Capgemini outlook: Benchmarking to provide insight
Most organisations get involved in benchmarking exercises as either a prompt for remedial action or as an objective validation of hard work undertaken. While these situations appear to be different, the underlying motive is the same: use benchmarking as a tool to confirm what everybody already knows.
25 July 2005
Publication
“Capgemini outlook: Manufacturing’s best kept secret Darren Jenking, head of retail supply chain, Capgemini Historically, Product Lifestyle Management (PLM) has been regarded as a manufacturing tool that primarily drives product data management and control over the npd process. Traditionally this has been the domain of industries where time-to-market is much greater than most retail buying operations would tolerate and the number of products being managed is significantly smaller. Without a tangible pay-off it’s unlikely that scarce retail resources would be used much further ‘upstream’ beyond being involved in own-label design and co-ordinating in-store launches of the finished product.
Many retailers tend to manage products over a season, the life of a catalogue or a 12-month period, and as a result the benefits of PLM seem limited. Retailers also tend to manage product lifecycles at the category or commodity level and will cull poor-performing products on a periodic basis.
While this approach is effective, there are plenty of horror stories of non-moving stock mountains, new product sales cannibalised by the deep discounting of old stock or demand outstripping supply of new products due to the lack of product continuity.
By using PLM principles to measure both the absolute and relative rates of growth for any given product it is possible to manage its lifecycle on a daily, weekly or monthly basis. It is also possible to make decisions about new product introduction and exit based on whether its sales are growing, maturing or declining. This avoids the common scenario of products dying a slow and undignified death on the shop floor.
Furthermore, informed decisions of product ‘family’ lifecycles can be enabled, for example various sizes or colours of ‘like’ products. When aggregated to category or commodity levels it is possible to use PLM as a way of creating common templates that can be applied to existing and new products to forecast future trends.
PLM can be utilised to maximise any product’s contribution over its whole lifecycle. Simple application of trigger points and hurdle rates can be used to effectively automate the decision making process from the point of introduction to the point of exit. This can even extend to foretelling appropriate exit strategy and timescale.
There are recent examples of retailers using PLM across their entire range, resulting in significant benefits in reducing stock levels, the ‘time-to-market’ of new products and enabling their product managers to focus on the real poor performing lines within their portfolio. “
