Transforming Product Portfolios: The Power of Product Mining
Amidst the current challenging economic climate and relentless pressure on profit margins, companies must rethink their operations. By leveraging Product Mining as an advanced analytical and diagnostic tool to screen product data and bills of materials (BOM), businesses can gain invaluable insights into their product portfolio, thereby uncovering significant opportunities for the reduction of product complexity and continuous improvement.
This article is part of a wider series on intelligent process and product transformation1 and delves into the emerging concept of Product Mining. We explore the functionality and significant advantages that Product Mining offers to organisations tackling product portfolio complexity. Learn why Product Mining is a game-changer when it comes to overcoming product portfolio hurdles.
Increasing product complexity challenges Swiss manufacturers
In today's competitive market Swiss manufacturing companies increasingly struggle with the rising complexity of their product offerings. As Swiss-based producers introduce more product variants to cater to diverse customer needs, they often face escalating costs, operational inefficiencies and diminishing returns requiring ways to handle product complexity. For instance, a leading industrial goods company is strategically focusing on streamlining its product portfolio to free up resources for innovation2. By doing so, it is not only reducing its software platforms by over 50%, but also optimising its hardware portfolio, where less than 3% of stock-keeping units (SKUs) generate 80% of profits2. Another Swiss top-tier producer aims to create a simplified and standardised product portfolio to improve the company’s earnings before interest (EBIT)3. Yet another Swiss player is currently also transforming its product portfolio towards high margin solutions4.
All the above are examples of Swiss manufacturing companies seeking to prevent, control, and manage product complexity to sustain profitability and optimise operations. We see Product Mining as an effective data-driven approach for managing complexity.
What is Product Mining, and how can it be utilised to tackle product complexity?
Unlike Process Mining1, which focuses on process analytics, Product Mining is a powerful tool to tackle product portfolio and related supply chain challenges, offering data-driven insights and strategies by applying multi-BOM analytics (as illustrated in Figure 1). Product Mining integrates data mining into product-centric decision-making, combining data analysis on product master data with decision intelligence in the context of product complexity. This provides companies with an overview of dependencies and risks within their product portfolio and supply chain, and the potential for improvement, enabling them to make quicker, better decisions, optimally allocate resources, and sustainably enhance their competitiveness.
How does Product Mining work?
The application of Product Mining can be organised into three key steps, as depicted in Figure 2: (1) input collection and analysis as the starting point, followed by (2) the identification of improvement opportunities, and (3) the final data-based decision-making and implementation. In the first step, the Product Mining solution gathers relevant data from both external sources (e.g., market data or any additional product-related information) and internal sources to combine and evaluate product information. Internal sources can include data from software such as configure, price and quote (CPQ), customer relationship management (CRM), enterprise resource planning (ERP), product information management (PIM), and product lifecycle management (PLM) systems. Subsequently, the analysed product data forms the basis for identifying data-driven potential in the product portfolio and associated interconnections such as critical paths and dependencies in the supply chain. The Product Mining solution helps users automatically prioritise hot spots and understand dependencies and impacts within the product portfolio and related supply chain.
What are the benefits of Product Mining?
The data-driven Product Mining approach offers a significant advantage over traditional, manual analysis across multiple BOMs by providing much faster and more accurate insights into the product portfolio and associated aspects, such as critical supply chain paths, enabling the identification of optimisation potentials. Furthermore, the underlying product information can be quickly and regularly updated within the Product Mining platform to adapt the analysis to changing market conditions and customer preferences. With these advantages, Product Mining can be applied to improve the product portfolio, develop supplier reduction strategies, optimise sourcing strategies, reduce the proportion of exclusive parts, fine-tune pricing strategies, and streamline the supplier base. Figure 3 below summarises the various significant benefits of applying Product Mining:
How can we support you and your organisation to help achieve these benefits?
Our tried and tested approach to conduct a Product Mining proof of concept to optimise your product portfolio or to increase supply chain resilience comprises of five key phases:
If you are interested in learning more about how Product Mining can help you optimise your product portfolio and supply chain resilience based on product data insights, please get in touch with one of our Product Mining experts.
Contributions:
- Davide Granata, Senior Manager
- Philipp Doebele, Senior Consultant
