Corporate Ambition and Product Proliferation

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The challenge of new product introductions

Corporate ambition is a good thing.  When your leadership (and contributing) teams are always striving to bring newer and better products to consumers, you have the makings of continued success.  If these new products (along with the entire portfolio) are carefully planned, you can maximize profit and mitigate supply chain risks as you scale. 

Without proper planning measures, too many new product introductions can create a challenge for planners and create more headache than profit. 

Headaches might include: 

The mindset of many ambitious product teams is that without continued releases and iterations, there is no way to find the ones that will sell.  But this mindset leads to a cycle of proliferation.  Add-in customizing items, and what you’ve got is a lot of SKUs with little demand. 

On top of that, forecasting new products is highly susceptible to bias and error.  Without historical data, and with plenty of time and resources invested in development, the tendency might be to over forecast, overproduce, and overpay.  According to the Institute of Business Forecasting, new items in the CPG industry average double-digit forecast error, mainly due to bias.  Over-forecasting can hurt your business in many ways (see above “headaches” list). 

What your ambitious team needs are statistical models that can better predict new product demand, and integrated plans that help minimize risk while aligning operations to corporate goals.  To learn more about how Vanguard helps companies manage this process, read the white paper on New Product Demand Forecasting.