As many companies step back and examine their core competencies some realize that outsourcing parts or all of a supply chain can be advantageous. With marketplace improvements around (1) information mediums and systems (2) cost and quality of global manufacturing and distribution and (3) product design capabilities companies are gaining additional synergies by outsourcing all or parts of their supply chain.
There can be significant economic benefits from outsourcing all or part of your supply chain operation, but without the right systems, processes or organizational management structure the risk to success can increase to frightening levels. In an outsource-heavy environment, companies need to put more controls and systems in place to compensate for the fact that the supply chain capabilities no longer reside onsite. In an outsourced supply chain environment the need for information, controls and excellence from the information worker becomes a high priority.
The optimally outsourced supply chain, either in its entirety or just a component, relies heavily on:
- superior supply chain network design
- inclusion of that outsource partner in the information chain
- establishment of control mechanisms to proactively monitor the various components of the supply chain
- information systems to connect and coordinate the supply chain as seamlessly as possible
A failure to excel at any one of these components can result in breakdowns affecting the entire supply chain.
Trend 5 — Shortened and More Complex Product Life Cycles
Today many companies are under pressure to develop innovative products and bring them to market more rapidly while minimizing cannibalization of existing products, which are still in high demand. In order to meet the needs of both customers and consumers, companies need more efficient product lifecycle management processes. This includes heavy emphasis on managing new product introduction, product discontinuation, design for manufacturability and leveraging across their entire product and infrastructure characteristics.
One chief benefit of product lifecycle management (PLM) processes and technology is helping companies design products that can share common operations, components or materials with other products, thereby reducing risks of obsolescence write offs, increasing cost leverage on the purchasing of key materials and ensuring that infrastructure investments are optimally utilized. Additionally, getting this right will help to improve your time to market. By focusing product lifecycle management efforts in these areas, a company can buffer itself against the risk of an unplanned cost increase, a poor new product launch, an unplanned obsolescence write off and can enhance the overall customer perception of the company as an effective innovator.
Typically when companies begin the process of introducing new products to market, they coordinate marketing, engineering, sales and procurement and develop sales forecasts to plan products in the pipeline. Without a formalized product lifecycle process the end result isn't always predictable. Recently, a U.S.-based major appliance manufacturer, struggling with sky-rocketing product development costs and a cumbersome, manual development process, was looking to implement a PLM initiative to help reduce the cycle time between development and entry to market. While implementing a new PLM environment the company designed innovative, common product development processes and selected a PLM solution to control engineering document management, online mark-up and Web-based collaboration with suppliers and contract manufacturers.
As a result the company increased parts re-use, improved document retrieval time, reduced design cycle time and ultimately reduced new product development cost by 15 percent. These improvements helped the company grow revenue by 25 percent, mainly from an increased rate of product introductions.
As the economy becomes more global, labeling and compliance to packaging requirements and regulations have become critical to success. Without adherence to local packaging and labeling regulations a product may violate local requirements, preventing it from being distributed and sold in that market. Product lifecycle management technology processes can help ensure that products being produced and targeted for specific markets are well-managed and are compliant. Product lifecycle management tools and processes have helped consumer goods companies with their efforts to try to continually drive demand through packaging and labeling innovation and design. Implementation of an optimal PLM process and technology can allow a consumer goods company to effectively produce and distribute products that are only targeted for regional promotions or consumer preferences.