Familiarity of the “product audit” Summary: A new product line under your responsibility or you has just landed

a new job with products that may be unfamiliar. You’ve probably already been asked to resolve a crisis or two and help out with a big account that needs attention. Since there aren’t any time-outs in business, you must tackle these immediate issues with little knowledge of the product, the politics, or the market, The new product manager, want to make sure you have a complete picture of your product’s health. You may know where you want to go, but if your product has some wasting disease, you won’t be able to get there! Don’t let other people in the company form your own opinion of your product use your knowledge of the product to your advantage and leverage to impartially understand. Do a product audit.

When to pull a product from the line is as important as knowing when to introduce a new one. Consider such internal requirements as profitability, available resources and new growth opportunities. Examine external factors of sales-force coverage, dealer commitment and customers’ needs to determine if a comprehensive line is required. The first step in establishing a regular product evaluation program is to create a Product Audit Committee. The committee may consist of members of the planning team or a separate group. This core group comprised of the top people in the marketing, finance, engineering and purchasing departments, should control decision-making authority about the design of the company’s product mix. Depending upon the dimensions of the product mix and the significance of the products, the Product Audit Committee should meet monthly and every product should have at least an annual review

WHAT IS A PRODUCT?

A product is a problem-solver, in the sense that it solves the customers’ problems, and is also the means by which the company achieves its objectives. And since it is what customers actually get for what they pay, it is clearly a subject of great importance. The clue to what constitutes a product can be found in an examination of what it is that customers appear to buy. Customers have needs, and they buy products to satisfy them. On market segmentation. At its simplest level, someone who needs a hole may buy a drill. But if a better way of making a hole is invented say a pocket laser – demand for drills may fall. The important point about this is that a company which fails to think of its business in terms of customer benefits rather than in terms of physical products or services is in danger of losing its competitive position in the market.

In Additional: When a customer buys a product, even as an industrial buyer purchasing a piece of equipment for a company, he or she is still buying a particular bundle of benefits perceived as satisfying Their own particular needs and wants. What is a product audit?

A product audit is an objective description of the current state of your product. The simplest audit I have seen consisted of an inbound and outbound Strengths Weaknesses Opportunities Threats (SWOT) analysis. About the Product Audit One easy-to-install procedure with direct impact on profitability is the product audit. Just as regular physical examinations are essential to maintain the body’s good health, likewise, products require regular examination to determine whether they are healthy, need re-promotion, or should be allowed to phase out. Begin your product audit by setting up a Product Audit Committee The product audit can assist the following: 1. Determine your product’s long-term market potential. 2. Assess the advantages and disadvantages of adding value to the product. 3. Alter your product’s market position compared to that of a competitor’s comparable product. 4. Evaluate the chances of your product being displaced by another product or technology. 5. Calculate the product’s contribution to your company’s financial goals. 6. Judge if the product line is filled out sufficiently to prevent your customers from shopping elsewhere. In addition to the above criterion, consider such issues as availability of money and human resources, assessment of new product and market growth opportunities, and even the effective use of your executives’ time. Also, add such factors as your firm’s willingness to sustain sales-force coverage, dealer commitment and ongoing eagerness to respond to changing customers’ needs. Product audit criteria

I. Operational/functional: Verify that sub-assembly or final product conforms to the Functional/operational test criteria. II. Dimensional: Compare actual recorded measurement(s) of the selected characteristic with the approved design data. Verify characteristics are inspected using the correct calibrated tooling, gauging, fixtures, etc., surface finish dimensions and radius meet drawing tolerances, inspections are performed in proper sequence, III. Visual: Inspect part for obvious external defects; (e.g., corrosion burrs, handling damage, and scratches) IV. Identification: Compare actual identification plates, tags, markings etc. with approved design data or purchase order requirements and verify that identification is maintained throughout the product line;. V. Documentation: Verify the latest revision level or changes, proper work instructions, completed operations, proper authorizations; proper use of statistical sampling; VI. Special Processes: Verify special processes are in accordance with approved process specifications. Verify operator qualification/certification; VII. Material: Verify that incoming raw material meets its specification requirements.

Product Audit Program: How does such a committee operate? To do justice to each product and to have an objective basis for product comparisons, a common rating form should be used. For products that appear dubious and thus demand careful evaluation, a product audit form using a simple 1 to 5 scoring system using the above six criteria. Phasing out weak products, the decision to drop them requires careful consideration of company’s obligations to the various parties affected by the decision. Supplier and customer notification and an adequate stock of replacement parts may be necessary Conclusion: Finally, phasing out weak products or exiting a market requires careful consideration of your company’s obligations. For instance, there may be significant costs related to labor agreements, maintaining capabilities for spare parts, contractual relationships with dealers and distributors, financial institutions and so on. In sum, the product audit provides a practical approach to the profitability and the decision-making process.

Sign up to vote on this title
UsefulNot useful