To Do More with Less, Develop a Portfolio Management Process
Cost-cutting is a frequent task of today's packaging engineer. Pharmaceutical and medical device manufacturers are looking to reduce costs wherever they can, so engineers must balance new packaging development with savings-minded product life cycle management.
But how can packaging engineers possibly juggle this increasing workload? Companies must develop a portfolio management process for prioritizing all projects, advises Stephen Birtsas, a manager with global innovation management consultancy Kalypso.
A graduate of Michigan State University's School of Packaging, Birtsas has handled new product design and package development while working for leading global medical device manufacturers. He has experience in sourcing, supplier capability analysis, cost reduction process, and product rationalization.
"As a packaging engineer, I found that our in-house resources were strained while trying to design packaging and manage costs," says Birtsas. "Now as a consultant, I frequently hear other companies, too, say that certain projects just aren't successful because project teams are spread too thin."
In this economy, manufacturers are working to improve their margins in their existing portfolio more than ever before, says Birtsas. Three common initiatives companies undertake focus on packaging design and material reduction, sourcing and supply chain efficiency, and packaging process and labor optimization.
For these projects to be successful, companies need to prioritize, advises Birtsas. "If companies have identified 20 projects, but really only have the resources to handle ten, they need to focus on the ten that deliver the most value, align to their business strategy and can realistically be resourced. Otherwise, all projects are at risk of failing."
Project Portfolio Management is the answer, says Birtsas. "Prioritize projects by first developing a methodology to identify and evaluate all projects. This includes financial valuation criteria such as Net Present Value (NPV) or Expected Commercial Value (ECV) and project evaluation criteria such as strategic fit, resource burn, or project risk," he says.
"Once you prioritize and determine the right projects to work on, you need to look at your resources," he says. "The number-one challenge is the pull on resources. Are hidden resources allocated to certain projects? And what percentage is dedicated to cost reduction projects? Companies may need to invest in order to improve margins. Technology can help, but you have to invest."
Look for tools that can automate processes and enable repeatability, Birtsas says. "Package and labeling software solutions can improve the package development process with data centric specification, electronic labeling reviews, automated workflows, and enhanced label translations."
Also, consider how ideas are generated. "Ideas need to be managed, too. Companies need to look at where certain projects are in terms of maturity. Start small and look for quick wins."
Finally, form cross-functional implementation teams. "If organizations work in silos, project management will be difficult to accomplish," says Birtsas. "It often requires a cultural shift, but it is essential to get all functions within the organization to buy into the corporate strategy.
"Breaking down the walls helped one of my customers," Birtsas recounts. "The company couldn't get products to market on time and blamed packaging for being late. We helped the organization break down functional silos so packaging engineers were involved early in the development phase. They developed a workflow tool, and packaging is no longer an afterthought."
Suppliers, too, should be on implementation teams. "They have a wealth of information and skills. Partner with them," he emphasizes. At the same time, "go through your supplier contracts. Negotiate collaboration and encourage innovation to save money."
Most importantly, packaging engineers should not be afraid to speak up, says Birtsas. "The entire organization needs to come together and prioritize projects."