What single event within a marketing operation creates its most transparent demonstration of value?
ECONOMIC EFFECT OF FASTER CYCLE TIME
Most firms drive innovation to market, offering new products, formulations, and packaging, or new services, enhancements, or configurations. In all but a few cases, these firms drive marketing communications to market by
- Publishing printed ads, marketing collateral, and promotional materials
- Broadcasting electronic ad spots and infomercials
- Provisioning digital content and interactive services to stationary PCs, mobile devices, and digital kiosks or point-of-purchase displays
As once noted by Peter Drucker, the expert on management and business, “Only two things add value: innovation and marketing. All else is cost.”
This rather pithy and sage remark calls attention to what aspects of innovation and marketing create value, as well as how firms can use automation to maximize those aspects that deliver the greatest value.
Simply put, most firms that sell products can maximize their profits by achieving two, often offsetting, goals:
- Sell goods or services with adequate, if not superior, profit margins, and
- Sell higher unit volumes of these goods or services
Profit margins reflect selling the right mix of products or services at prices that buyers will pay. Seasonal factors, the comparative value of one firm’s offering to another’s offering, and other factors will affect price sensitivity—what customers will pay.
Another dimension of cycle time economics relates to velocity or how much annual revenue a firm can earn for each dollar or euro it has invested in its assets and operations—factories and people, respectively.
Combined, margin and velocity become the most important measurement to a firm: return on investment—how we measure the effectiveness of automation and best practices.
SHORTER PRODUCT LIFECYCLES LIMIT PROFITS
The pace of innovation continues to accelerate across all technical realms, giving large and small firms worldwide a real opportunity to develop new breakthrough products or services and drive them to market.
This quite simply means that competition will continue to expand and intensify without a foreseeable end in sight.
The figure below depicts how faster time to market of new products or services can produce incremental profit and revenues, as well as reduce total development costs with the desirable result of capturing lost margin or profits.
For more about how firms can use automation to speed up their innovation processes, GISTICS offers the white paper entitled, The Impact of Enterprise Collaboration on Productivity of Intangible Assets. To find the white paper, visit www.gistics.com.
The figure above also depicts how faster time to market of marketing communications helps maximize the value of bringing new products or services to potential customers.
In the case of consumer electronics, durables, motorcycles, and other products with annual model releases, as well as packaged software with regular version updates, the number of product-selling days averages 240. Any reduction in time to market of marketing collateral to retailers and dealers essentially creates additional selling days.
In one instance uncovered by GISTICS, improved workflows of a marketing operation in a global consumer electronics firm reduced time to market of collateral by two weeks, producing a three percent sales increase—tens of millions of euros!
Key points: Faster cycle times increase revenues and competitiveness; speeding cycle times entails process automation.