1+1 = 3: Integrating Product Innovation and SCM to Deliver Incremental Value

Editor’s Note: This is the first of a three-part article written by Maha Muzumdar, vice president of supply chain marketing, Oracle & Kerrie Foy, PLM/PIM applications product marketing, Oracle.

Vying for customer loyalty can be a challenging proposition. The complexity involved in delivering the most innovative products with superior quality at the lowest cost - while meeting a myriad of specific requirements - has been known to keep a few executives up at night. There are plenty of companies that seem to be getting product innovation right, creating game-changing products that spark thousands of envious tweets, mentions and shares. Yet it is no easy undertaking.

Product lifecycles are evolving with dramatic shifts in supply and demand, drawing on technologies that manage these processes closer than ever before. To control the dynamism in a meaningful way, organizations have begun to bridge these historically separate or siloed processes and systems. Early results have shown productivity gains, profitability improvements, and ultimately, even higher customer satisfaction thanks to a more flexible supply chain delivering better products. With the right integrated processes enabled by technology in place, historically functional silos, such as product development, quality, procurement, supply chain, manufacturing and service operations, are evolving to deliver significant incremental value in organizations and becoming sources of world-class competitive advantage.

And executives are taking notice. According to the consultant firm PRTM (PwC), half of the executives surveyed in “2011 Global Supply Chain Trends” reported increased investments focused on achieving better operational flexibility. PRTM emphasizes “tearing down the wall” that divides applications and teams in supply chain and product development processes. By integrating these processes and activities from the onset, says PRTM, supply chain flexibility leaders have learned to accelerate ramp-up and ramp-down of products, while defining life-long product requirements and planning for significant shifts in demand and supply variability.

This executive challenge of satisfying increasingly complex customer requirements crosses four key dimensions: innovation, customization, quality and timely delivery. Delivering on these four key dimensions requires companies to leverage cross-functional processes and technology applications across supply chain and R&D processes.

In our next installment, we examine these dimensions, and explain how siloed processes with stand-alone technology and minimal interaction can severely limit performance.

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