27 June 2014
How can retailers get products to market more quickly to deliver extra margin? Kurt Salmon director Sue Butler says it's about leveraging technology and team spirit.
The prize of 0.25% of maintained margin for each week that can be shaved off the time it takes to get a product to market is there for the taking – and what retailer (or brand) would not welcome some additional margin in today’s increasingly competitive trading environment?
Businesses will, however, not just have to invest in technology but also address the way they organise their teams and working methods to enjoy the prize.
Getting product to market quicker is not a new concept; in fact, those that adopted the practice early would be heading towards their mid to late teens by now. Rather than a competitive advantage that set a few apart from their competition, it is now the norm and every retailer needs to keep focused on how to shorten calendar lead times and make final product decisions much closer to the time products go on sale.
Retailers are, however, having to manage these shorter lead-times in an ever complex and shifting landscape:
- Increasing pressure on margin and higher sourcing costs with material and labour inflation means sourcing teams have to fight to work with the best suppliers in existing markets while managing the risk associated with developing new supply bases in new geographies.
- Product ranges are getting more complex as the demand for unique lines to serve the consumer in multiple international markets across multiple sales channels increases the size of ranges. Instead of developing one range for one market with one set of target customers buyers’ workloads are increasing as they could find themselves developing products for extreme weather in Russia at the same managing special make ups for strategic franchise partners in Asia and the Middle East while juggling the reverse seasonality of Australia.
- This is all happening in the context of the consumers’ demand for fresh, fashionable products and frequent injections of newness increasing the frequency that ranges are changed in store- and online – and the number of development cycles.
Retailers have had to respond by increasing the level of flexibility in their operating models, making fundamental changes to their ways of working and how they structure their teams. What we know is, the following:
- Working in silos does not support a fast flow of information and decision-making; there needs to be cross-functional alignment from the buying and merchandise, design and development teams, through to the sourcing teams and not forgetting the suppliers and factories.
- The mind set for executing the process has also had to shift, from a linear process into one that is much more iterative – for example, greige product might be ordered and production capacity booked but exact colours and products not confirmed to a much later date once more information is known about the what the customer is looking to buy that season.
- It’s not one size fits all anymore for the seasonal development process and calendars, a retailer could have multiple tracks running at any one time – the basic product that runs season after season will often have the slowest calendar with the activity for the more fickle fashion product happening as close to point of sale as is possible.
Given all this complexity it shouldn’t come as a surprise then that the implementation of PLM (Product Lifestyle Management) tools that offer a solution to coping with this complexity are increasingly being prioritised by retailers to support the product process. The best in breed PLM solutions support collaborative design and development and provide one source of information and visibility throughout the product lifecycle; at the same time, they support collaboration both internally between functions and externally with partners.
At Kurt Salmon we have implemented PLM solutions with many of our clients across the globe, and these are just some of benefits achieved:
- Speed: 45% reduction of average cycle time for private label retailer
- Fast Fashion: Adoption rates up by 25%, so leading fashion apparel brands can catch trends faster
- Quality: 40% reduction in quality defects from better technical specification and communication
- Cost Reduction: 3% reduction in chargebacks for consumer products leader
- Efficiency: Over 50% of the product specification created by suppliers, so designers can focus on new products
However, technology isn’t the answer by itself – to sustain a faster product development process the entire way of bringing product to market both from a process and organisation perspective needs to be reviewed. In our experience it’s the combination of simplified process and structures with a tool to support this, combined with a focus upon change management, that will deliver the valuable extra margin.