Integrated Innovation

This month, CGTinterviews Bernard Goor,vice president of consumer goods for Agile, a wholly owned subsidiary of Oracle Corporation. Having joined Agile via its Prodika acquisition in 2006 and having worked with i2 Technologies, Nine West and PepsiCo Restaurants before that, Goor can offer a unique perspective on innovation challenges and trends through a blend of consumer goods (CG), retail and technology knowledge and expertise.

 

GOOR: The essence of everything that a CG company does resides in its products. We used to say that 80 percent of a product cost is locked in during the design phase. I would go a lot further than that. The way a company innovates, the processes it uses, the data it stores through the innovation process, the places where it stores that data, all have a profound impact on everything else in the company - so it is not only about product cost.

 

You may say that a CG company manages three fundamental processes: innovation, commercialization and execution. The way products are being set up through the innovation process, from raw materials and components all the way to manufacturing processes and finished products, will impact commercialization and execution, both upstream on the supply chain side and downstream on the retail and consumer side. Let's just take one example: data syndication. The premise of data syndication was to electronically harmonize the product master between CG companies and retailers so they could jointly manage commercialization and execution seamlessly. The 1.0 version of data syndication was to add a single data repository (mostly referred to as a PIM) from which to syndicate data. In most instances, this still required data to be cleansed and completed on the back end. We believe in a more integrated approach (you could call it a 2.0 version) that calls for aggregating, reviewing and approving the product data throughout the innovation process within a single "version of the truth," and syndicating data from that single instance as part of the innovation process. This approach achieves full integration of process and data, and minimizes the points of failure. The bottom line is that the innovation process and the resulting data will have a critical role to play on how well the company will perform downstream on the commercialization and execution side.

 

Another reason why innovation is "the only thing" is that it is the biggest contributor to company growth, which in itself has the largest impact on company valuation. So clearly innovation needs to take a central place in CG companies' investments and strategies. After years of looking "inside out" and focusing on efficiency, CG companies are now turning to "outside in" strategies and focusing on growth and innovation.

 

GOOR: The reason we are so passionate about this is that we believe there is still a significant opportunity to improve the innovation process in CG companies. This is not about marketing, science and technology expertise — the CG industry is a vibrant industry with top innovation talent. It is about how a company can accelerate innovation, while at the same time reducing costs and improving the success of new products from a sales and margins standpoint. This is the innovation dilemma, and it requires a new integrated approach from a process and data perspective.

 

We see numerous examples of CG companies making fragmented decisions in innovation. For example, a company may invest in a product and portfolio management solution, a specification management solution and a data synchronization solution — all disconnected. This is in stark contrast with investments that companies have been making in transaction systems for the last 10 to 15 years. To relate this to ERP, would be equivalent today to a company buying one solution for financials, one solution for order management and one solution for HR. Everyone knows that this is not the way it works. Everyone knows that an integrated, enterprise-wide ERP solution is the way to go.

 

The same applies to innovation. We recommend that CG companies look at innovation now the same way they looked at transaction systems years ago — one integrated process and solution that delivers shorter cycles, lower costs and higher sales and margins. The industry needs one integrated innovation solution, an equivalent to ERP for innovation, an Enterprise Innovation Planning and Execution solution of sorts.

 

GOOR: In our view, this integrated solution needs to combine the seven core processes that are essential to an integrated innovation effort:

The critical value of an integrated solution is global information visibility. A project manager supervising a project (in new product development and introduction) can quickly assess the state of product development (in specification management), the experimental formulas that were considered (in formulation management), the supply chain that will be called upon (in supplier management) and the approval status of packaging materials and labels (in packaging and labeling management). He or she can verify the compliance of the product against regulations and labels, and verify that the product meets its quality objectives (in compliance and quality management), and finally he or she can activate the syndication of the product data to internal systems and external data pools (in data syndication). All processes and data are readily available in just a few clicks, over a Web browser, anytime, anywhere (pending security access).

 

Such an integrated approach needs to achieve the benefits of global consistency (global framework and global metrics), and at the same time allow local teams to operate based on their local conditions and requirements (consumer requirements, supply chains etc.). This is essential to drive speed of adoption and achieve a short time to value.

 

GOOR: At the process level, our recommendation is to look at innovation holistically and build one integrated strategy and process that integrates all innovation components together.

 

At the system level, our recommendation is to endorse solutions that already achieve this level of integration today. The science behind an integrated innovation framework is of course product lifecycle management (PLM). Oracle's Agile has solutions for both the process and the discrete components of the CG industry. On the process side for example, Agile leverages the solution acquired from Prodika to integrate all innovation activities together in a single version of the truth. Combining the breadth of an integrated solution with the depth of functionality linked to industry expertise is what Agile can offer today.

 

GOOR: Oracle is fully committed to the PLM space and the CG industry. Oracle will use the Agile solutions in conjunction with its broader enterprise applications and technology assets to support the integrated innovation objectives of its customers in CG. We look forward to working with CG companies to achieve the benefits of a single version of the truth for both the innovation process and the resulting data.