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September 27, 2005Boston College1 The Impact of IT on Product Innovation Peter Burrows Sr. VP/ MIS and CIO September 27, 2005.

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Presentation on theme: "September 27, 2005Boston College1 The Impact of IT on Product Innovation Peter Burrows Sr. VP/ MIS and CIO September 27, 2005."— Presentation transcript:

1 September 27, 2005Boston College1 The Impact of IT on Product Innovation Peter Burrows Sr. VP/ MIS and CIO September 27, 2005

2 Boston College2 Reebok Background Multiple Brands Variety of Product Types Multiple Retail Channels Footwear, apparel, fitness equipment, licensed watches, bottled water, etc Products may be merchandised as collections or assortments requiring coordinated delivery Products may require special fixtures or collateral promotion material like posters, print ads, and store signage Department stores Sporting goods Specialty retailers Company-owned stores Licensees Wholly-owned, international Subsidiaries and distributors Sales in 140 countries Internet

3 September 27, 2005Boston College3 Reebok 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.

4 September 27, 2005Boston College4 IT Governance Project Steering Committee IT Investment Committee Corporate Executive Management; establishes IT capital spending annually; meets once per year IT Steering Committee Brand Presidents and CFOs/Shared Services, selects and monitors projects; meets monthly Global Process Executives Nominated owners of every key company process, referees changes to global process designs IT Project Manager Business Project Executive 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

5 September 27, 2005Boston College5 Implementation Methodology of all Major Systems Investments Time boxed Involve appropriate brands/countries Highest voice to those that make money Dont 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 Usage Risk Aversion First Replication Second Replication G1TG1T G1TG1T

6 September 27, 2005Boston College6 Example 1: Reebok 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

7 September 27, 2005Boston College7 Product 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 (PCs, Macs, Unix workstations) Employees want to work online/offline at the office and on the road

8 September 27, 2005Boston College8 One 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

9 September 27, 2005Boston College9 Pump 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

10 September 27, 2005Boston College10 THE 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 FactoriesMaterials groupCostingSalesDevelopmentMarketing Current 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 Technology Sales Materials Group Factories Costing Development Marketing Product Information

11 September 27, 2005Boston College11 Key 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

12 September 27, 2005Boston College12 Key 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

13 September 27, 2005Boston College13 Product Development 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 Portfolio

14 September 27, 2005Boston College14 Product Development 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 Portfolio

15 September 27, 2005Boston College15 Product Development 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 Conferencing Video Conferencing Remote Visualization Tools Product Development Technology Portfolio

16 September 27, 2005Boston College16 Product Development 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 Conferencing Video Conferencing Remote Visualization 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 Portfolio

17 September 27, 2005Boston College17 Results 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

18 September 27, 2005Boston College18 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 POs electronically – Publish ticketing and labelling requirements – Track work in process – Obtain shipping services – Creation of advanced shipping notices – Exchange shipping documents

19 September 27, 2005Boston College19 Logistics 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

20 September 27, 2005Boston College20 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 Challenges Past Supply Chain Challenges

21 September 27, 2005Boston College21 Country Liaison Offices Label Providers Banks Factories Raw Material & & Component Suppliers Transportation Providers Customs Reebok HQ Drop ship customers Communication Methods: Fax, Mail, Couriers, site visits, EDI, proprietary file transfers the Old Way Reebok Trading Hong Kong

22 September 27, 2005Boston College22 the New Way Reebok HQ Country/ Liaison Offices Raw material & Component supplies Factories Banks Employees Drop ship customers Customs Transportation 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

23 September 27, 2005Boston College23 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 Far

24 September 27, 2005Boston College24 Example 3: Digital Asset Management 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 BENEFITS 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

25 September 27, 2005Boston College25 The Past... Librarian Product Development Centers US E-Mail strain on network and mail servers Manually resize all images - low, med, hi versions Manually Archive to CD Users requesting images Print Catalogs

26 September 27, 2005Boston College26 Reeboks New DAMS Process Diagram Product Development Centers Global Users Product Data Access System Librarian Product Images Deployment Agent Push of Assets Internal Folder Locations FTP to Partners Prototypes Line Confirmations Lifestyle Marketing Materials Catalog Stage Manual Process Hot Folder Footwear and Apparel Line Planning System Reebok Websites

27 September 27, 2005Boston College27 Results So Far Central Repository for all of Reeboks 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

28 September 27, 2005Boston College28 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 Reeboks 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.

29 September 27, 2005Boston College29 Central Repository for Reeboks Assets

30 September 27, 2005Boston College30 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 qTry to deliver some benefits every 3-6 months qInitial focus on low hanging fruit to gather support and momentum qIf possible, defer most complex technology challenges until team has mastered the technology and gained confidence qRetire Legacy modules along the way to increase compliance to new processes/simplify maintenance Do not accept software that is NOT a good fit qInfluence suppliers if you can/custom build if you cannot

31 September 27, 2005Boston College31 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.


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