Product Value Management (PVM) is a set of capabilities that allows companies to maximize the value of their entire product portfolio. It is a true concept-to-customer approach to product strategy, wherein product and commercial teams collaborate across the entire value chain to deliver revenue growth, decrease costs, and improve customer satisfaction.
Traditional solutions used by product companies—such as Product Lifecycle Management (PLM), Product Data Management (PDM) and Quality Management Systems (QMS)—can work well for individual teams, but they lack the capability to connect across departments. Even more crucially, they don’t allow data and business processes to seamlessly flow between product and customer-facing teams, which hinders collaboration across the product cycle.
PVM starts with the capabilities of PLM, PDM, and QMS, then it adds two core elements:
- commercialization capabilities to help the sales and marketing of products, and
- product operations to ensure alignment between product and commercial teams.
This alignment makes a big impact on product line profitability and revenue growth at companies in high tech, medtech and consumer goods—industries where success relies on fast product development cycles, superior customer experiences, and coordinated operations from supply chain to post-sale service.
So how can a product company decide if traditional PLM or QMS will meet your needs, or if a fresh approach with PVM is a better fit?
Here are five questions every company should ask to determine if Product Value Management is right for them.
1. Are revenue growth and profitability integral factors in your product strategy?
PVM is all about connecting commercial teams with product teams to develop and deliver a shared vision for their company’s success. That vision includes revenue and profitability goals for products.
An essential benefit of PVM is the ability for commercial and product teams to work in parallel and share key information with each other, including demand forecasts and supplier cost information, to determine if a product will be profitable and able to meet market demand.
Product companies that roll up supplier costs after a product is designed or companies that have very stable demand and market patterns may not benefit as much from insights shared across commercial and product teams.
Although most companies say that revenue and profits are integral to their product strategy, not all of them are willing to create an environment where this actually happens and prefer sticking to familiar terrain. PVM will likely have less appeal to these companies.
2. Do you actively pursue a whole product concept that puts the customer at the center of multiple product experiences?
It’s quite common for companies to have multiple product lines and everybody loves repeat customers that are loyal to their favorite brands. But some product companies allow cross-selling or upselling to existing customers to develop organically. It’s certainly a hopeful goal, but the products and services are not methodically coordinated to provide a whole product experience.
Putting the customer or patient at the center of the product experience is a key strength of PVM. That’s because a unified customer experience across marketing, sales, and service—not to mention the product itself—requires real-time data and collaboration between product and commercial teams.
This is vital for product companies selling subscription products where product managers can adjust offerings and experiences based on actual customer usage. It’s also valuable for companies that offer multiple products and experiences, each with their own revenue stream that need to be managed independently for maximum overall profitability.
A great example of this is Traeger, who sell smart grills that help cook the perfect meal, Traeger pellets that ensure the grill is cooking just right, full meals from Traeger Provisions, and a full line of accessories to augment revenue and increase brand awareness.
Along with all these rich revenue streams, Traeger provides premium customer experiences like videos and local events that grow content revenue, deliver ongoing engagement, and increase customer loyalty. Traeger has been rewarded handsomely for its ability to engage customers in so many different ways, doubling its revenue over the past two years.
3. Do you think in terms of front and back office or just a single “whole office”?
Did this one catch you off guard? You’re not alone. Many product companies still think in terms of front and back office. Customer-facing teams rely on front office solutions like Customer Relationship Management (CRM) or field service platforms. Product teams rely on back office solutions like Enterprise Resource Planning (ERP), PLM or QMS.
This works fine for large scale products with long development cycles, clear handoffs and lengthy sales cycles. But working in serial is far from ideal for companies that aim for faster product innovation and faster time to revenue.
When your primary goals consist of hitting aggressive revenue targets, increasing market share and meeting lofty customer expectations, you don’t have time to work in serial. Every team must work in parallel in order to speed up the overall process from design to development to production to sales.
PVM ensures that product and customer teams all have access to their needed data in real time. And by enabling collaboration and workflow across the entire value chain, PVM removes the gap between front and back offices to create a whole office mindset where each team can do their jobs better and faster.
4. Do you integrate quality, sustainability and supply chain with company-wide processes and workflows?
Most products require some form of quality management, sustainability, and supply chain strategy. The key decision is how connected they are to the rest of the company. With a PVM, these connections are inherent to all communication so processes like below are smoother and faster:
- Quality is improved during product design and development - before a product is even built - when product teams have full access to quality data.
- Root-cause determination and analysis of problems is faster when quality teams can see every single place a component or subassembly is used.
- Accessible sustainability and supply chain information is linked to specific products, making it easier to find crucial audit trails when needed.
- Customer insights delivered to product teams helps them build the right products at the right quantities.
The tighter the connection, the greater the ability to remove blindspots that create drag on time to market, customer satisfaction and profitability. Removing these blindspots across the entire value chain is another benefit of PVM.
5. Is responsiveness important to your business?
Some product companies work in predictable environments with long lead times. Others experience constant change while under pressure to get products to market as quickly as possible. PVM is ideal for the latter category because connecting the entire value chain on a single platform makes finding, analyzing, and acting on data easy—all of which help increase the speed at which decisions are made.
This is especially important when unforeseen events take place. For instance, let’s look at how a product company responds to a key supplier becoming unable to meet a promised delivery date. With PVM, teams can collaborate to find a solution immediately:
- Product teams can immediately search for and price out alternatives
- Any necessary approvals from procurement and engineering can be secured quickly
- And as new delivery timelines become clear, they are automatically passed on to customer-facing teams for communication to the buyer
And even if anything else throws a wrench in the works—say the new delivery date falls outside a contractual obligation or a supplier misses an agreed upon date—then all affected parties will be informed and can collaborate on the solution. That’s what PVM is all about: staying connected and moving quickly.
Product Value Management is ideal for companies that rely on comprehensive data insights, collaboration across the entire value chain and deep customer engagement. By connecting the customer and product data into a single solution accessible by all stakeholders, PVM helps increase revenue, deliver better customer experiences, and reduce costs.
It may not be for everybody. Companies working with a predictable supply chain and easily standardized development cycles will see limited value from PVM. But it’s perfect for companies where speed and customer-centricity are keys to success.
To learn more about Product Value Management, visit https://www.propelsoftware.com/products/pvm.