Managing the Science of Innovation within the Consumer Products Industry

By: Keith Colonna, Value Chain Solution Manager, Oracle

The consumer products (CP) industry is very mature and competitive. Most companies within this industry have saturated North America (NA) with their products thus maximizing their NA growth potential. Future growth is expected to come from either expansion outside of North America and/or by way of new ideas and products. Innovation plays an integral role in both of these strategies, whether you’re innovating business processes or the products themselves, and may cause several challenges for the typical CP company,

Becoming more innovative is both an art and a science. Most CP companies are very good at the art of coming up with new innovative ideas, but many struggle with perfecting the science aspect that involves the best practice processes that help companies quickly turn ideas into sellable products and services.

Symptoms and Causes of Business Pain

Struggles associated with the science of innovation show up in a variety of ways, like:

· Establishing and storing innovative product ideas and data

· Funneling these ideas to the chosen few

· Time to market cycle time and on-time launch rates

· Success rates, or how often the best idea gets chosen

· Imperfect decision making (i.e. the ability to kill projects that are not projected to be winners)

· Achieving financial goals

· Return on R&D investment

· Communicating internally and externally as more outsource partners are added globally

· Knowing your new product pipeline and project status

These challenges (and others) can be consolidated into three root causes:

1. A lack of visibility
2. Poor data with limited access
3. The inability to truly collaborate enterprise-wide throughout your extended value chain

Choose the Right Remedy

Product Lifecycle Management (PLM) solutions are uniquely designed to help companies solve these types challenges and their root causes. However, PLM solutions can vary widely in terms of configurability, functionality, time-to-value, etc. Business leaders should evaluate PLM solution in terms of their own business drivers and long-term vision to determine the right fit. Many of these solutions are point solutions that can help you cure only one or two business pains in the short term. Others have been designed to serve other industries with different needs. Then there are those solutions that demo well but are owned by companies that are either unable or unwilling to continuously improve their solution to stay abreast of the ever changing needs of the CP industry to grow through innovation.

What the Right PLM Solution Should Do for You

Based on more than twenty years working in the CP industry, I recommend investing in a single solution that can help you solve all of the issues associated with the science of innovation in a totally integrated fashion. By integration I mean the (1) integration of the all of the processes associated with the development, maintenance and delivery of your product data, and (2) the integration, or harmonization of this product data with other downstream sources, like ERP, product catalogues and the GS1 Global Data Synchronization Network (or GDSN, which is now a CP industry requirement for doing business with most retailers).

The right PLM solution should help you:

• Increase Revenue. A best practice PLM solution should help a company grow its revenues by consolidating product development cycle-time and helping companies get new and improved products to market sooner. PLM should also eliminate many of the root causes for a product being returned, refused and/or reclaimed (which takes away from top-line growth) by creating an enterprise-wide, collaborative, workflow-driven environment.
• Reduce Costs. A strong PLM solution should help shave many unnecessary costs that companies typically take for granted. Rationalizing SKU’s, components (ingredients and packaging) and suppliers is a major opportunity at most companies that PLM should help address. A natural outcome of this rationalization is lower direct material spend and a reduction of inventory. Another cost cutting opportunity comes with PLM when it helps companies avoid certain costs associated with process inefficiencies that lead to scrap, rework, excess and obsolete inventory, poor end of life administration, higher cost of quality and regulatory and increased expediting.
• Mitigate Risk. Risks are the hardest to quantify but can be the most costly to a company. Food safety, recalls, line shutdowns, customer dissatisfaction and, worst of all, the potential tarnishing of your brands are a few of the debilitating risks that CP companies deal with on a daily basis. These risks are so uniquely severe that they require an enterprise PLM solution specifically designed for the CP industry that safeguards product information and processes while still allowing the art of innovation to flourish.

Many CP companies have already created a winning advantage by leveraging a single, best practice PLM solution to establish an enterprise-wide, systematic approach to innovation.

Oracle’s Answer for the Consumer Products Industry

Oracle is dedicated to solving the growth and innovation challenges facing the CP industry. Oracle’s Agile Product Lifecycle Management for Process solution was originally developed with and for CP companies and is driven by a specialized development staff solely focused on maintaining and continuously improving the solution per the latest industry requirements. Agile PLM for Process helps CP companies handle all of the processes associated with managing the science of the innovation process, including: specification management, new product development/project and portfolio management, formulation optimization, supplier management, and quality and regulatory compliance to name a few.

And as I mentioned earlier, integration is absolutely critical. Many Oracle CP customers, both with Oracle ERP systems and non-Oracle ERP systems, report benefits from Oracle’s Agile PLM for Process. In future articles we will explain in greater detail how both existing Oracle customers (like Gallo, Smuckers, Land-O-Lakes and Starbucks) and new Oracle customers (like ConAgra, Tyson, McDonalds and Heinz) have all realized the benefits of Agile PLM for Process and its integration to their ERP systems.

More to Come

Stay tuned for more articles in our blog series “The Business of Winning Innovation.” While we will also feature articles focused on other industries, look forward to more on how Agile PLM for Process addresses innovation challenges facing the CP industry. Additional topics include: Innovation Data Management (IDM), New Product Development (NPD), Product Quality Management (PQM), Menu Management,Private Label Management, and more! .

Watch this video for more info about Agile PLM for Process