At Solventure we strongly believe Product Portfolio Management is a crucial element to the profitability of the company. This involves evaluating product performances, identifying risks and opportunities or prioritizing high-value products. When done right, it is the key instrument for the CEO to navigate the business along the budget towards its strategic targets.
The ultimate goal: structurally improve profitability despite the odds
Building strong portfolios and maintaining best-in-class corporate performance is no easy task, as today a lot of manufacturing companies still struggle to answer increased market volatility.
Product Portfolio Management strategies do allow you to constantly revise your product portfolio investments according to changing market conditions and product pressure, but it is also essential that your internal departments are aligned on the product variety funnel or the width of markets and customers you want to address.
So how do you build winning portfolios? It all starts with having a clear picture of your active portfolio. Which products are bringing in big profits, and which are adding very little to the profitability of your business?
The Common pitfalls: regularity and collaboration
Currently, the popular approach to deal with portfolio complexity is to do a one-time ‘cut-the-tail’ exercise and remove those products that bring too little margin to the table. Additionally, for each new product an older product needs to be cut. It’s a very effective, albeit shortcoming, way to combat the natural growth of portfolio complexity, but it might not always be in the best interest of the company.
So, let’s aim to go beyond these types of one-off exercises by driving portfolio decision-making and cooperation between, for instance, Sales & Marketing and Production. Only by working together with all product portfolio stakeholders in your company, will you be able to continuously update your portfolio and improve your corporate performance.
Through this cooperation and sharing of data, your company will also be better equipped to handle uncertain market conditions and volatile changes in transport or pricing.
How to succeed: a 4 step approach
- Awareness: focus on the perception and health of your product & customer portfolio throughout the entirety of your company.
- Data: by relying on real-time data-driven insights and our own recommendations, we can objectify product portfolio decisions that would otherwise be made based on subjective views or opinions not be shared by all stakeholders.
- Progress: building on this strong, common, view on the product & customer portfolio, we can pave a transparent way forward with clear decisions and actions that are concretely implemented.
- Tracking: as previously stated, it is of course crucial to continuously monitor the performance of your portfolio to see how it evolves through time, make sure it stays healthy through enforced guidelines, and alter the course when needed.
In the end, you will grow winning portfolios that help improve your corporate performance, allow company growth and strengthen the efficiency of your organization.
