The basic idea is to think about formula, packaging, and labeling in a more coordinated and circular rather than linear fashion. Ian Finley, marketing vice president for Formation Systems, a supplier of software aimed at optimizing the supply chain, put it this way in a conversation at National Manufacturing Week in early March.
“Presumably, the supply chain is cost-optimized for existing products. But if you kick something new into that chain and you haven’t optimized for cost up front, you’ll run into problems.”
One example he provided is where a CPG company, as part of a supply chain rationalization, reduces a long list of vendors by 60%. In other words, a whole group of vendors are no longer approved for use because using them brings an added cost. But if the folks in newproduct development aren’t kept in the loop and keep going back to the same vendors who aren’t approved, then whatever new products they develop won’t be optimized from a cost perspective when it comes time to launch.
Software programs now available from Formation Systems and others who exhibited at National Manufacturing Week can help bring a circular, closed-loop, feedback-oriented approach to new-product development. Product developers will have information to help them rein in costs from the earliest stages of a new product’s life cycle. That way, when it comes time to launch, costs associated with labels, packaging, and formula won’t spiral out of control and, potentially at least, doom the new product to failure.
Finley says, “The attitude used to be, ‘Let’s launch now because the deadline is here. We can fix whatever we need to somewhere in the supply chain.’ But that attitude can be costly. Worse, there may be recalls because of label or ingredient mistakes. It’s an uncoordinated approach. Today there are tools to correct this.”
