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In today's process manufacturing environment, innovation is viewed as critical to sustainable growth and profitability. While open innovation is regarded as the answer, few companies can effectively measure the return on R&D investment, have acceptable product success rates, achieve acceptable promotional effectiveness, or have visibility into their compliance risks or operational readiness for new product launches. In the GMA's Insomnia in the Corner Office whitepaper, finding sources of sustainable growth, consolidation and power of retailers, and increasing regulations were the top CPG CEO issues. Recent chemical surveys highlight rising input costs, sustainable growth and increasing regulations are critical issues. A recent study by A.D. Little rates "enhanced innovation abilities" higher than cost cutting, mergers or alliances as the best profitability and growth lever among European companies.
While open innovation is a hot topic, capitalizing on the opportunity requires a holistic strategy - not just increased collaboration. Companies must have repeatable, compliant and responsive business processes, global information infrastructure that provides a single source of the truth, alignment across departmental silos and solutions that evolve without coding. With holistic strategy and supporting infrastructure, companies can consistently minimize the time to scale, improve product success rates and promotional effectiveness, and enjoy sustainable and profitable growth.
With open innovation providing unlimited opportunities, where should you start? To identify the best open innovation opportunity and deliver top and bottom line benefits companies must first focus on the needs of their customer, continually minimize time to scale, eliminate waste, drive out costs and improve. These are core concepts of a Lean strategy. This whitepaper will describe how Lean PLM can leverage Lean concepts with integrated compliance, continual improvement without coding, and other PLM best practices to increase the return on R&D investments and provide sustainable and profitable growth for process manufacturers.
Lean Concepts Compliment PLM Best Practices, Drive Top and Bottom Line Growth
A core component of Lean is focusing on your customer. For many Process manufacturers, they must need to focus on the consumer or customer, retailer and distribution. To achieve this, collaborating with aspects of the value chain, validating constraints and compliance early and often, continually optimizing portfolio management opportunities, managing knowledge and intellectual property, integrating to the extended enterprise systems, engraining governance into processes and continually improving without coding are standard PLM best practices. These PLM best practices will allow you to continually minimize time to scale, eliminate waste, drive out costs and improve.
Focusing on the Customer and/or Channel Needs
The reality is that most companies try to focus on their customer or channel needs. Unfortunately, internal business model obstacles or departmental focus dilute the best of intentions by focusing on their own goals. In the hope that some requests will lead to sales, the sales organization submits as many sample or new product requests as possible. Marketing is often measured on the number of new products launched. If an idea is promising, product managers are quickly promoted and never see the long term impact. If neither group is responsible for the long term profitability of the portfolio, R&D wastes time and resources chasing products that will not have long term staying power, retailer and customers get disenfranchised and brand equity is diluted.
To drive growth and profitability, companies need to focus on the customer and must identify their unique value propositions for customers and align these with their channel. For instance, if a company sells value-based milk, this large private label dairy manufacturing capability should steer to an organization with no internal dairy manufacturing. If you add value through innovative packaging or drive business through national brand pull, either retailer could be a good partner. Defining your critical-to-customer, critical-to-retailer and critical-to-quality characteristics is an important first step. With these critical characteristics, R&D costs can be lowered by not designing in non-value added capabilities, time can be reduced by eliminating non-value added iterations, excess material costs and carrying costs can be eliminated, product quality and consistency improved, and regulatory risks reduced. Integrating these into R&D concept, development and commercial applications and providing continual validation will ensure products meet customer expectations and improve product success rates. Additionally, lead times are reduced, waste is eliminated and costs are reduced.
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