Improving Product Life Cycleprofitability
A few years ago pasta came in two formsonly: dried spaghetti and tinned spaghetti. Today supermarkets offer an immense array offresh tagliatelle, fettucine, ravioli, tortellini and a myriad of other types, plus anever increasing choice of ready-made fresh sauces. But who knows for how much longer thefascination with Italian food will last? After all, both the consumer and the retailer arealways hungry for innovation. Local and international legislation and environmental issuestoo, exert pressure on manufacturers to replace existing products with more interesting,new alternatives.
This means that foodstuffs have definitelife cycles, the lengths of which are dictated by a variety of factors including fad andfashion. To prosper in such an environment, manufacturers must therefore aim to be firston the market with new products at the right time and at the right price – and be preparedto discontinue them as soon as their popularity starts to wane.
Information – the key
Obviously, achieving such a goal requires access to detailed, accurate and timelyinformation on all aspects of the product in question. During the development phase,alternative manufacturing processes, suppliers, product and packaging design, choice ofingredients, distribution methods and many other variables have to be carefully weighed upand the optimum combination selected.
The next stage, the launch period, iscrucial. Experts maintain that most new products have only a 12-week window of opportunityto create interest and generate trial. During this period, manufacturers therefore needconstant, accurate feedback from the retailers on how well the product is selling. Anynecessary tweaks to the marketing strategy can then be made and manufacturing schedulesadjusted to meet real consumer demand. The internet and EDI make it possible formanufacturers to obtain such data on a daily or even hourly basis. With this information,they can react quickly to the actual demands of the marketplace, assess when the life ofan existing product is coming to an end, and plan the best steps to take next.
Seeing the whole product life-cycle
More and more manufacturers are now looking towards enterprise resource planning systemssuch as JBA Drinks from JBA to help them manage product life-cycles, make data visiblethroughout the organization and turn it into essential management information. In additionthe latest ERP systems help integrate the new product development program with existingactivities so management can predict new product development costs and the impact onplant, people, manufacturing schedules, logistics and current ranges. By speeding upfeasibility planning, EPR systems also help manufacturers deliver their products to marketmore quickly.
As Karen Marsh, Manufacturing Consultant atJBA says, “System 21 provides manufacturers with accurate, detailed information whichenables them to make better decisions throughout the life-cycle of the product. This helpsthem fully exploit new market niches and maximize customer profitability, while monitoringdemographic buying patterns, the effectiveness of marketing strategies and the costs ofvarious production methods. All-in-all it can make a significant introduction towards anorganizations’ competitiveness and success.”