It’s Just One More Flavor
Every CPG company thinks this - let’s grow sales with more skus…
And it sounds so reasonable. One recipe. One new label. Another size? How hard could it be?
So I wind up being the wet blanket and try to explain how complex that 1 extra variant or flavor is going to be.
I have frequently had this conversation regarding the complexity of adding variants or new lines to a companies portfolio. The issue most people don’t get is that one new flavor is a half dozen to even dozens of new items to manage. And that complexity expands logarithmically not linearly.
I had an idea of charting it out, then that expanded into an interactive tool to look at the impact of adding or reducing complexity.
It could be used as a business model tool, but frankly that is more work than I’m willing to do, but if there is interest I’ll open source it people can run with it as they like.
This is a business on day one. One product, one size, one machine, one customer. Read it left to right: order the parts, receive them, store them, make the thing, package it, inspect it, store it again, pick it, pack it, ship it. Ten steps. One line running through them. Seven things on the shelf and four people to run the place. You could hold the whole operation in your head while making a sandwich.
Now the same ten steps, a few good years later.
No added steps. It’s the same plant doing the same ten things. What changed is that there are sixteen offerings now, and each one comes in several sizes, on four kinds of machine, in three kinds of package, sold five different ways.
Every thin line is one item somebody has to buy, make, count, find or ship. Sixteen offerings turned into 256 finished items. Those need 338 different things bought from 29 vendors. The warehouse has 768 places a picker might be sent. There are seven different ways out the door, each with its own paperwork and its own cut-off time.
Nobody holds that in their head.
Which brings us back to the flavor.
In the tool there’s a button that adds exactly one offering. Press it at this size and here is what arrives with it: 16 new finished items, 18 new things to buy, 48 new pick faces, and 19 more times per cycle that somebody stops a machine, cleans it out, and sets it up for the next thing.
For one flavor. You can also add a variant, a size, a distribution channel.
None of this is an argument against new products. New products are the business. I have launched plenty and I’d do it again.
It’s an argument for knowing what you ordered. One new flavor isn’t just one thing. It’s also the eighteen things behind it, the processes to manage them, the inventory counts, the mental load, and the physical storage.