Dear reader,
Before you dive into this blog update, please share your own unbiased experiences on Product Portfolio Management and more specifically phase-out processes via this survey. Many thanks in advance for your support!
Nick
I often hear customers say: “Isn’t product portfolio management the responsibility of Marketing or Product Management? What does it have to do with Supply Chain?”. Well, a lot actually.
In this blog, I’ll discuss what the potential role of a Supply Chain Director can be to optimize your product portfolio efficiently. My answer: Supply Chain can – and should – take up a facilitating role in product portfolio discussions and bring key company stakeholders around the table.
Supply Chain should put the focus on managing the existing portfolio of products & customers
When I say product portfolio management, I mean more than just creating new products, increasing market share, or taking new markets by storm. Often, Marketing or Product Management focuses primarily on portfolio growth, whereas managing existing products is a structural challenge all on its own. And when this management goes awry, it’s most likely the Supply Chain department that will face the consequences.
Infrequent and inefficient portfolio management can lead to inventory inconsistencies in a company’s supply chain, for instance, which can cause last-minute production runs and increased production costs. But, when you put in place a frequent portfolio review, these problems can be avoided. And, as Supply Chain has the most to win from a structurally reviewed portfolio, it’s more than logical that it should have a seat at the portfolio management table.
Supply Chain should facilitate product portfolio discussions with all stakeholders
In my professional opinion, the Supply Chain Manager should have an active role during portfolio management discussions. Of course, the end responsibility lies with Marketing and Product Management, but it would be healthy for an organization if Supply Chain is in the position to put the subject on the table and facilitate discussions between relevant stakeholders.
This facilitating role should fit the Supply Chain Manager like a glove for two main reasons. One, the Supply Chain department is known for its data-driven qualities, which helps to offer an objective, neutral analysis. Starting portfolio discussions with facts and figures avoids emotional discussions, which could throw a spanner in the works. Secondly, Supply Chain already has a lot of connections with departments like Operations, Finance and Marketing, so it’s in a unique position to bridge any gaps that may exist between them and arrive at a compromise regarding product choices.
Companies should make product portfolio management a recurrent exercise
Portfolio reviews should be a structural part of the monthly S&OP process. It will naturally extend the S&OP process in many organisations and fits the extended S&OP or IBP vision of e.g. Oliver Wight.
And, like S&OP, portfolio management is a process, not a project you only need to think about once every year. The Supply Chain Manager can share lessons learned and recommend quarterly reviews to keep the state of the product portfolio in prime condition. They can also help to follow up on the decisions made during those review exercises and organize monthly meetings to see if the actions made are having an effect.
