Every business needs to keep its product portfolio up-to-date and its supply chain operating at its optimum. Here, we outline how you can effectively refresh your product portfolio and reshape your supply chain.
If you’re a business owner and you have a range of different products in your inventory, how do you allocate your marketing budget to each item you’re selling? Which products do you invest more heavily in, or do you choose to distribute your resources among them equally?
These questions—and many more—can all be summed up under the umbrella term of product portfolio management. Managing your product portfolio helps you to allocate resources, finesse marketing efforts, and make informed strategy decisions by giving you a clear picture of the market positions of each product you’re selling.
Due to the ever-changing nature of business and the fluctuations in markets, you’ll need to restructure and reshape your product portfolio from time to time. Doing this will allow you to stay competitive in your sector, while continuing to meet the evolving needs and desires of your target customer base.
Why Reshaping Your Portfolio Is Important
Product portfolio management is vital to the proper operation of your business and the maintenance of your supply chains. Regular and meticulous management helps you to:
- Increase and maximize the value of your products. Each product you offer will contribute differently to your business’s profit margins. Your portfolio should be structured to contribute as much as it can to your bottom line, both now and in the foreseeable future.
- Determine an ideal mix of products. A solid portfolio spans across numerous market segments, product categories, and levels of consumer demand. Having a comprehensive range will help to safeguard your company against changes in the market. Your portfolio should always include some well-established, long-term products to offset any riskier ones you choose to add.
- Encourage strategic internal alignment. The success of your business could be in danger if your product portfolio doesn’t align with your company’s goals and strategies.
- Adequately allocate resources. All companies have limited resources to devote to their product portfolios. Investing most of your resources in the right products could work towards ensuring the profitability and success of your venture.
Reshaping Your Product Portfolio
1. Identify and prioritise high-performance products
Products that experience high demand from customers in a growing market sector are the ones that you should focus your portfolio on. Consider the time frame during which these products have performed favourably, too.
If they’ve continued to sell well for years despite many marketplace changes and ebbs in customers’ interests, these products should continue to form the cornerstone of any newly updated portfolios you develop.
2. Nix under-performing products
Any products in your portfolio that no longer draw demand or generate sufficient income to turn a profit must be removed. This also applies to products that are no longer attractive to most of your target market.
3. Improve or re-brand promising products
If you have products that show potential but are not selling as well as you’d expect, you may not need to remove them entirely. Most times, promising items can be rebranded, reformulated, or otherwise improved to boost their sales potential.
In this case, it’s wise to market these products as being ‘new and improved’ to renew interest in existing customers, and attract interest from potential ones.
4. Expand product ranges that are in consistent demand
Many businesses have a keystone range of products their venture is based on. These products were the main focus when drawing up a business plan template, with all financials, market research, and projections based on their performance. However, once successful and meeting ongoing demand, building on these products’ success becomes essential.
Expanding a keystone product range to diversify your income streams and continue to meet your customers’ needs is one way of updating your offering. If it’s not possible to expand the existing range, you could consider offering similar products of comparable quality to achieve the same effect.
5. Determine which products dominate slow growth markets
Certain products may not sell well immediately after they’ve been added to your portfolio. However, if they are dominant within slow growth markets, it might pay you to keep them on as part of your long-term portfolio strategy.
These products could take months or even years to prove profitable, but could end up supplying your business with a steady stream of income once they have become established mainstays in your consumers’ budgets.
Streamlining Your Supply Chain
In the wake of the pandemic, supply chain disruptions are still rife. If you can optimize yours to the best of your ability, you’ll maintain a stronger position in the market.
6. Optimise your supply chain processes
Your product portfolio and supply chain processes are intimately linked. It’s essential to implement high-level processes to assess your business’s current status and find innovative ways to streamline your supply chain operations by spotting problems within the process. From there, you can correct them in a timely way.
This could reduce your operational costs and allow you to pass your savings onto your customers, while leaving you with a larger budget to diversify your product portfolio.
7. Integrate your supply chain information
Every transaction within your business will pass through several systems, including enterprise resource management, financial, and sales forecasts systems. From product release to sale and invoice processing, each stage of the process has its own specifics that create data. This, or other data, may also be shared with similar systems belonging to your suppliers, partners, and customers.
In small to medium businesses, data integration is done through file uploads, manual updates, batch updates, and spreadsheets. These processes are all time-consuming and prone to mistakes. By incorporating an integration layer into them, data flows can be automated and shared more rapidly among relevant systems.
8. Remove duplicated data
Once you’ve eliminated duplicated data entry processes, you can save your business many hours of valuable labour time. Your supply chain systems will be more resilient and easier to manage, which can improve flows of information and enhance the service you can offer to customers and clients.
9. Use existing systems to your advantage
Many in-house data systems can be complicated, difficult to use, and hard to integrate with their newer counterparts. However, the information they collect can still be useful for analysis and planning purposes. Information from existing systems can be used to develop new and more efficient mobile supply chains.
10. Stay ahead of the game
Streamlining your supply chain will allow you to see beyond simple order fulfillment and gain a better understanding of what your customers will need and want in the future. Analyzing your supply chain gives you a chance to learn more about how it operates, and to improve product deliveries, both in the short and long term.
These efficiencies will then be passed down to your customers, who can enjoy the assurance of better service, high-quality products, and timely deliveries that will keep them coming back time and time again. Which is exactly the result you’re aiming for when you restructure and revitalize your product portfolio and supply chain.