Why Manufacturers Need Better Visibility Across Product Portfolios

Here’s a mental image from a Product Manager I spoke with last spring. She has a “wall” of hundreds of sticky notes covering most of the painted wall of her office. Each note represents a different market, spec change, feature, product variation, and regional requirement for the products she manages as a Product Manager at an industrial manufacturer. She didn’t seem to mind showing me the wall of notes – she actually laughed – but there was a tired look in her eyes as if this is just her life, and the way her team runs as a Product Management organization at this manufacturer.

That wall was her visibility. That was her portfolio.

The quiet chaos hiding inside product lines

The key point about manufacturing complexity is that it quietly and steadily accumulates. A single new regional market could mean supporting an additional variant of an existing product, or even a new product. Supplier changes, (such as a cost reduction initiative) for individual components are not a problem on their own, but can add to complexity as more product lines are added to the portfolio. Customers in different parts of the world may require slightly different versions of the very same product. As the number of product lines in a portfolio increases, so does the complexity of that portfolio. And as the number of regions increases, so to does the complexity of supporting customers in those regions. And as more time passes since a single product was first launched, that single product becomes part of a larger and more complex portfolio of products. And in order to manage that complex portfolio of products, it is necessary to track an ever increasing amount of data. In practice, in most manufacturing organizations, that amount of data is not practical to track.

Spreadsheets used to track products developed by different groups across different locations are a disaster waiting to happen. In order to make good decisions about the products you are offering to customers, the person making decisions needs to have complete visibility of all of the products. That means all of the products should be tracked in the same spreadsheet or tool, and that all of the people who need to see the information should have access to it. No one should have to ask another person for information that should already be available to them.

The disconnected decision making leads to several problems as the decisions have unintended consequences on other parts of the organization. The problems are numerous as engineering can only build what parts and materials are in front of them. Sales can only ask for what the customers are asking for. Finance can only approve what fits within the budget model that was created six months ago. And as everyone is making the best decision for themselves, there are many unintended consequences as decisions are made in a vacuum.

What actually breaks when visibility is poor

I cannot stress enough how preventable the ‘wreckage’ of poor portfolio visibility is.

• Product variants proliferate past the point of profitability because nobody can see the overlap
• Resources get allocated to low-margin lines while higher-potential products sit underfunded
• Teams duplicate development work on features that already exist in another product family
• Market windows get missed because approval cycles involve too many people reconciling too many different data sources

Leverage your top selling products and watch in amazement as new products cannibalize your best-selling products. The intelligence that went into creating those product is now lost as a company as a whole – all because of the disconnect between individual decisions.

The spreadsheet trap

Spreadsheets are not the problem, they are just not up to the task for managing the complexity of a large portfolio of products.

A product portfolio is a dynamic system – a river and not a photograph. A river changes as the market around it changes. Supplier changes lead times. Competitors launch new products. New customer requirements are discovered. A good way to represent a dynamic portfolio is a living system of information that continually changes to reflect the current circumstances of the products in your portfolio. A spreadsheet is a static representation of a product portfolio at a particular point in time. It can be used to manage a dynamic portfolio but it will rapidly become a blocker as the effort to keep the spreadsheet up to date will very quickly outweigh the benefit of having the information in a spreadsheet.

Spreadsheets were never designed to support a structure like the one that I have previously described. For a single product line of a single organization, they can be a very powerful tool, as well as for documenting out a single initiative or project. However, as the number of products, of organizations, and of other variables grows, so too does the spread sheet or set of spread sheets. It can become a full time job to keep a spread sheet or set of spread sheets up to date in support of a team’s planning and decision-making.

(One could argue that spreadsheets are not so terrible for single product lines that are managed by a single person. But, as soon as you move to a portfolio of many product lines that are managed by many people, then things start to go terribly wrong very quickly.)

Centralized planning changes the calculus

With information relevant to the portfolio decision visible to all parties involved in the decision making process, such issues can be dealt with quickly. The time it takes to reach a decision on a portfolio related matter can be decreased from weeks to days, without the individual involved having to work any harder. The information necessary for making a portfolio related decision should be obvious to all parties involved.

Again, I do not think that a manufacturing company should switch to a dedicated product portfolio planning platform (as described in product portfolio planning platform for manufacturing https://gocious.com/ ENDANCHOR) in order to solve the problems of disconnected decision making and information asymmetry. The information asymmetry can and must be solved using a company’s existing portfolio management tools.

So what does better visibility actually require?

This is not a technology problem. In theory, all of the information that needs to be included in a portfolio for planning could be entered into a spreadsheet. However, the biggest challenge is that of data, and that of who is best to own the data for each product in a portfolio. Once that data has been collated and the products entered into a portfolio for planning, decisions then have to be made regarding the direction that the organization will take with each of its products. Sometimes these decisions will be made by one person, and at other times by a group. In every case, the decisions that are made regarding products will be made by people who believe that they are making the best decisions for the organization. The biggest challenge of all is that of issues that exist within a product portfolio for an organization can often exist below the surface, causing problems that are not even apparent until visibility is created for all of the products of the organization. In the worst cases, such issues are exposed that show the extent of resources and time that have been invested by an organization in products that, in the end, are found to be in competition with the organization’s most successful products.

The hardest part of making decisions when visibility surfaces conflicts between groups is that people are not good at accepting information that is uncomfortable to them. Therefore, many visibility initiatives stall out because they surface a lot of information that is uncomfortable to people in a company. For example, the visibility into a portfolio of products could reveal that a product that a team has been investing in for two years now has a weaker market position than a variant that the same team has been half paying attention to. This information is very useful but also very uncomfortable for the team that has been investing in the product that has a weaker market position. And that team is half the company. And the product that is losing has been a flagship product for the company for a long time. Of course, the team that has been half paying attention to the variant would love to shift all of the resources to the variant. But that would be a very uncomfortable change for the other half of the company. And it would be a very uncomfortable change for the CEO of the company because the product that is losing is a very visible product and it is a product that the CEO has been championing for years. Visibility can surface all sorts of uncomfortable information. Companies need to be prepared to act on the information that their visibility tools surface. If they are not prepared to act on the information that their tools surface, then they will get very little value from their visibility tools, no matter how good the tools are.

So why am I going on and on about this? Most people, stuck managing product portfolios in a poorly structured organization, are stuck trying to build a good tool to help deal with their current problems. And that’s not going to help them until they can tackle the structural issues as well.

This was not a Visibility System, it was a very clever and laudable way of a very smart person to cope with a Visibility Problem (i.e. a structural problem which her company did not want to fix). So the really big question is: whether you have a tool or not, does your company have the capability and the will to stop the coping and switch to clarity. These are two very different problems.