially as more and more consumer goods companies begin to realize that product information must be cleaned up as well as synchronized in order to reap the rewards of RFID technology.

The April 2004 cover story in CGT, "The Customer Connection", details how Pfizer Consumer Healthcare is able to enjoy pre-RFID benefits by setting up a self-serve customer service portal in addition to synchronizing data with the help of GXS technology. Pfizer is now saving an enormous amount of time by devoting less and less of its attention to preventing deductions. "We thought it would be a great idea if all of our preventative measures were done automatically," says Joe Wisdo, senior director, B2B customer e-commerce, Pfizer Consumer Healthcare. "That's exactly what we are trying to accomplish with data synchronization."