Beginning at the End
We discussed the end of the lifecycle in the last post and this week we will discuss the most critical and also the trickiest phase of the lifecycle- New Product Launches/Introduction (NPI). NPI causes the biggest clusters for the obvious reason that when offering a new SKU into the world- the performance is mostly an unknown and often so too are the manufacturing nuances.
Determining forecasts for new SKUs is complicated and full of assumptions. Of course, the hope is that the SKUs take off and sell well for a long time, that the demand is manageable and the supply reliable. That is the ideal which also rarely seems to happen!
There are two extremes that need to be considered at the start of the planning process-
The SKU takes off wildly, way higher than expectations and the supply chain must rise to the occasion
OR
The SKU is a dud, the inventory just sits and becomes excess/obsolete (E&O) almost immediately
When planning for NPI the most critical aspects to ensure that are in place are flexibility and outlet. Both of these need solid plans at the point of product inception. Traditionally, the focus mostly has been on developing high quality items that function and look the way intended, but now there also needs to be attention to the plan (in advance) for flexing way up or way down depending on performance.
Flexing up can look like the following: back up suppliers, raw materials/components on order above the few launch qty, capacity reserved, freight options to reduce lead times, or late stage customization, to name a few. Flexing down depends heavily on your supply partners’ flexibility and the creativity you can access internally and externally. From discount channels, repurposing inventory, recycling, relaunching in a different market to donations, the options for moving excess inventory are limited only by what can be thought up and time.
Knowing and planning the full lifecycle (and the risks that come with each phase) at product inception prevents shortages and/or being stuck with years worth of unselling product. More and more companies are closing the loop on their supply chains and ensuring their products and packaging do not end up in landfills or as waste.
And that is truly the gist of it- having that plan up front, as a part of the decision making process for new SKUs. Because as much as we want every SKU to be a home run, not all of them will be and knowing how inventory will be managed at all stages - ethically, quickly, seamlessly and without derailing your team is critical to the long term success of your business AND the legacy it leaves.