When launching a new consumer product, the supply chain might not always be at the forefront of everyone’s mind, but an efficient supply chain is key to ensuring a product launch is successful. As a result, we’ve highlighted in this blog some common things to consider when developing a supply chain for a new consumer product.
5 Key Considerations When Launching a New Consumer Product
1. Unpredictable Sales Projections
Market insights are getting better, and more tools to help predict market trends and product demand come out frequently; however, new product launches can be pretty unpredictable. The newer the market and the fewer competitors there are for a given product, the more uncertainty there will be.
Various strategies exist which can attack this issue head-on. For instance, if there’s a concern that supply shortages could really damage the customer base, then consider waiting to release the product until the first production run is complete and have the second production run on standby, ready to go. Other strategies to tackle uncertainty include: launching a pre-funding campaign such as a Kickstarter to predict demand, offering “limited releases” at the start to reduce excess inventory, and/or negotiating with suppliers to optimize a pull supply chain rather than a push supply chain to begin.
Customers love being able to select various colors, sizes, and features to really make a product their own. Customization can be a large selling point when trying to grow a customer base. Yet, to put it bluntly, customization is a nightmare for the product’s supply chain. With each new edition, or color, or size, etc. comes a new SKU, higher minimum order quantities, and additional steps in the supply chain and inventory. This isn’t to say that it can’t be done, it just drastically increases the cost to run an efficient supply chain.
When a product is to a point where the customer base demands more options, it’s a good idea to provide them, but start simple.Launch the product with two or three different color choices, or just enough sizes to capture most of the customer base. Then, as the products sell, customer feedback through focus groups, surveys and reviews should highlight the next steps. Slowly roll out new SKUs and features to enable easy supply chain adaptation.
The launch of a new consumer product is filled with unknowns. Models can help predict sales information and reviews can help with product satisfaction, but launches never go as expected. Plans should be put into place to account for anything that could go wrong or not as expected, like in the event of a recall, for instance. Also ensure that the logistics network is agile enough to adapt to changes in customer base location, and talk with suppliers about capacity constraints in case sales exceed expectations. Unpredictability is both exciting and frightening at the same time, but planning ahead will offer more peace of mind while reducing risk.
Products can be designed and optimized according to many variables. Cost and quality are often the two largest tradeoffs made in design and manufacturing, and in some cases it’s easy to understand how the tradeoffs should be made. For example, if the product is being developed for a limited-edition sports car, then quality is of the upmost importance, and cost is a secondary concern. These two variables aren’t always easy to balance, and that’s particularly true when additional variables get thrown into the mix.
With consumer products, design is a third variable that can be overlooked, but is equally important. When making manufacturing and design decisions, factors such as surface finishes, ergonomic design requirements, and color choices shouldn’t be neglected. For example, maybe it’d be cheaper to change the shape of the object to something more manufacturable or change the color to something more basic to reduce cost. These decisions could have a large impact on potential sales.
5. Distributors & Retailers
One of the things that makes consumer products unique is that they’re often sold indirectly through distributors and retailers. This final step inherently adds complexity to the supply chain because the logistics network requires a lot of tracking and shipping information, and raises questions about things like product return and refund policies. Lately, the growth of eCommerce has allowed companies to easily forgo this final step in the supply chain. There are pros and cons to selling products directly online or through retailers, and this decision is often reliant upon many factors. When weighing these pros and cons of where to sell your product, supply chain complexity should be a major part of the decision making process.
Launching a new consumer product is always an exciting and adventurous time. But the supply chain for these products isn’t always as simple as it first appears. Factoring in some of the considerations like those listed above will go a long way to ensuring the product has a successful launch.