new_productI recently attended an IBF conference session by Michael Birch, Vice President Operations at Ping Golf on why forecasting is so critical to the product launch.  Michael spoke about the multiple stages of a product launch, the various stakeholders involved, and the criticality of “the forecast” relative to a successful launch. Michael went as far to state “the forecast is the foundation of execution”, I happen to align with his thoughts. However, the forecast is potentially the least exciting aspect of new product introductions.  The teams responsible for development and marketing new product introductions are by nature aggressive in the terms of anticipated performance and demand in the marketplace. This is certainly not surprising; it is an integral part of their role. Each of the various business units involved during product launch play a key role within their area of expertise. Challenges arise, however, as these different groups generally are interested in components of the product specific to their charge, and often times are not very familiar with the end to end process required to successfully launch a product. Therefore, as Michael argues, cross functional alignment is an absolute must. In his organization, Planners are in the position to facilitate this communication. This would thereby, seem to require the Planner to possess a degree of business savvy. After all, if he or she is going to be a successful orchestrator across business units, a sound working knowledge of each these business units is a fundamental requirement. As Michael pointed out, people tend to “worry” about different things…we see this all of the time and in every organization.

For discussion purposes, let’s view a list of potential business units that likely include; executive management, quality control, warehousing, inventory planning, logistics, marketing, sales, finance, purchasing, and manufacturing. As we know, each of these functions has different skin in the game and engages at different points in time. The timing and frequency of communication across the enterprise is critical during all stages of the product launch. If, as Michael describes the Planner is the facilitator, they must be skilled at understanding the degree of risk or uncertainly and be able to broker discussions around potential contingencies. Some of the changes that inevitability take place during the launch cycle occur when constraints are added or removed, when delay or acceleration exist, when units are increased or decreased, when the mix changes and/or the costs change. These all have a potential impact on the forecast.

A critical component of the new product launch is the need to forecast the impact to existing product. Cannibalization, in some form will occur.  In my experience there is generally always impact to existing product and this is a “must take” opportunity to generate healthy dialogue with the respective partners. For a new product launch to be successful the existing product needs attention. If changes to the existing product mix are not addressed, the consequences can hinder sales of the new product, cause product obsolescence, create margin erosion and even potentially confuse the customer. Part of our human nature is to focus on the “new”, because it is more exciting. However, in the case of inventory planning the “old” requires adequate attention for the health of the overall business.

Joy White
Supply Chain Leader
IBF Ambassador