Woman reading jar label at the grocery store and ROI icon

Private Label Product Lifecycle Management: Calculating ROI (Pt II)

| PLM | Private label | Food industry
Posted By: Don Low


PLM solutions have been around for decades. Historically they have been considered as large investments, with long implementation projects caused by heavy customization, and slow return on investment.


This is no longer the case with many solutions being provided via software as a service, which reduces cost of ownership. Your selected vendor should also have an out-of-the-box offering which limits the level of configuration required to reduce implementation investments.


You will still need to prove that there is a return on investment. For this you need to assess your current product development and maintenance KPI’s so that you can present a financial case to your leadership and justify the purchase.


Before selecting a PLM vendor you need to review what cross functional departments the solution will support. In the case of Trace One the focus is the following:


1. Category and product development teams

2. Product quality and supplier compliance teams

3. Packaging and sustainability teams


In this blog series we will tackle four key areas of return and how these can be estimated. Let’s take a sample mid-sized retailer with an existing private brands portfolio of 3000 SKU and 300 suppliers.  They want to expand their product range by 10% per year and recognize that spreadsheets and PDF documents won’t support the growth objectives.


Please note: the figures used are just examples and the formula would be adjusted based on an analysis of the retailer’s private brands business and their strategic objectives.


Specification validation and approvals reduces artwork iterations and packaging errors


Over the last 18 months 209 products recalls have been listed on the FDA’s website with a reason on undeclared allergens. With an estimated cost of up to $10M for each recall which includes cost of product removal, label rework, and lost sales revenue you can see why it’s so important to validate your product specifications before passing label data to design teams for inclusion on the final artwork.

Artwork and packaging design is expensive, and for new product introduction and rebranding it is the lion’s share of the total process activity. It’s important to select a PLM provider that offers validation of your labeling information against the product formulation and substantiates product claims by requesting valid certification. Having a solution that is glossary based for risk areas of the product specification also minimizes data entry errors and brings brand consistency. These features will help reduce artwork iterations.


When compared to manual methods and disconnected solutions for specification and artwork management, Trace One has achieved an average of 1.5 - 2 iterations per project with our PLM and Artwork development modules, which are highly integrated. Just taking the reduction in packaging and design costs as our subject for return on investment, we can use the following formula to estimate a return on investment.


A. Total number of new packaging projects per year (new items 300 + re-packaging 150) = 450

B. Average # of artwork reviews / iterations per item = 4

C. Cost charged per iteration per project = $1,000

D. Reduction in effort using Trace One PLM = 50%


A x B x C x D = $ 900,000 in costs saved per year


Of course, labeling errors are not the only cause of product recalls and it's critical for brand owners to act quickly, but the minimization of costs when these events occur is the subject of next week’s blog


About Trace One

We spearhead a powerful global retail community at the heart of the industry ecosystem. Unified on one platform, our systems connect, streamline, and organize data, teams, and networks. This allows brand owners to overcome complexity and grasp the opportunities at every stage of the product lifecycle.


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