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Product Lifecycle Management 23 Aug 2016, 5:56 am
Product Lifecycle Management (PLM) is a strategy to run business efficiently. PLM is not just a software implementation but also a process implementation. PLM software is just tool to enforce cross-functional business process and discipline that contribute to efficient supply chain. I am not going to talk about the details of specific PLM software or one industry specific product lifecycle, but want to share my overall experience from different PLM projects.
Change management is a very common challenge in many organizations, business scenario and priority change often. Organization silos that exist in varying degree in most of the organizations create an impediment to the change management. Functional silo leads to data silo, subsequently every department maintains their own dataset about product and ultimately we find many ‘product master’ databases in one organization. In this scenario it is very difficult to make a change to the existing product or introduce a new product. Time to market is a key for today’s agile corporation, uncontrolled and redundant product information increase the time to introduce product to market.PLM is an approach to integrate the business processes and gain control over various data elements regarding a product. Below is a sample of some common data elements and their ownership in a typical organization.
It would be powerful if we could create a single repository to store and control all of the above data elements, right? What if the data owners/departments are spread across the country? Or across the globe? The integration becomes a necessity and not a luxury.
The following is an example of information flow when the organization operates in silo, it is obvious that when product data exists in different places, it becomes a time-consuming task to get accurate information of product.
Following are very common questions we face:
- What is the status of the product? Is it active? Discontinued?
- What is the latest revision of the specification? Latest BOM?
- When we can release the next version of the product?
- How much inventory we have of the previous version?
- Does the product have a specific ingredient, which is banned in a specific overseas market?
- Who is the approved contract manufacture for the existing product?
- What is the impact on product cost if one component is replaced with another?
……and the list goes on.
These information must be retrieved quickly and accurately to make key business decisions. An effective PLM strategy can help to get these answers by fostering collaboration, enforcing discipline and pre-defined workflow across the organization.
Following is a diagram of information flow in a PLM system.
Well, now we convinced that a PLM system could help us but what next? Read on…
Based on my experience in PLM implementation, I think the following point should be considered before starting a PLM project:
- Organizational readiness: This is the most important criterion, a PLM project will impact many departments, and process change is inevitable. Change can be painful, so a common understanding and high level of commitment from every stakeholder are essential. Argument over priorities and resistance to change existing processes will be there so support from senior management is required.
- Suitable PLM software and implementation partner: The rule is “One size does not fit all”; there are number of PLM vendors in the market. We should choose wisely. The success of the PLM strategy depends on integration, so if you have an existing ERP or Manufacturing Execution/planning system, PLEASE VERIFY THE INTEGRATION CAPABILITY OF PLM WITH THE YOUR ERP.
- Industry Specific Requirement: Some industry (like pharmaceutical) needs compliance to 21 CFR Part 11, so the PLM software should be able to capture electronic signature in electronic records.
- Data migration strategy: Please analyze the existing data; some data may exist in spreadsheet, shared drive, access database etc. Knowing about the quality and integrity of existing data will save a lot of time in later part of the project.
- Budget and Roadmap: A small budget project can be a grand success and a big budget project can be a failure, it all depends on how well the project is planned. If required, the implementation can be done in phases but the objective, expected outcome and timeline need to be defined clearly in advance.
I wanted to share some high level information about PLM, please feel free to let me know if you have any question.
Executive Sales and Operations Planning 23 Jun 2016, 4:29 pm
“Sales and Operations Planning” (S&OP) is a very common business term these days. Some organizations have S&OP function, some are trying to implement S&OP process and of course there are many software tools available to support S&OP process. But what is S&OP? Why we need S&OP and how to implement S&OP? We will try to find these answers in this post.
Oliver Wight, the well-known expert in manufacturing, defined Manufacturing Resource Planning (aka MRP II) in the eighties. Wight said “MRP II is a system that includes manufacturing, finance, marketing, engineering, purchasing, distribution and certainly changes a lot of things for data processing people”. The underlying principle of MRPII was to integrate business effectively and this principle builds the basis of Sales and Operations Planning. I would even more simplify it by saying that ‘S&OP’ is based on the famous quote ‘United we Stand Divided We Fall’.
APICS defines S&OP as a process to develop tactical plans that provide management the ability to strategically direct its business to achieve competitive advantage on a continuous basis by integrating customer focused marketing plans for new and existing products with the management of supply chain. The process brings together all the plans for the business (sales, marketing, manufacturing, sourcing and financial) into one integrated set of plans. (APICS Dictionary,14th edition, p. 154).
There are plenty of examples of organizational silo and I believe operational silo and lack of collaboration exist in every organization in varying degree. Mature and best in class organizations try to minimize the operational silos by fostering collaboration and business integration. Following is an example of a hypothetical company and its different functions. The communication between departments is typically done via email/informal/formal meetings. What’s wrong in it? Apparently nothing wrong but let’s take few snapshots of events that happened in this organization.
Marketing department found an opportunity to introduce a new product, which should bring new customers and fight the growing competition. Marketing is very excited and informed the executives and other stakeholders about the new product. Executives were really hopeful to see a positive turnaround in the business and approved budgets to make the new product successful.
Product development worked on optimizing the design specification of the new product.
Purchasing negotiated raw material price and made long term contract with quality suppliers.
Manufacturing worked hard to make sure that there is sufficient assembly capacity for the new product.
The product was launched with great promotions, which attracted a good number of new customers. The product was offered through different marketing channels like retail, online and outlet centers. After about a month senior executives reviewed the performance of the product and following facts were revealed.
There are many unfulfilled demand and dissatisfied customers. And marketing is very upset about it; they are blaming operations because there was a shortage of some critical components.Purchasing tried hard to expedite the critical components and managed to get some supply at higher cost.Manufacturing and purchasing are blaming product development because they did not release the right BOM and specification on time.Product Development is saying that marketing did not tell which exact version of the product was finally selected for promotion until it was too late.Marketing says that competitors are creating pressure and ‘time to market’ must be improved.
After all these Finance department reports that:
There are tons of excess inventory and a substantial write-off is imminent.
The COGs are very high because purchasing paid high price in expediting the components.
Seriously???
Am I making this up? Unfortunately the above condition is not as uncommon as you would like to think.
But which department is responsible to meet supply and demand? Which department is responsible to make sure that the organization is meeting the demand and making profit?
We cannot assign the above responsibilities to one single department, we can of course blame others but nobody wins. Every department did their best, but they were too focused on departmental goal, lack of a unified plan and lack of collaboration are the root cause of the above situation.
If we are convinced that “united we stand divided we fall” holds true in this case, the next question would be who can break the departmental silo and influence every department to collaborate with other. The C-level executives are the most appropriate group to do this. The ‘Sales and Operation Planning’ is just an official name for the collaboration process to make sure that supply and demand are balanced and the organization is selling the right product at right time in a profitable way. S&OP is a tool for executives to help and guide the rest of the organization for business excellence. At the same time it is a tool for executives to have visibility to the good, bad and ugly situations before it is too late. Hence ‘Executive Sales and Operation Planning’ is more effective than just ‘Sales and Operations Planning’.
Up to this point, we talked about concepts of S&OP, but what is the process of implementing it? The actual process will vary from one organization to another. In general, the executives can appoint an S&OP coordinator, whose responsibility is to conduct and manage formal S&OP meeting in regular interval, once a month S&OP review meeting is quite common. The meeting is very important and departmental representation is a must, executives should also participate because formal decisions need be taken based on S&OP meeting. The coordinator should collect data from all departments and summarize in meaningful way, so that the data tells the actual business ‘story’.
Technology plays a role in collecting and summarizing the data, there are many S&OP software packages that can help to collect and aggregate data from different systems used in an organization. But I believe the process and executive support are most important, without which the S&OP software is of no use. When it comes to IT and software implementation we need to be careful, as I mentioned, merely buying a state of the art and expensive software will not change anything unless the software is configured and embedded in S&OP business process. I have built many simple S&OP software solutions by using open source tools, which worked perfectly in many cases. Every business has some unique features, understanding the data and identifying most effective levers is the 1st step. Following is an example of S&OP process.
There is always a risk of information overload and most of the executives do not have the time to spend in understanding granular data. I think the S&OP review should be based on quantitative analysis of most important key performance indicators(well, what if I have 40 most important KPIs ? I suggest taking another look; it will not be practical to start with so many KPIs in S&OP meeting). It can be a challenge to find the most important KPIs and may need some data mining effort but that effort is worth spending. Analytical software with ‘drill-down’ and ‘aggregate’ capability is often powerful for S&OP process. At the end of the day it is the initiative of people to implement a collaborative process using most effective (not necessarily expensive) technology.
Reference:
APICS Dictionary 14th Edition, 2014.
Oliver Wight, Manufacturing Resource Planning: MRP II: Unlocking America’s Productivity Potential, 29th March, 1995.
Social CRM 15 May 2016, 9:19 am
“Humans are social animals” – told by my history teacher when I was at school. This was one of the most intriguing things I realized as I grew up. At different times I pondered the social aspects of humans and every time I seem to see a new angle of it. In the ancient times, living in a group was a necessity and communication within a group was inherent. The group expanded over time and mode of communication evolved; today we are part of one global cyber society communicating over the Internet. This transformation of social communication means a lot to a business strategist, how so? Well we know customers are most important stakeholders for any business and customers are human beings hence they must be in social communication with each other…I did little more research on it, let’s see what ‘social’ means to today’s business.
Advertising is the primary method to reach to customers; in every industry advertising takes place in one way or other. It is the only way to catch attention of a potential customer. Organizations have been using different techniques and channels to advertise their products and services. Advertising management, particularly media channel selection, is always challenging for marketing managers. Although traditional media like television, radio, print, billboards are still being used; the rapid and sustained rise of the Internet has introduced several new, attractive marketing communication channels (Danaher and Dagger, 2013). Technology-based media such as e-mail, websites, mobile and social media have appeared as new marketing and communication channels. It was not until around 2008 when industries did business mainly through offline sales channels began to consider online as a branding advertising medium that could both build long-term brand equity and drive offline sales (Fulgoni & Morn, 2009).
The advertising-based digital-media economy took the better part of two decades to develop, but the realities of an exceptionally rapid shift from desktop to mobile platforms is creating the most disruptive event in the industry’s history (Fulgoni & Lipsman, 2014). Advertising is a tool to acquire new customer but organizations need to maintain and grow their customer base after the acquisition, hence the concept of relationship management evolved. Customer Relationship Management (CRM) is one of those magnificent concepts that swept the business world in the 1990’s with the promise of forever changing the way businesses small and large interacted with their customer bases. CRM is an integrated approach to identifying, acquiring and maintaining customers. CRM allows companies to coordinate their approach across channels, departments and also geographically.
A CRM system, as traditionally defined, is a way to “unite the potential of relationship marketing strategies and IT to create profitable, long-term relationships with customers and other key stakeholders” (Payne & Frow, 2005 p. 168). It involves using technology to synchronize interactions with sales, marketing, customer service, and IT support. CRM systems have been used at companies with significant sales departments as a way to manage the entire sales process, from prospecting to “close” to continued customer support (Weinstein & Mullins 2012). Consumers are now empowered in ways they have never been before. In the past, consumer behavior was influenced by two things: 1) personal preference or actions and 2) external influences such as the recommendations of trusted sources like friends or marketing and advertising. Today, consumer behavior is augmented by the consumer social experience, which includes real-time information, contextual data and other social factors that affect the consumer. The contextual data is mostly generated on different social media platforms. The social media applications are transforming the role of the online users from passive consumers of information to active participants in creating and sharing information (Trainor, 2012). Companies are aware of the usage of social media platforms and they are investing more in social media advertisement than the traditional channels.
Traditional CRM is based on an internal operational approach to manage customer relationships effectively. But Social CRM is based on the ability of a company to meet the personal agendas of their customers while at the same time meeting the objectives of their own business plan. It’s aimed at customer engagement rather than customer management (Greenberg, 2009).The traditional CRM system, which already provides for closer collaboration between organizations and their “customers” than traditionally has occurred in the past, may very well be usurped by “social” CRM systems that allow for more concretion of content on the part of the customers.
Reflecting the widespread application of social media, the term “Social CRM” has been recently introduced into marketing parlance to represent a broad set of tools and activities enabled by social media. The new concept of social CRM is also known as CRM 2.0.As social networking sites explode in popularity, the hype and interest continue to build. Social networking at a high level is described as the convergence of technologies that make it possible for individuals to easily communicate, share information, and form new communities online. But the big question today is not what social networking is, but rather what it means for businesses.
Today about 73% of adult Internet users are using social media, they are sharing what they like or dislike about a product or company. Word-of-mouth has long been an important concept in marketing communications. In today’s world of Internet, electronic word-of-mouth has materialized as a phenomenon of critical interest to marketers. They also share concerns, expectations apprehensions in social media. These are mainly unstructured data, but there is a wealth of information in these data. Companies can use this unstructured data to better understand the consumer behavior, sentiment, trend and expectation. The information in social media is a true reflection of customer voice, which can help companies to be more customers centric and build a strong relationship with customers.
Social CRM is a philosophy & a business strategy, supported by a technology platform, business rules, workflow, processes & social characteristics, designed to engage the customer in a collaborative conversation in order to provide mutually beneficial value in a trusted & transparent business environment. It’s the company’s response to the customer’s ownership of the conversation (Greenberg, 2010).CRM is an approach to manage a customer through a process that essentially keeps them buying more stuff from the organization. Organizations manage customers based on data and information that they collect over time in an attempt to get to know their customers. Traditional CRM is an inside-out approach meaning that a team within an organization gets together to decide what to make, how to make it, and how to market it, and then pushes everything out to the customer. But customers now talk back in a very public way and these customers have a lot to say and a lot to contribute.
Benefits of Social CRM
Marketing Benefits:
Idea management: Generating new ideas from individuals and communities, communicating those ideas and implementing them to support marketing objectives.
New product market research/test/launch: Engaging the community for market research, testing, and feedback for new products and services.
Brand and reputation monitoring: Listening, developing, strengthening, promoting and defending a company brand.
Social analytics for marketing: Identification of influencers, customer profiling, scoring and automatic classification of subject/topic, people and content for marketing objectives.
Social campaigns: Tracking, targeting segments/individuals within a community (such as influencers), aligning products and services with individual needs, and leading prospects through a buying process by applying specific treatments.
The main measurable benefits have been for reduced product-development cycles, using a community for product ideas, testing and improvements in promotion targeting, and using customer product reviews as a promotional and influencing tool in the evaluation stage of a buying process.
Sales Benefits:
Sales social prospecting/frontline research: The use of cloud-based data services to help salespeople maintain up-to-date contact information and/or the use of social networks for prospecting.
Sales social collaboration: Using social networking capabilities for collaboration on processes like competitive intelligence use and tendering.
Sales social analytics: The use of social software for sales analytics
Lead management is a benefit that presents compelling value propositions for social CRM for sales, particularly with key performance indicators (KPIs) concerning sales-ready leads and the impact on sales cycle durations: number and percentage of leads deemed ready for sales attention, leads committed to sales pipelines, lead velocity, impact on close rates, decreased time invested in lead qualification and early stages of prospecting.
Customer Service:
Community peer-to-peer support: This requires tools for content creation, member management and a knowledge management system, all on an agile social platform. Community peer-to-peer support popularly incorporates forums, blogs, wikis and messaging, all within a common space. The purpose of these tools is to foster peer-to-peer and organization engagement to provide business value. Community peer-to-peer support can be conducted within a no cost environment like Facebook, Google Plus or LinkedIn, or can be done in a branded environment requiring an investment in peer-to-peer community software.
Service feedback: This requires tools for member interaction, surveys, forums and polling. While these tools are not new, the social iteration of them is new. Social feedback can incorporate community panels and personalized surveys, a key component being the visibility of results to the entire community.
Service listen and respond: This category of social media monitoring software focuses on the detection of potential support situations voiced in a social environment, such as Twitter.
Service process analysis: This requires the analytical tools to pinpoint precisely where a customer service process falls short. These include measurements such as the time to inquiry resolution, the number of posts, the accuracy of responses, and the number of participants.
The benefits of social customer service and support tend to revolve around cutting costs or improving the customer experience. Organizations measure for call deflection, reduction in organization-provided technical support, time to resolution, change in customer lifetime value, customer satisfaction, and impact on trust and brand loyalty.
I have just outlined some benefits of social CRM, in reality implementing Social CRM strategy is not simple, it will need advanced infrastructure, resources and new set of skills; this type of business initiatives should show substantial ROI as well. But I think this strategy will continue to evolve because it makes the business closer to customer.
References :
Greenberg, Paul (2010). CRM at the Speed of Light. McGraw-Hill,NY,USA
Pavicic, J., Alfirevic, N., & Znidar, K. (2011). Customer Knowledge Management: Toward Social CRM. International Journal Of Management Cases, 13(3), 203-209.
Schulaka, C. (2013). Greg Friedman on Successful Mergers, Data Nirvana, and the Future of CRM. Journal Of Financial Planning, 26(7), 16-19.
Danaher, P. J., & Dagger, T. S. (2013). Comparing the Relative Effectiveness of Advertising Channels: A Case Study of a Multimedia Blitz Campaign. Journal Of Marketing Research (JMR), 50(4), 517-534.
Fulgoni, G., & Lipsman, A. (2014). Digital Game Changers: How Social Media Will Help Usher in The Era of Mobile and Multi-Platform Campaign-Effectiveness Measurement. Journal Of Advertising Research, 54(1), 11-16. doi:10.2501/JAR-54-1-011-016
Payne, A., & Frow, P. (2005). A Strategic Framework for Customer Relationship Management. Journal Of Marketing, 69(4), 167-176. doi:10.1509/jmkg.2005.69.4.167
Beard, F. K. (2013). How Practices Have Changed in Two Decades. Journal Of Advertising Research, 53(3), 313-323. doi:10.2501/JAR-53-3-313-323