Groupon says its focus is on the bottom line, rather than top-line growth.
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“The development process is broken down into tasks with a time scale on each task so we have a predetermined workflow,” Padgett says. “This gives us much more control over the products. We believe that with tasks being assigned with a time period that we’ll get out new products to the store shelves much faster.”
And that means greater profitability. “We know the incremental profit from new products and we have calculated the benefit of being in the market weeks before the conventional process would have allowed,” Padgett says.
Such efficiency also allows Sainsbury to leverage resources, Padgett says. “Because CPD improves efficiency in project management our teams can do more development projects,” he says. Furthermore, using a single system that all can view results in fewer errors.
Follow the recipe
Although there is a trend toward moving product development online, from sourcing material in factories to modifying product designs on the fly, GlobalNetXchange and Sainsbury had to develop a grocery-specific solution to meet the segment’s needs. “There was not a product out there that combined the workflow automation with the necessary technology specs for private label grocery product development,” says Anne Driscoll, GlobalNetXchange product manager for CPD. “The workflow tools off the shelf did not understand grocery product development needs, which require several different levels of specifications ranging from safety, quality and legal due diligence to nutritional information, testing and process controls. The grocery segment needed a niche product.”
Driscoll says the Collaborative Product Development solution ties all the pieces together. “The biggest benefit is that it is based around the product recipe, anything where there is a complex list of ingredients, such as cleaning products, food and beverages,” she says. “Anyone in product development can be included with this software.”
The workflow aspect of CPD allows a retailer or manufacturer to create templates for each part of the development process. Each party is alerted when the process requires that person to perform a function. This allows multiple parties to work simultaneously on one document, giving them access only to what is relevant to them.
Package artwork, for instance, may have to go to the marketing department to approve the logo, the legal department to check on ingredient listings and the copy department to check for wording. “There’s a lot of inefficiency in moving all this information around and things can get lost along the way,” Driscoll says. “But CPD ties the input of information together and cuts down on the approval time. Each party can verify the information and send in approvals or suggestions for changes using an easy messaging tool that is part of the software templates.”
GlobalNetXchange hosts the application, which is accessible to employees via the web using a password and ID. Users pay a yearly licensing fee based on usage. GNX and Sainsbury did not disclose their investment costs for the solution.
So far, the potential drawback to this type of solution is the radical change in business processes and the hesitancy of retailers to adopt them. Until the technology proves itself, retailers won’t adopt it in significant numbers, says AMR’s Abell. That hesitancy is one reason that having GNX host the application makes sense, he says. “This is a good application to have on a web-based exchange like GNX because it’s relatively new to retailers,” he says.