The document discusses Marine & Protective Coatings' approach to managing product range complexity (MRC). MRC aims to balance customer needs, minimize costs, and realize savings through four core processes: product introduction, deletion, managing underperformance, and redundant stocks. These processes use tools like a product introduction form and deletion form. The approach reduced SKUs by 30% for Protective Coatings and over 500 to under 300 for Aerospace Coatings, while increasing average gross profit per SKU. Key to success is collaboration across functions and focusing on business priorities rather than departmental targets. MRC helps ensure greater productivity and efficiency in product range management going forward.

1. . Managing Product Range Complexity at Marine & Protective Coatings
The message of the November 19th MMM webinar on Managing Range
Complexity [MRC] in Marine & Protective Coatings was that taking a pro-active
approach to product range management brings substantial benefits.
Shirley Gibson [Product Manager Protective Coatings] and Tsjip Boersma
[Manager Product Management Aerospace Coatings] explained how a
structured approach led to a reduced number of SKU´s [stock keeping
units], a higher gross profit per remaining SKU and a higher success chance
for new products.
The MRC process
MRC is seen as the process that is critical to ensure an optimal balance
between satisfying customer needs, minimizing trading working capital and
realizing operational cost savings. The project delivered four core
processes: product introduction, product deletion, managing
underperformance and managing redundant stocks. For each of these
processes, tools have been developed and implemented. Some examples:
 PIF [product introduction form] a one page management
philosophy document that represents the commercial justification
behind the introduction of a new product;
 PDF [product deletion form] is a tool to eliminate products that no
longer efficiently advance the company interests. The PDF helps
in a systematic way to minimize the financial burden caused by
such a product;
 JUPPO [justified underperforming product ownership] is a
formalized measure and procedure to track & share
market/customer knowledge about products that are sold for strategic reasons without regard for their
intrinsic contribution to earnings. The costs that are made to keep a product alive, for which a JUPPO
is submitted and authorized, are charged on the P&L account of the owner of this product. With the
ownership of JUPPO products, the responsible sales person becomes accountable;
 LPO [lost profit opportunity] is the "traffic sign" and indicator of the process. By measuring the
performance of the product range, underperforming products are highlighted. The measurement of
poor sales performance of the products is defined by using filters. Examples of these filters are
minimum annual profit generated by a product and minimum percentage margin made by a product.
Managing the front and back door
The PIF helps to closely monitor the key stages of introduction. It results in clear and achievable business plans
prior to the introduction of new products. The PIF can be seen as the input factor or front door of the process.
The defined filters are used to measure the performance of the product range. For products that generate a
certain LPO value, the action plan helps to improve the performance. Possible actions are increasing the price
and/or volume sold, improving forecasting reliability, and value engineering. The only "escape" route for this is
to submit a JUPPO.
Products that are in the end phase of the life cycle and which are underperforming will be rationalized. The PDF
will drive the removal of products reaching the end of their productive lifecycle and minimizes OWC [operating
working capital] scrap and re-work costs. The PDF represents the output factor or back door of the process.
Results achieved
These four processes address four critical factors: product lifecycle, profitability, operating OWC, and business
complexity at all stages along the supply chain right through to sales, including the customer interface and
improved collaboration across departmental, geographical and market boundaries.

2. Within Marine & Protective Coatings, the various SBUs have saved money by reducing working capital and
increased profitability by implementing MRC. For example, Protective Coatings was able to reduce the number
of SKUs from 676 to 483 [-30%] in EMEA between 2006 and 2009. The gross profit per remaining SKU
increased from an average of €2,000 per SKU to above €5,000 per SKU in the same period.
In Aerospace Coatings the number of products decreased from more than 500 to less than 300 in EMEA in the
same period.
Critical success factors
MRC involves people in a wide range of business functions such as sales, planning and manufacturing and in
the roles of management and operations. Instead of focusing on achieving departmental targets, they work
together, guided by business priorities shared by all concerned. Working together helps to better understand the
root causes of problematic performance and facilitates the process of drawing up an action plan, putting it into
practice, and monitoring it to gauge its effectiveness in achieving the desired improvements in performance.
With a focus on the product range management process, MRC helps to ensure that in the future, we can
achieve greater productivity and efficiency in our product range management.
Shirley Gibson
Product Manager, Protective Coatings
Marine & Protective Coatings
shirley.gibson@akzonobel.com