Launching a new product comes with great risk. Even if the product launch is a success, if the company fails to determine the customer demand for the product then you could face a massive disaster. So what can you do to rationalize the decision-making process in order to commit to a new product introduction with confidence?
Slimstock Canada, along with Supply Chain Management Ontario conducted a speaking session on the topic "Managing the Unknown- New Product Introduction," on June 20th, 2019 in Hazelton Manor, Concord, ON. The event was filled to the brim with supply chain professionals from HD Supply, Amazon, Freedom Mobile, Apotex and many more. Danny Bloem, our very own supply chain expert, shared insights on the strategies of inventory management during new product introduction and how to determine the demand and supply during a challenging time.
HOW CAN YOU ESTIMATE DEMAND IN ADVANCE OF A NEW PRODUCT INTRODUCTION?
Launching a new product is an exciting time for any business. However, working out how exactly how much demand to expect can be a real challenge. On one hand, if the new product introduction is a roaring success, you want to ensure you have enough stock to exploit the sales opportunity fully. Equally, if you overestimate demand, this could easily result in a huge amount of excess. Consequently, it’s vital that when anticipating demand, you remain realistic!
IS THERE SUFFICIENT MARGIN TO JUSTIFY A NEW PRODUCT INTRODUCTION?
Even if there is plenty of interest in your new product concept, there is little point in pursuing a new product introduction if it will never achieve a sufficient return on investment. As a result, it is important that you do your homework before making any final decisions. Through confirming costs, order volumes and lead times with suppliers, it will quickly become evident whether it’s worth taking the risk.
If your product offers an ample return than that is a positive indication to proceed with a new product introduction. However, if the margins are not quite enough, perhaps the supplier is willing to negotiate on prices. Alternatively, maybe you can work with your customers to increase the sales volume.
TO LAUNCH, OR NOT TO LAUNCH
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