In Part 1, I discussed serveral companies discussed in the Gartner Webinar that recognize the importance of having a good balance of understanding product and opertional excellence. You can read Part 1 here.
One of Burkett’s major points in this Webinar is that to realize value across a products’ lifecycle a company must consider the product, supply chain and demand from the beginning of the its life. They must anticipate challenges in early introduction and have created a supply chain that can handle the inevitable erratic demand that occurs over the life of a product. Taking these factors in to consideration creates a buffer of sorts to supply chain disturbances.
Governance is a huge part of ensuring that your company achieves excellence across product, supply and demand. Key stakeholders must be aligned with the business value as it relates to their responsibilities in order to fully understand in how the introduction of a new product will affect their goals and the overall business goals. Considering cost of goods sold and other assets drivers to your business assure that there is cooperation at all levels and “buy in” that a new innovation will bring revenue, profit and a return on assets.
Sony Ericsson is an example of a company in a highly competitive landscape that understands the importance of governance in their innovation. They model the cost to serve when considering product introduction. They determine whether they can withstand the tradeoff between new design and operational excellence by considering where to source, quality of potential suppliers and cost to assemble.
Governance within the products life cycle and product, supply, demand relationship is essential to achieving cross functional collaboration. The right metrics must be established to drive the right behavior. Metrics like your “Time to Value –capability to respond to market opportunity” in terms of total value and “Operational Excellence – Stability of processes driving value” are important to consider. Companies such as Fiat and Ford have been exceptional in the governance process in part because of their CEO’s heavy involvement in the governance process. Fiat postponed the launch of a new product in order to strategically ensure that they met the markets needs while positively impacting their business. Ford CEO Alan Mulally was also hands on in their strategic complexity reduction and the decision to get rid of the Mercury brand to focus on the Lincoln brand.
Burkett rounds out the discussion by encouraging stakeholders to consider the importance of supply chain talent in achieving innovation and operation excellence and an aligned product, supply, demand strategy. Supply Chain talent needs a skill set that will allow them to actively engage in the innovation process, either by making supply chain or supplier recommendations or at least the ability to recognize and reduce supplier risk. They must also be skilled in understanding and adapting to the product’s evolution across its lifecycle. Being able to adjust to the added complexity of market extensions and monitoring and adapting the supply chain as demand changes over the life cycle are other key areas of focus for supply chain professionals to achieve cross functional excellence.
Burkett closes this Webinar with a few key takeaways when evaluating the balance and disciple of your organization around product, demand and supply. First, define your product launch holistically, balance your product portfolios to maximize value, embed innovation across the value chain, employ governance and metrics to drive your organization to excellence and involve supply chain talent throughout the lifecycle.
The replay of this Webinar is available in the replay archive at www.gartner.com.