Speed to Market

To prosper, companies must constantly change the game by creating products and services that satisfy needs consumers don't even know that they have yet. This month, CGT caught up with Rory Granros, director of process industries vertical marketing for Infor, who taps into his 25 years of industry experience to discuss some of the key steps and processes companies need to consider in delivering new products to market faster.

With seasonal launches and competition from private label, what unique challenges do consumer goods (CG) companies face around innovation?

Common CG challenges include private label, customer expectations, compliance, changing demographics, high product failure rates and globalization challenges. Since many of these private label products have improved and become category leaders, they are threatening brand loyalty. For example, in the Refrigerated Complete Ready Meals category, private labels have 49 percent of sales and retailers are winning the loyalty war. As retailer sophistication increases, they are more price savvy and may look to reduce "in store" private-label competition.

The "develop more new products and they will come" strategy has not proven successful. A 2006 IBM Value Institute study had some startling statistics -- only 4 percent of 77,000 UPCs launched since 2003 have met $50 million revenue targets. The greatest root causes cited were not meeting customer expectations, late launches and lack of alignment between product strategies and supply chain initiatives. To try to compensate for product issues, companies spend up to 40 percent of revenue on promotions.

To look for new growth, many companies are going global. Here, each market increases complexities in the supply chain with compliance, risk management and local products. Poor emerging market vendor social responsibility has resulted in high profile brand sales reductions. And if these issues were not challenging enough, product lifecycles are reduced with every changing consumer preference and/or demographic.

To improve product and launch success rates, companies must have a holistic product strategy and extended enterprise support for processes that include R&D, marketing, quality, regulatory, supply chain, vendors and customers.

What tools and processes can companies put in place to meet these challenges?

The applications and processes to develop, launch and manage product profitability are categorized as Product Lifecycle Management (PLM). Without a PLM infrastructure, most product success result from "Herculian efforts" and cannot be repeated or scaled. Informal social networks, manual processes and islands of information limit visibility, issues are identified later in the process and more products are rushed to market. Rushed products often miss cost targets, are fixed in the supply and increase compliance risks. As product lifecycles shrink, fixing products in the supply is no longer feasible.

To provide incremental return on investment (ROI) and support your holistic product strategy, choose an extended enterprise PLM solution that has an incremental implementation approach.

To provide short-term ROI, many companies start with Process Product Data Management (PPDM), which can immediately improve product quality, increase reuse and reduce costs. To achieve one single version of the truth, PPDM captures, validates and contextualizes R&D data, and relates external data (documents, for example). PPDM Strategies that just focus on capturing data late in the process and routing for approvals such as specifications, do add value, but result in excess costs, activities (some surveys suggest more than 50 percent of R&D activities are redundant) and an increase in knowledge flight risks, like retirement. Companies that capture data earlier and capture more data throughout the process will increase their product knowledge, improve their competitive advantage and mitigate knowledge flight risks. When projects are approved, PPDM information is published as specifications, ERP systems are updated and PIM data update GDSN data pools.

With a global PPDM system, the product knowledge can be further transformed into actionable insight. Online best practices, regulatory usage restrictions or conformance to specification analysis provide timely and consistent feedback. Engines can combine date from R&D, production and experimental data to simulate production capabilities and can eliminate post launch fixes, improve launch success, reduce non-valued tasks and costs.

Product and Portfolio Management (PPM) helps identify the right product mix and manage the process from concept to the shelf. Project Management is used to manage programs, provide global visibility and ensure timely launches. To balance time, costs and risks, programs can vary some simple projects to a global stage gate process. Integration of the PLM applications and PPM capabilities results in real-time visibility and increases the success of one-time product launches.

As companies strive to get new products to market faster, how can the product development process be flexible to meet fickle consumer demand?

To improve agility and reduce time-to-shelf, companies leverage continual feedback, deferment development strategy and overbuilding. Addressing the highest product failure causes, critical to customer (CTC) and quality (CTQ) ensures the product meets customer requirements, is affordable and leverages core competencies to improve scalability. To increase R&D's effective capacity and the ability to react, continual cross-functional validation and feedback ensures that products meet requirements or projects are killed earlier.

A recent development trend is called deferment. Rather than developing a formula at a time, many companies are developing more robust intermediates and formulas that make end products. A common example is in-store custom tinting of white paint. Since each variant had low volumes, deferment has improved inventory turns and improved customer service. The intermediate formulas are designed to be easily tailored extended or packaged for local requirements. To meet shortening time to market requirements, analysis and modeling applications can eliminate multiple trial and error iterations. While the initial development cost and the impact of failed project is higher, the lifecycle costs should be significantly lower.

Since development is not 100 percent successful, most companies over build and have several alternative projects in their plans. If one of the projects is late or killed, the pipeline is still full.

As CG firms begin to look outside the traditional four-walls for new product ideas, how can they better work with external partners and retail customers in delivering new products to market?

If you're not collaborating, you will be at a competitive disadvantage. Industry leaders are collaborating to align products with customers, and using vendors to extend innovation, shorten time to market and increase supply. As with internal collaboration, data and governance can change moving through the process.

Combining retailer collaboration with industry-leading concept to shelf capabilities will ensure your products align with retailers; will increase product success rates and continue to lead categories. Throughout the process, you can validate concepts, key capabilities and prototypes with retailers. As final specifications are complete, retailer specifications and GDSN can update retailer systems and increase retailer readiness.

Since R&D spending is flat and ramping new capabilities takes time, vendors or innovation partners are no longer viewed as cost savings targets but as sources of innovation and agility.

Identifying approved vendors with required competencies will reduce RFP lead times if the vendor is not approved; starting the qualification process for new vendors saves critical time and ensures compliance. Based on vendor rating and risk, rules-based workflows provide the right level of governance without impacting time to market. Collaborative processes can not only shorten time to market but improve specification quality. To ensure vendors continue to meet your standard or improve, audit and improvement programs can be instituted and actively managed.