Integrating Product Innovation and SCM to Deliver Incremental Value: Part II
February 02, 2012 - SCMR Editorial
Editor’s Note: This is the second of a three-part article written by Maha Muzumdar, vice president of supply chain marketing, Oracle & Kerrie Foy, PLM/PIM applications product marketing, Oracle
As noted in our first installment, siloed processes with stand-alone technology and minimal interaction can severely limit performance.
On the other hand, a comprehensive, integrated approach that leverages both product lifecycle management (PLM) and supply chain management (SCM) processes and solutions can yield exponential value – better time to market, right products to the right customers, better quality and improved order fill rates. Let’s take a look:
Innovation: According to a 2010 survey by Ernst & Young entitled “Competing for Growth,” 71 percent of respondents cited product and service innovation as being most important to gaining a competitive edge. Glance at annual reports of top companies in most industries and you’ll find innovation-fueled corporate strategies weaved throughout. As innovation increases and product lifecycles shorten, markets become more volatile and place increased pressure on the supply chain to adapt accordingly. PLM offers a vital product record to readily tap for rapid design/part reuse, ideation management, stakeholder collaboration, organizational knowledge, and analytic capabilities to empower decision makers at all levels of the business to act and plan quickly. By incorporating real-time product data from a reliable enterprise PLM system with best-in-class SCM solutions, companies can dramatically improve their organizational ability to execute “what if” scenarios, breach new markets, and transform internally focused cost-centric supply chains into “outside-in” or externally-focused extended value chains.
Customization: Ernst & Young also found in its survey that 87 percent of all respondents grew their portfolio of products over the past three years to maximize their market potential. A global proliferation of new products brings all sorts of corresponding product and labeling requirements that each have a range of safety and environmental regulations, which may widely differ from one market to the next. A compliance lag in the product development process could wreck havoc on the supply chain and business reputation as a whole.
For example, a leading provider of construction materials for residential and commercial properties recently integrated its PLM processes with SCM software to automate and optimize the flow of capturing customer needs, convert those needs to product requirements, feed them to the bill of material (BOM), and release to manufacturing, while noting the final delivery location to ensure compliance with local regulations. Prior to integrating product development process with its configure-to-order model process, it took several months to manually gather, enter and send product requirements to manufacturing. With the combined and tightly integrated PLM and SCM processes, the required time lag was whittled down to days and weeks, and greatly reduced the chance of errors.
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