Nick Martin, senior vice-president of product lifecycle management company Trace One, muses on manufacturing and retail's need to drive innovation in order to stay ahead in a globally competitive market.
Dire market conditions and the growth of online retail have led to established high street retailers such as Jessops struggling to survive or going out of business entirely. Although manufacturing is faring somewhat better, it has also had a hard time of late; the sector barely returned to growth in Q2 this year.
Retailers and manufacturers have little choice but to eliminate inefficiencies and reduce costs while still attracting business. While this is a difficult balancing act to achieve, if organisations turn this necessity into an opportunity to innovate they will undoubtedly see the benefits.
Taste for success
In the past, creating products for the retail market could often be an inefficient, time-consuming process; leading to unnecessary drains on time and resources. The product specification manager in charge of product development was traditionally tasked with managing hundreds of lists of paper based product specifications, each of which needed to be updated and audited several times a year.
Making even minor changes to specifications meant going through reams of documents; complicating the management of existing ranges and slowing new products’ route to market. A disagreement between retailers and manufacturers on product specifications would usually mean production stopping while the issue was resolved, substantially slowing down product development. Combined with the fact that a manufacturer often has to work with multiple retailers, across multiple product ranges at any given time, the scale of the problem could be enormous.
In recent years technology has done much to help resolve these issues. Firstly, storing and sharing information digitally allowed manufacturers and retailers to track and share information on products without the need to search through reams of paper based records. With the growth of cloud computing, retailers, manufacturers, printers and designers are able to work from the same specification simultaneously and track where changes are made, improving efficiency and introducing greater accountability in the process. While this is useful, innovation remains at the heart of the product development process: effective communication of ideas between parties and reducing inefficiencies are key to making these ideas a reality.
Own label has proven a successful method for retailers to utilise their brand reputation to increase margins. However, as noted, paper records and spreadsheets would be ill-suited for managing an own label portfolio of hundreds of products: each of which demands its own verified product specification. Improved ways of collaborating now mean modifying or adding to product ranges is as simple as updating the specification. This demonstrates how improved collaboration can avoid silos in the own label product creation process and speed up the route of new products to market.
Similarly manufacturers often use very similar specifications across their product lines. By automating the sharing and reuse of information across product lines, manufacturers can work on more products for more retailers simultaneously. Furthermore, automating the process also reduces the risk of human error in manual data entry. Automated, consistent recording also helps to identify any product issues and facilitate effective product recalls. All this avoids unnecessary damage to the brand’s reputation, which can be quickly eroded by a poorly managed product recall.
The Manufacturer is running the Inspiring Innovation in Manufacturing conference on October 16 in London. Speakers at the event include James Godman of AgustaWestland and Stephen Cousins of Axon Automotive.
For more information and to book visit www.themanufacturer.com/eventsite/innovation2013/
Full of beans
Innovation in the production process is one thing: retailers and manufacturers also need to re-establish their relationship with customers and appeal to a broader range of new tastes that are changing by the day. One way that this can be achieved is through product packaging. For example, leading European retailer Monoprix recently overhauled their “M” own label range: moving away from what was a typical minimal, uninspiring design reminiscent of value products to a simplistic, stylised font and bold, eye-grabbing colours based on the work of Andy Warhol. Doing this with over 20,000 products managed to change the ‘M’ range’s image as ‘just another value brand’, while still conveying all-important information on the product and its ingredients clearly to consumers.
Monoprix provides a good example of collaboration since creating this change required co-ordination between many different parties across a staggering range of products. Delivering greater “value” goes above just reducing price for consumers: it also means innovating to better appeal to new tastes and creating an enjoyable experience. In future we will also see retailers and manufacturers breaking new ground with supposedly niche ranges such as gluten-free, low GI and world foods; which have all gained momentum in recent years. We are also sure to see innovation in packaging sizes. Smaller, single serving pack sizes have been increasingly championed by retailers as an obvious choice for the picnic season. This shows how retailers can innovate to find new ways to capitalise on seasonal spending patterns.
Off the shelf
As mentioned, improved collaboration can also have a direct benefit on the wellbeing of consumers. For example, the food industry as a whole has been damaged by scandals such as the recent horsemeat crisis: while in this case prompt action was taken, a poorly managed recall can have serious implications beyond a loss of stock or sales and in the very worst case can lead to a loss of life. Both retailers and manufacturers are obliged to ensure that they are able to facilitate effective product recalls and that affected products are removed from store shelves in a matter of hours, not days.
Again, better collaboration tools mean manufacturers reusing a specific ingredient across multiple products have full visibility over what products contain that ingredient and which retailer that product has been sold to. This means that if a product is found to contain an ingredient that is harmful or unexpected, the retailer and manufacturer can quickly share information on its specifications, identify what products have been affected and recall these as soon as possible. In future we may also see technology playing a greater role, with ‘horizon scanning’ identifying problems with particular ingredients and products before they make their way through the supply chain to the final product.
The full package
Innovation and effective collaboration will be essential for retailers and manufacturers to succeed in an increasingly harsh economic landscape. These companies no longer have the luxury of operating in silos, since the success of the one is now linked to the success of the other. With the right approach retailers and manufacturers can not only boost margins and improve safety in the short term; but engage with customers to form lasting relationships well into the future.