Initiatives to rationalize or manage the Research and Development (R&D) project and product portfolios can provide up to 20% of the savings in competitive plans.
Context and challenges
For almost ten years, a very clear upward trend in product portfolios has been emerging among manufacturers in all sectors. It applies to both the R&D phase and existing products.
It stems from the need for companies to make themselves stand out and adapt to their customers' differing requirements, their difficulty eliminating products at the end of their life cycle (or fear of losing customers), the proliferation of sources of funding for projects, collaborative research, and the frequency of technological developments.
As a result, companies need to rationalize and manage their product portfolios to achieve four goals:
- Cut costs, by identifying the product lines or technological routes that do not offer the expected opportunities, and reducing complexity for downstream functions (Supply Chain, Logistics, Marketing and Sales, etc.)
- Focus internal resources on the products that contribute the most or the technologies to be integrated into upcoming major programs
- Balance the development risks by adopting a Leader/Follower/Delegate/Abandon policy
- Increase the impact on the client or those involved in R&D, by increasing the visibility of the range, maximizing the perceived value or the coherence with technological roadmaps.
Of course, rationalization and management require trade-offs between financial, commercial, and manufacturing activity.
The success of these initiatives depends on five fundamental points:
- Defining the product or service and measuring the problem, in particular by segmenting and measuring the scope of the portfolio
- Defining and analyzing the performance of the product/service, an objective analysis is carried out on the financial, industrial, and commercial aspects
- Assessing the risks and the opportunities, a purely analytical interpretation of the segmentation (market, functional, performance, etc.) is too narrow and could even be dangerous
- Daring to make decisions. At this stage, decisions are essential and must allow the company not only to prioritize products/technology or to invest in R&D, but also to decide which existing products should be discontinued, adjusted, redesigned, or kept as they are
- Being firm with respect to implementation. The potential discontinuation of a product or de-prioritization of research is often an emotional, or even political, matter. A rigorous portfolio management system must be implemented to prevent any U-turns occurring. This kind of system must also prevent another proliferation of products or projects without sound funding
How can Argon Consulting help you?
- Studying the range of products and services, its segmentation and analyzing the total cost of complexity
- Studying the R&D portfolio, its coherence with technological roadmaps, its funding, and analyzing the risk incurred
- Rationalizing and reducing the complexity of the product portfolio, based on validated scenarios and opportunities
- Implementing a sustainable management system for R&D project or product portfolios and tracking its performance