There is growing evidence that the global manufacturing industry as a whole is slowing recovering from a multi-year economic slump. The good news, however, is accompanied by a generous amount of caution on the part of the consumer and manufacturers. While economic indicators show that consumer spending is on the rise, manufacturers must remain conservative, keeping inventories low and executing very lean, agile product supply strategies.
Despite an upswing in production orders and new product launches, consumers across industries will remain cost-conscious. Supply chain partners remain reluctant to invest working capital due to demand uncertainty. According to AMR Research, as a result of this convergence of factors, product lifecycle management (PLM) strategies will need to support design for value while minimizing the product complexity and variability that creates inefficiency in the supply chain.
A report by AMR Research, now part of the Gartner Group, indicates that the overall trend in manufacturing will be towards creating value-based products that closely align with market demands. Bottom line for manufacturers: there is little room for error in this economy. Here are a few of the trends as identified by the AMR Research report on product innovation and PLM.
Cost-conscious consumers. Manufacturers are happy that consumers are ready to start buying again, but purchasing decisions will be largely based on price. Product development teams must focus on designing new products that satisfy a range of price points without causing disturbances in the supply chain.
To help manufacturing work within these new confines, PLM software needs to be put to work to help improve insight into customer behavior and cost in order to make realistic projections, minimizing supply chain disturbances.
The value proposition. Consumer giant Proctor & Gamble rolled out an aggressive number of new products last year, reflecting an overall trend towards increased innovation and an increased focus on value for cost-conscious consumers. To do this, manufacturers must remain steadfastly focused on new product cost and deploy an agile strategy for understanding and responding to changing customer needs.
Manufacturers can accomplish this by using PLM applications to capture, validate and translate customer needs to product development. PLM applications also enable companies to better manage the collaborative product design process, streamline iterations and validate designs while they evolve through the design cycle.
Better manage the supply chain. Demand fluctuations due in part to design variability can have a serious impact on lower-tier suppliers in the supply chain. Steering customer—through judicious use of incentives—towards standard products can lesson this instability. According to AMR research, two techniques can help manufacturers reduce supply chain glitches. Direct material sourcing helps product developers find preferred suppliers and materials through use of the traditional request-for-quotation (RFQ) process and supplier part catalogs. Global manufacturing planning simulates the manufacturability of designs and supports concurrent product and manufacturing process development.
As the economy continues to rebound, new product launches and an accompanied demand on the supply chain will both increase as companies refocus on innovation but with a watchful eye on creating a value proposition for customers. To help manage this flux, companies need to re-evaluate their PLM strategy to ensure that it is aligned with their business goals.
Image by qisur