How PLM Leads to Further Innovation

| Product Lifecycle Management | Food & Beverage | Product Portfolio Management
Posted By: Hollie Farrahi

Selerant-innovation-digital-transformation

For many businesses, current research has established that new products fail to yield significant bottom-line revenue contributions upon release. A 2014 Nielsen report, for example, found that 85% of new consumer packaged goods (CPG) are no longer available two years after their initial launch. In certain industries like pharmaceuticals, in which Research and Development (R&D) costs are as high as $1.4 billion for a product, innovation-related failures in fact sharply hamper future earnings and the bottom line.

By adopting a robust product life cycle (PLM) solution, businesses can better position their new products for success, while also avoiding the common pitfalls that often plague new product development and rollout. 

The benefits of PLM for incremental change

As Nielsen noted, many of the most successful product releases do not focus on large-scale innovation. Rather, many of the biggest new products in the CPG space have demonstrated financial success simply through the tweaking of existing products. By way of example, a cereal manufacturer creates a successful new product by adding more nuts to a pre-existing granola bar recipe -- as opposed to the development of a wholly new product. This product development approach is hardly unique to just to CPG manufacturers. Many of the leading pharmaceutical companies, cosmetics manufacturers, specialty chemicals producers and others have found success tweaking previously existing products to develop a new market offering.

PLM serves a critical role in this type of R&D environment where modification drives innovation. When companies store recipes, ingredient information and other critical data points on disparate, non-centralized files using a variety of software, their ability to tweak products in a consistent and uniform fashion is diminished. Under such a scenario, changes made in one area with one set of ingredients can yield entirely different results somewhere else.

With PLM in place, process manufacturing firms can more effectively guarantee consistency throughout the product development process. PLM is clearly the best technology for ensuring that recipes and formulations can be uniformly tweaked and changed as necessary. This is a major reason why 71% of Selerant’s PLM customers improved formulation speed by as much as 60%.

How PLM proves beneficial during R&D 

PLM is beneficial not just for the efficient development of new products, but also for ensuring compliance and helping get the new product to market. A quality PLM solution can assist with compliant labeling, new product creation/assembly, at-scale ingredient sourcing, allergen information, product costs and other key points of information/steps needed to bring a new product into the marketplace.

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Often, developing new products and bringing them to market successfully is less about having a dramatically new idea—and more about tweaking new products in a way to make them more appealing to customers and new markets. Research shows that creating an entirely new product costs 7X as much as it costs to refine an existing one. Utilizing PLM technology to develop new offerings from existing products is an easy way to reduce customer churn and ensure continued brand satisfaction.

Moreover, this kind of incremental innovation is predicated on the effective sharing of knowledge throughout an enterprise. Information cannot be effectively shared and leveraged, when stored manually on disparate files and a wide variety of software types. PLM serves as a central repository of knowledge, making it far easier to develop effective new products and quickly bring them to market.