Observations in the marketplace and visits to several beverage facilities continue to present a broad and unprecedented array of beverage products to consumers. These observations are evidence of the SKU explosion and provide a factual basis for assessing the impacts of alternative perspectives regarding the approach to evaluating new products and modifying existing ones.
While making these observations and discussing day-to-day operating problems with first-line personnel, many questions were raised regarding the old nemesis of SKU proliferations, product longevity and space. Once products enter the market, how are before- and after-the-fact evaluations made to determine success or failure of this variety of packaged products?
From a marketing and sales viewpoint, where do the new products or modifications originate? What significant factors were considered as justification for market entry? And, once decisions are made, who is responsible for the product’s success or failure? Also, was a projected product life considered or determined? These are important questions in any beverage category, and the answers can relate to a wide range of viewpoints depending on where one is positioned in the supply chain.
Because most product ideas originate from marketing and/or sales sources, the marketing viewpoint becomes very important. The focus usually is directed to competition and area demographics. What does the market already contain, and who is buying what?
Existing producers and ambitious entrepreneurs spend considerable monies to develop what they believe will be a winner. However, detailed plans and considerations often are overlooked and do not provide a basis for future success or evaluation of product longevity. The viewpoint at this level is relatively critical because it affects many succeeding steps in the supply chain.
The product/package being developed could meet or surpass competition, could exceed projected volumes and possibly generate profits beyond expectations. Then, based on these factors and other algorithms for the product, it should always be mandatory to make an evaluation of actual versus projected results.
From an operations perspective and engineering viewpoint, new products/packages usually make the largest impact on capital expenditures, infrastructure configuration, utilization, modification or renovation. Here again, it is a basic premise to question the marketing criteria and determine whether existing capacity, capability and infrastructure can produce the new product/package.
If a new product is a hybrid or a proliferation of an existing product, the production environment might not require many changes. Nevertheless, in recent years, new products have had different characteristics that can and usually will impact the production machinery and equipment.
Cold-fill and hot-fill are prime examples of changes that can require heat exchange or cooling equipment and affect other workstations on the line. Such changes can extend beyond physical form and function, resulting in additional costs, undesired productivity variances and can raise the question of long-term sustainability.
The product/package phase of the supply chain can be a difficult-to-establish basis for future evaluation because experience and history are not always available to set bona fide evaluation parameters. For this reason, a detailed capacity/capability of each machine station in the line must be established for the product with the option of modifications for when test runs are made. These steps are necessary to ensure minimization of errors at the earliest possible point in the product/package cycle — realistic expectations.
From experience and history, the processing phase of new product development includes a tremendous amount of research and development work — especially when developing new product formulations — subsequent pilot test runs and even processing equipment. Many producers have found current processing equipment incapable of handling new product requirements, prompting new devices or machines to be built.
Apart from the equipment, the product alone is subjected to a “taste is king” philosophy for evaluation, if not at the point of origin, certainly at the point of use. This is an intangible factor and difficult to evaluate.
The taste must be a critical viewpoint to consider, and because actual development of a new product can take years, it is not only difficult, but perhaps in some situations, a product taste evaluation might be an unattainable effort. In reality, however, product acceptance becomes a matter of taste by someone.
New product introductions are infinite. Rate of market entry is not controllable; therefore, new product preparation for processing, production and distribution will have many algorithms to consider. BI
General guidelines:
- Make the new product a team effort involving all departments.
- Determine the requirements for the new product/package.
- Assess and document all current capabilities.
- Establish a timetable for the entire project.
- Develop goals for the product to attain.
- Develop cost estimates for the full range of the project.
