August 22, 2017 Industry news
A recent report, FDF Economic contribution and growth opportunities, commissioned by the Food and Drink Federation (FDF) and published by Grant Thornton, looked at how product innovation is the lifeblood of the food and drink industry – but also how the new product introduction process causes unnecessary problems, costs and delays.
The food and drink manufacturing sector is innovative and dynamic. New products are constantly being introduced, and the strategy for brands is always to maximise the contribution of new and existing products to the overall business. Brands are always adding value to products – keeping them interesting and engaging for their consumers. In fact, as seen from the Grant Thornton report, new product development or reformulation is the most common form of innovation for these companies.
- New product development/reformulation (89.2%)
- Manufacturing process automation (73%)
- Efficient resource use (67.6%)
Innovation, whether it be in products or processes, is a significant growth opportunity for the food and drink manufacturing sector, and one that will also have an equally positive impact on improving productivity.
Grant Thornton report
Craft beer sales, for example, have set the drinks category alight – sales are currently going through the roof. New product development and reformulations to existing products is essential in this category. It’s all about the strength, flavour and overall experience which can surprise and delight shoppers.
Thousands of products are launched each year, but most fail. Why?
Understanding consumer behaviour is vital when it comes to innovation. Everything should be focused on the consumer: How you can solve a problem or how you can make them feel good.
But when a product idea is seen as a ‘winner’, it’s often brought to market too fast for the product development team. And in today’s world, consumers are now more influential than ever. The rise of smartphones and social media have given them that power. As mentioned in the Grant Thornton report, “these days products can become overnight successes at the press of a “Like” button.”
To successfully bring a new product to market, the process needs to be structured and systematic. And ensuring product data is accurate and consistent is vital to this process.
Bringing products to market
The product development process is currently a lengthy one – it can typically take up to 18 months to develop a product from concept through to appearing on the shelf. Many don’t even make it past the initial research stage. But for those that do make it to production, the new product introduction process is then the most vital process of all.
GS1 UK members tell us it takes around 16-18 weeks to get a product on the shelf from the time it is presented to a buyer. Typically, at 16 weeks out, the supplier account manager shares initial data with the buyer such as the launch date, price and description. At 10 weeks out, the supplier usually has more data about a product, but as it’s not fully complete and accurate, it’s often not shared with the retailer. And the longer the retailer goes without the data, the bigger the problem becomes – because around 2-5 weeks before the launch date, the retailer will start implementing workarounds to get the data they need. Which means the data will be incomplete, inaccurate and inconsistent between retailers.
Simon Masters, Partner at PA Consulting group, shared his views about the current process. “One supplier is essentially providing a new product and every single retailer is setting up the product data and its attributes. It would be good to remove that and allow retailers to be competing with one another on what they should be competing on.”
It’s critical that a new product is established in the first 6 weeks of its life, otherwise it starts going under review.
The challenge is to ensure speed to shelf and maximising the initial product launch. And this whole process relies on accurate data covering all the product’s attributes. Yet it’s still surprising that many retailers and suppliers do not have internal data champions in their organisations. Master data or data excellence teams should be seen as the guardians of the company’s product data and the quality of that data. The business case to establish such a team in an organisation is clear – it can save hundreds of working hours and costs by avoiding non-added value activities, where operations stall due to inadequate and incorrect data being present – and the need to resolve queries.
How is industry solving the problem?
This is why GS1 UK are working on the Digital DNA programme. The solution will deliver a single industry-managed and industry-owned product catalogue where suppliers can put in their product data once, and retailers can take it out in a way that ensures accuracy and consistency. The service will also include a physical data check which will only need to be done once, removing the current lengthy and costly process where every retailer manages their own physical data checks.
It’s clear that the way industry manages product data shouldn’t be a competitive issue. We can agree with Simon Masters that competition should be in areas that are needed, not in one where product introductions are delayed and consumers can be affected by inaccurate, incomplete and inconsistent data.
Find out more about our Digital DNA programme
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