Aligning product lifecycle with supply chains can unlock value, says Maine Pointe
A recent report from global supply chain consultancy Maine Pointe asserts that aligning new product introduction and product lifecycle management with the supply chain function can unlock new value in a hyper-competitive landscape – giving companies a better shot at getting the right product to the right markets, in the way customers want them delivered.
Supply chain revamps are not a new idea, with some large organizations already into their fourth or fifth round of programs and re-engineered processes. Supply chains have been innovated with smart factories, cloud services, digitization, big data, and omnichannel; companies have upskilled the talent pool, adopted Six Sigma and lean, and linked data and metrics to decision-making.
Companies can, nonetheless, unlock further value by linking supply chain priorities to new product introduction (NPI) and product lifecycle management (PLM). NPI is the process that brings a product to market once it has been prototyped and pilot tested. It includes defining which materials and components will make up a product and how they will be sourced, as well as how the product will be built, tested, shipped, and delivered.
PLM is the strategy for a product’s progression through introduction, growth, maturity, decline, and end of useful life; it informs marketing, forecasting, product roadmap, and inventory management.
“Cross-functional teams that practice aligned NPI and PLM disciplines are more likely to make decisions in line with larger business enterprise objectives and customers’ needs and wants,” the Maine Pointe report states.
NPI and PLM are key parts of Total Value Optimization (TVO), which allows organizations to better anticipate and meet demand through a synchronization of their buy-make-move-fulfill supply chains. The pair of processes are critical to effective supplier management, and provide the information to make optimal supply chain decisions, according to the report.
Aligning NPI and PLM to an integrated supply chain can reap big benefits by making product design decisions that advantage procurement and strategic sourcing. Benefits include cost reductions and a boost in advanced forecasting, as well as the ability to get the right product, at the right place, at the right time, to the right customers.
Synchronizing NPI and PLM with the supply chain means that the supply chain now fits the product, rather than simply reacting to specifications downstream and without any prior input. This means that products are more stable, minimizing costly modifications and feature creep, while the supply chain is better equipped to make short and long-term big bets on product priorities.
According to the report, improvement through streamlined NPI and PLM is best suited to more mature enterprises – especially those pressured by new entrants with disruptive business models, and for whom time-to-market is critical. Companies that would see the best returns from NPI and PLM alignment would also have complex cross-functional operating models, complex product development rollouts, and large approved vendor lists.
The shortening of product lifespan gives additional impetus to align NPI and PLM with the supply chain function – allowing companies to better tackle changing lifecycles and more frequent product introduction and decommissioning.
The report also notes that though NPI and PLM account for approximately 20% of the value chain, with data analytics they can drive 80% of the opportunity to affect positive supply chain performance.
“Aligning NPI and PLM with specific supply chain priorities quickly becomes a competitive differentiator,” Simon Knowles, CMO of Maine Pointe, said. “This alignment leads to enhanced visibility, so management can readily detect the best opportunities for positively impacting cost, margin, time-to-market, and customer experience.”
A case study of a Maine Pointe client drives home the importance of NPI and PLM. The client was a mid-sized consumer technology company, with a relatively mature procurement function. Its operating model was siloed, however, with the product engine divorced from procurement and logistics, leading to missed milestones in getting products to market.
In response, the consulting firm created holistic NPI and PLM processes, making sure that products moved through the lifecycle stages in alignment and collaboration with the supply chain function.
The consulting engagement helped reduce time-to-market by 200%, nearly doubled the client’s EBITDA, and realized a 6:1 return on investment for the client.
Related: Maine Pointe: Sales & operations planning at the core of successful firms
