September 27, 2005Boston College1 The Impact of IT on Product Innovation Peter Burrows Sr. VP/ MIS...
Transcript of September 27, 2005Boston College1 The Impact of IT on Product Innovation Peter Burrows Sr. VP/ MIS...
September 27, 2005 Boston College 1
The Impact of IT on Product InnovationThe Impact of IT on Product Innovation
Peter Burrows
Sr. VP/ MIS and CIO
September 27, 2005
September 27, 2005 Boston College2
Reebok BackgroundReebok Background
Multiple Brands
Variety of Product Types
Multiple Retail Channels
Footwear, apparel,fitness equipment,licensed watches,bottled water, etc
Products may bemerchandised ascollections orassortments requiringcoordinated delivery
Products may requirespecial fixtures orcollateral promotionmaterial like posters,print ads, and storesignage
Department stores
Sporting goods
Specialty retailers
Company-owned stores
Licensees
Wholly-owned, international Subsidiaries and distributors
Sales in 140 countries
Internet
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Reebok FinancialsReebok Financials
2004 Annual Sales = $4 billion
An improving financial performance for the last five years:
• Five consecutive years of earnings improvement.
• Compounded annual growth rate of 23.4%.
• Returned $226 million to shareholders in the form of dividends and share repurchases
• We have generated $900 million of operating cash flow.
• Our share price increased more than 400% and during the past year it outperformed the S&P 500 for the fifth consecutive year.
• Cash position at December 31, 2004, $565 million
• On August 3, 2005 Reebok agreed to be purchased by Adidas for $59 a share – a 34% premium.
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IT GovernanceIT Governance
Project Steering Committee
IT Investment CommitteeCorporate Executive Management; establishes IT capital spending annually; meets once per year
IT Steering CommitteeBrand Presidents and CFO’s/Shared Services, selects and monitors projects; meets monthly
Global Process ExecutivesNominated owners of every key company process, referees changes to global process designs
IT Project Manager
Business ProjectExecutive
F/T Business Team Members
F/T IT Team Members
Data Conversion
Manager
Integration Test
Manager Change Management
& Training
Project Knowledge Coordinator
Mandatory for any project
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Implementation Methodology Implementation Methodology of all Major Systems Investmentsof all Major Systems Investments
• Time boxed• Involve appropriate
brands/countries• Highest voice to
those that make money
• Don’t try to reach 100% consensus if process not needed for first usage
• Pilot or parallel if possible
• Select brand or location with best skills/greatest incentive to change
• Any gaps to the G1T model surfaced to global process executives
• Only two outcomes:– Improve model– Change practice
• Gaps to G1T should be smaller
• Project duration should be faster
Global One-Time
Design
First UsageRisk
Aversion
First Replication
Second Replication
G1T
G1T
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Example 1: Example 1: Reebok Product DevelopmentReebok Product Development
• Reebok introduces thousands of new products as seasons or collections every year
• To ensure a steady supply of new products we are working on 5-7 active seasons of products all at the same time
• The average footwear product takes 18 months to engineer, commercialize and appear on retailer shelves, but quick to market products can move through the same process in less than 90 days.
• Continuous improvement in materials present an ever increasing list of construction choices that must be tested and approved before being included in any product
• Despite the availability of digital product representations of products, our industry requires physical product samples to test, approve and sell effectively
• We out source almost all manufacturing so we must work collaboratively with a network of supply chain partners
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Product Development Re-Engineering ChallengesProduct Development Re-Engineering Challenges
• High volume process
• No exact-fit, off-the-shelf software that can scale to global requirements
• Geographically dispersed user base
• Large percentage of users not Reebok employees
• Desire to add more structure to current processes while reducing cycle times
• Footwear product development different than apparel and equipment
• No common workstation platforms due to nature of the work (PC’s, Mac’s, Unix workstations)
• Employees want to work online/offline at the office and on the road
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One Example: Pump 2.0One Example: Pump 2.0
• Pump 2.0 introduced in April of 2005
• The original pump technology Reebok introduced in the 1980's eventually sold more than 20 million pairs
• Pump 2.0 needs no laces and inflates by itself
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Pump 2.0 Facts and FiguresPump 2.0 Facts and Figures
• The inflatable bladder and smart valve took over four years to develop and perfect in our Advanced Research department
• 50 additional parts beside the bladder make up this shoe
• The parts are made from 25 different materials that had to be tested and approved by labs located in China, Korea and Taiwan.
• 15 different manufacturers supplied these materials from five different countries
• Special tooling had to be created for manufacturing to support RF welding dies, cutting dies, midsole molds, outsole molds, flow molds, hot press molds and injection molds
• Physical samples of this shoe had to manufactured for initial product review, prototype, confirmation meetings, retail and consumer feedback meetings, photo-shoots, bulk sales samples for distribution to more than 30 countries, 3 rounds of fit and wear testing and final manufacturing confirmation
• Hundreds of product wear testers had to be identified, provided product and then surveyed for results
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THE PASTTHE PAST
• Islands of Information• Redundant views of information• Technology makes factory participation
difficult • Manual hand offs between groups• Data integrity issues• No visibility or control over process• Increasing pace of market changes
leading to employee stress
Factories
Materials group
Costing
Sales
Development
Marketing
Current EnvironmentCurrent Environment
• Increased investments in automating the product development process
• Single database for all product information
• Only one version of the truth• Internet based to allow factory
participation• Workflow agents for electronic handoffs
Product Development TechnologyProduct Development Technology
Sales
Materials Group Factories
Costing
DevelopmentMarketing
Product Information
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Key Attributes of Current EnvironmentKey Attributes of Current Environment
• Single product vault for all product information regardless of where the products are designed or what technologies are used to create them
• Ability to view and comment on aspects of a product digitally, without the need to have specialized software that might have been used to create digital view
• Every electronic device used in product development is connected to the network to support 100 % flow of information
• Individual products can be grouped into categories, lines and seasons so the timelines can be managed as a collection that must be delivered to the market together
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Key Attributes of Current EnvironmentKey Attributes of Current Environment
• Electronic workflow to move all products through specific process gates defined for each product type
• Web browser user interface
• Digital product images are used in all reports and management dash boards
• Collaboration with supply chain partners for 7/24 hour global engineering
• Management alerts on products not hitting timelines or margin expectations
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Product Developmen
t Tools
MAC-based Design Tools
PC-based Design Tools
2D & 3D CAD/CAM
Tools
Pattern Engineering
Software
Tooling Design
Software
Digital Cameras
Electronic Last
Design Software
Material Testing
Technologies
Wear Testing
Software
Color Matching Lab Dip
Software
QA Analysis Tools
Product Development Technology PortfolioProduct Development Technology Portfolio
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Product Developmen
t Tools
MAC-based Design Tools
PC-based Design Tools
2D & 3D CAD/CAM
Tools
Pattern Engineering
Software
Tooling Design
Software
Digital Cameras
Electronic Last
Design Software
Material Testing
Technologies
Wear Testing
Software
Color Matching Lab Dip
Software
QA Analysis Tools
Databases and
Transaction Systems
Quality Analysis
Database
ERP for Supply Chain
Management
Product Vault “Single
Vision of the Truth”
Approval Materials Database
Digital Asset
Library
Fit and Wear Test Databases
Product Development Technology PortfolioProduct Development Technology Portfolio
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Product Developmen
t Tools
MAC-based Design Tools
PC-based Design Tools
2D & 3D CAD/CAM
Tools
Pattern Engineering
Software
Tooling Design
Software
Digital Cameras
Electronic Last
Design Software
Material Testing
Technologies
Wear Testing
Software
Color Matching Lab Dip
Software
QA Analysis Tools
Databases and
Transaction Systems
Quality Analysis
Database
ERP for Supply Chain
Management
Product Vault “Single
Vision of the Truth”
Approval Materials Database
Digital Asset
Library
Fit and Wear Test Databases
Communication and
Collaboration Tools
Secure E-Mail
Supplier Portal/E-
Hub
Secure File
Transfer Servers
Web Conferencin
g
Video Conferencing
Remote Visualization
Tools
Product Development Technology PortfolioProduct Development Technology Portfolio
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Product Developmen
t Tools
MAC-based Design Tools
PC-based Design Tools
2D & 3D CAD/CAM
Tools
Pattern Engineering
Software
Tooling Design
Software
Digital Cameras
Electronic Last
Design Software
Material Testing
Technologies
Wear Testing
Software
Color Matching Lab Dip
Software
QA Analysis Tools
Databases and
Transaction Systems
Quality Analysis
Database
ERP for Supply Chain
Management
Product Vault “Single
Vision of the Truth”
Approval Materials Database
Digital Asset
Library
Fit and Wear Test Databases
Communication and
Collaboration Tools
Secure E-Mail
Supplier Portal/E-
Hub
Secure File
Transfer Servers
Web Conferencin
g
Video Conferencing
Remote Visualizatio
n Tools
Presentation Tools and Analysis
Decision Support
Information Warehouse
Product Viewer
Line Planning
tools
Executive Dashboards
Custom Product catalogs
Marketing and Sales
Presentation Tools
Product Development Technology PortfolioProduct Development Technology Portfolio
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Results So FarResults So Far
In the sixth inning of a nine inning game
15 Complete Seasons in footwear and apparel now managed
Over 45,000 electronic files are stored in the product vault
24 reports and 35 line plan views are utilized daily by 64 different user profiles/roles
8 footwear and 9 apparel milestones are tracked as workflow gates
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Example 2: Supplier E-Hub - What is it ?Example 2: Supplier E-Hub - What is it ?
Web enabled application that can be used to extend internal ERP and PLM systems to factories, transportation providers and other supply chain partners.
Can facilitate:– Distribute PO’s electronically– Publish ticketing and labelling requirements– Track work in process– Obtain shipping services– Creation of advanced shipping notices
– Exchange shipping documents
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Logistics FactsLogistics Facts
40 Main Footwear Factories in 8 Countries
600 Apparel Factories in 29 Countries
450 Raw Material Suppliers
27 Freight Forwarders Transportation modes include Ship, Truck, Rail and Air
34 Custom Brokers
Over 5,000 purchase orders placed each month
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Purchase Order Management Lack of complete purchase order visibility to trading partners
(sales offices, factory, raw materials supplier, ticketing, consolidator, transportation, Distribution Center) to manage supply chain lead time & inventory
Difficult to extend internal systems to link different supply chain parties.
Difficult to accurately implement customer specific services (e.g. ASN, pre-ticketing, labeling, mark-for-store)
Transportation Logistics Management Different carriers, different way to trace & track Non completeness of consignment check point Manual processes for smaller carriers, air and exceptions Last minute inventory management difficult
Past Supply Chain ChallengesPast Supply Chain Challenges
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Country Liaison Offices
Label Providers Banks
Factories
Raw Material &
& Component
Suppliers
TransportationProviders
Customs
ReebokHQ
Drop ship
customers
Communication Methods: Fax, Mail, Couriers, site visits, EDI, proprietary file transfers
the Old Waythe Old Way
Reebok Trading Hong Kong
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the New Waythe New Way
Reebok HQ
Country/Liaison Offices
Raw material &Component
supplies
Factories
Banks
Employees
Drop ship
customers
CustomsTransportation
Providers
Label Providers
Business-to-Business data sharing /Vendor Neutral E-Hub/ Hosted Environment (ASP model)
Workflow, message alerts, backoffice integration with reporting capabilities
Custom-built e-HUB with LINE,
a division of container port operator,
Hutchinson- Whompoa in Hong Kong
Reebok Trading Hong Kong
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• Increased operational efficiency through electronic transmission of order information directly into the factory systems
Improved data accuracy Reduced administration cost through data inheritance
• Some factories now using same solution for raw material suppliers.
• Neutral & common platform compared to having different system for each shipper/carrier
• Purchase order history and version control logs benefit factories
• Dashboard design with “To Do List”, “Overdue Tasks” and “Alerts” for each user level
• Ability to print / re-print purchase orders on demand
• Numerous pre-delivered reports to manage PO activity
Results So FarResults So Far
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Example 3: Digital Asset ManagementExample 3: Digital Asset Management
WHAT IS IT?WHAT IS IT?
– A central repository for all digital assets capable of handling all of Reebok image types (video, products, lifestyle)
– Ability to push digital assets to a channel partners
– A work flow system that enables a stream-lined process for creating and approving digital assets
BENEFITSBENEFITS Cost reduction
Improved brand image
Enable better communication with distribution partners and customers requiring digital images
Allows the use of digital images in all executive dash boards
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The Past The Past . . .. . .
Librarian
Product Development
Centers
US
strain on network and mail servers
Manually resize all images - low, med, hi versions
Manually Archiveto CD
Users requesting images
PrintCatalogs
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Reebok’s New DAMS Process DiagramReebok’s New DAMS Process Diagram
Product Development Centers
Global Users
Product Data
AccessSystem
Librarian
ProductImages
Deployment AgentPush of Assets
Internal
Folder Locations
FTP to Partners
Prototypes
Line Confirmations
LifestyleMarketing Materials
Catalog Stage
ManualProcess
Hot Folder
Footwear and ApparelLine Planning System
Reebok Websites
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Results So FarResults So Far
Central Repository for all of Reebok’s digital assets. Reduction / elimination of redundant photo shoots Better control of copyrighted assets - automated expiration of assets Access to the correct and most current version of assets
Store only the core asset; Render to needed format and resolution “on-the-fly”.
Self-service model for image requests - Reduction of CD creation costs Reduction of Shipping Costs Reduction of Product Catalog Printing Costs Instant fulfillment – reduced time-to-market
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Results So Far (cont.)Results So Far (cont.)
Reduced network traffic: Automated upload of product assets via FTP and not E-mail View thumbnail and only download high resolution if desired Use of shortcut links in emails to reference images, instead of attaching image file
Improved worker efficiency by providing a one stop location for product images and product data.
Product data from Reebok’s Line Planning System automatically mated with appropriate asset
Built in search tools
Better control of access to assets through user groups and permissions.
Browser based application accessible from any public Internet connection and does not require any client install.
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Central Repository for Reebok’s AssetsCentral Repository for Reebok’s Assets
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Advice when using technology to improve product development: Obtain executive leadership at the highest possible level Balance top-down objectives for change with ample benefits for the
people who work in the process Avoid long-duration, big-bang implementations
Try to deliver some benefits every 3-6 months Initial focus on low hanging fruit to gather support and momentum If possible, defer most complex technology challenges until team has
mastered the technology and gained confidenceRetire Legacy modules along the way to increase compliance to new
processes/simplify maintenance Do not accept software that is NOT a good fit
Influence suppliers if you can/custom build if you cannot
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Advice when using technology to improve product development (continued):
Fund full-time, business team members in project cost Pay close attention to systems technical architecture so it can
scale and handle performance and allow secure collaboration outside of the firewall
Adjust project calendar to recognize and accommodate seasonal product development calendars
Use the project as an opportunity to clean up data Adhere in strong project methodology and focus attention on
issues and off plan items.