Profitable product portfolio under complexity and growth

Background

Established in 1649, Fiskars is one of the oldest companies in Finland. The company is focused on providing high-quality consumer goods, and its products are present in people's everyday lives – at home, in the garden, and outdoors. Fiskars is well-known for its many iconic products and has them available in more than 100 countries.

Today Fiskars is experiencing strong demand for its brands and products and has started multiple initiatives to capture these growth opportunities. One of the initiatives was to improve how the product portfolio is managed across life cycles, functions and geographies. This initiative was approached business area by business area, with the plan to create scalable processes and tools for all the business areas to use.

"We've been discussing for a long time on how to develop our profitability management. The project with Knowit Insight brought transparency to our product portfolio through the introduction of a concrete tool and put end to the gut feeling based decision-making."

Sari Somerkallio, Vice President, Business Finance at Fiskars

Right tools for product portfolio management

Complexity in product portfolio management is best fought with simple enough tools that bring clarity and enable fact-based decisions. Proactive product portfolio management requires efficient practices so that time can be utilized in making decisions and executing actions, instead of simply operating process practicalities.

The efficiency was reached by

1. Using one set of numbers with information beyond the gross margin.
2. Combining P&L statement profitability information with inventory data.
3. Setting clear targets to product portfolio based on targets that had been communicated to investors.
4. Building a flexible and user-friendly tool that enabled assessing product portfolio performance and investments e.g. on different levels of product hierarchy.

Numbers never capture the whole story behind the product portfolio performance, especially in a brand-driven business, like Fiskars'. Analytics findings were not intended to provide ultimate conclusions on needed actions. Instead, they were used as a starting point to validate whether the findings genuinely required corrective actions, or if there was another rationale for accepting the seemingly low performance of some parts of the portfolio.

For the portfolio areas that were confirmed to require actions, it was important to have a wide range of alternative actions before having to consider the most conclusive option, ramp-down. For example value engineering, pricing and the possibility to increase volumes were used as other options for ramp-downs.

"Knowit Insight's tool for product portfolio management provides a more realistic picture of our product portfolio. Before the project, we followed mainly gross margin. Now we have more information available, and the tool has also brought inventory visibility that didn't exist earlier."  

Could we help you too?

All too many companies consider product portfolio management as a finance-driven clean-up activity that focuses on reactive ramp-downs. Quick-fix cleanups are easy to force through in an organization to a certain extent. But they leave a large grey area of products that have questionable performance, but which don’t quite qualify for blunt ramp-downs.

Could we help you too? Contact us below and let's talk more!