Here's advice on understanding the strategic impact of Product Lifecycle Management technology on building a private label brand.


For many retailers, successful development and introduction of new Private Label products has grown increasingly important. As consumers hunker down in a tough economic environment, PL brands offer retailers an attractive path to higher gross margins and stronger profit contributions. An April 2008 report by AMR Research noted that PL marketers plan to grow PL sales by more than 10% in the coming year-a handsome growth target in the midst of a slow down.


However, if not managed carefully, PL products can introduce serious risk to the business. Poorly managed product introductions will disappoint consumers through delayed PL product availability or poor quality. Supplier irregularities or badly managed compliance programs that result in poor quality or recalls can be devastating in the court of public opinion and extraordinarily costly.


Most authoritiesand some of the most successful PL marketers in business todaybelieve that product lifecycle management (PLM) technology delivers key benefits to PL marketers by enabling best practices for managing collaborative new product introduction and sourcing processes. Additionally, PLM helps PL marketers manage the product quality and compliance issues which are so critical to a successful PL brand strategy.


Formula For Pain


Formula for Pain: Change the Product Portfolio Mix. Change Nothing Else.


Even as they attempt to dramatically grow the numbers of PL products in their portfolios, many PL marketers have changed little else in their business operations. Suppliers are still held at arms-length, and asked only for price and availability data as though they have no other knowledge to contribute. Most PL marketers still manage their new product development and sourcing processes through an antiquated system of emails, faxes, and spreadsheets, despite the fact that these processes can't scale to accommodate aggressive growth plans.


Managing product quality is equally challenging. Suppliers have limited means of providing critical information about quality or comparable substitutions. Because a "single version of the truth" about the product is unavailable, incorrect decisions are often made and lead to product errors and delays, or to poor quality product making its way to shelves.


Elegant Simplicity


So how does product lifecycle management (PLM) solve these issues? The answer is elegantly simple: PLM allows PL marketers and their suppliers to easily access a single version of up-to-date product information so that decisions are made quickly and accurately.


Importantly, a new generation of web-based PLM solutions is now available to specifically meet the requirements of PL marketers. These solutions include strong functionalities for managing processes of importance to PL marketers including product specification, global sourcing, line planning, and calendar management, and for enabling global collaboration among designers, suppliers, manufacturers, and PL marketers. In fact, the ability to 'tie the whole team together' and unite geographically and functionally separated groups is an important capability of these new solutions.


The Pitfalls


Beware the Ides of March or, what to watch out for.


PL marketers who seek a PLM solution will want to be aware of two important considerations: the length and cost of implementation, and the ease of integration to existing data sources.


Data integration leverages existing investment in existing systems and data, and how easily a PLM system integrates to other data in the organization is another vital consideration. Difficult integrations frustrate team members, build added expense into the overall cost of a PLM implementation, and undercut the potential value to be realized from a PLM solution. PL marketers should insist on solutions characterized by architectures that emphasize ease of connectivity to data in other systems as a major feature.


 

The Recap


As long as PL marketers push to expand brand equity and overall profitability by growing their portfolio of PL products, product introductions, sourcing, and product quality will remain critical business processes. To be successful, designers, suppliers, manufacturers, and PL marketers need access to up-to-date and accurate product information. PLM technology delivers the accurate information and secure access that all parties require.


Important considerations include: Was the solution designed to optimize the business requirements of PL marketers, or was it designed for other industries with little in common with PL business processes? Does the solution typically implement in a few months and return value to the organization quickly, or are average implementation times in the range of 9-12 months or more? How readily can the solution be integrated to data within the organization, so that existing investments in data and technology can be leveraged? With the right answers to these questions, and the right focus on key business processes, PL marketers can be assured of improved profitability of their PL brands.


About the Author:


Ray Hein is Executive Vice President of market strategy and business development at &sec=article&uinfo=<%=server.URLEncode(1662)%>" target="_blank">Centric Software, Inc. His career has led to deep expertise in the area of product lifecycle management (PLM) solutions and how PLM best delivers value to customers in many businesses including PL marketers.