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Achieving Better, Faster,Smarter Innovation

Dassault Systmes V6 Whitepaper

A Product Liecycle Management Whitepaper

Prepared by ENOVIA, a Dassault Systmes Brand


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Maintaining nancial viability while delivering innovative, environmentally-

sustainable products may be the most important business issue

conronting Consumer Packaged Goods (CPG) companies today. Faced

with a global recession, ever-changing consumer preerences, and higherdevelopment costs, CPG leaders want solutions that provide Better

FasterSmarter innovation.

Leading CPG companies are nding success deploying Product Liecycle

Management (PLM) practices. As a strategic pillar or creating business

growth, PLM enables:

Better innovation while providing open, yet directed collaboration

across the enterprise, and with consumers and suppliers

Faster innovation through ecient use o internal and external

resources and repeatable phase-gate processes

Smarter innovation by eciently capturing and re-using intellectualproperty (IP) and value chain capabilities throughout the product

development process

PLM practices drive organic growth by linking a companys innovation

engine intrinsically to its business strategy and empowering management

to:

Alignproductconceptswithbusinessgoalsandcustomer

preerences

Lowerproductdevelopmentcostsbyimplementingworld-class

best practices

Makenecessaryadjustmentseffectivelythroughtheuseofmetrics

that measure process against innovation imperatives

Improvethesuccessrateofproductionintroductionsandquality

Other successul methodologies that interace well with PLM include

open innovation and virtual product development (VPD). Open innovation

suggests that companies improve time to market by taking advantage

o globally distributed knowledge and buy or license processes or

inventions rom outside the organization. VPD allows companies to

drive organic growth to the lowest possible cost and complements open

innovation and PLM processes.

Ultimately, PLM enables aster innovation, lower development costs, and

more winning products by delivering the visibility necessary or virtuallytesting and validating design concepts prior to manuacturing and

delivery.

Executive Summary


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Executive Summary 1

The Challenge: The Perect Storm 4Organizational Amnesia Sties Innovation

PLM Cures Organizational Amnesia

Better: Improve Success Rate o New Product

Introductions and Deliver Higher Quality Products 5 Open Innovation Leads to Success

PLM Supports Open Innovation

Faster: Enable Rapid Prototyping and LowerDevelopment Costs with Strong Project Oversight 7

PLM Drives Organic Growth

Virtual Product Development Reduces Development Costs

Smarter: Reuse Organizational Memory

Eectively and Create Viable, Environmentally

Sustainable Designs 9 VPD and PLM Enable Proftable, Sustainable Designs

VPD Facilitates New Product Introductions

Conclusion: Leave Your Competition Behind 10

About The Authors 11About Dassault Systmes 11

Achieving Better, Faster, Smarter Innovation

A Product Lifecycle Management Whitepaper

Prepared by ENOVIA, a Dassault Systmes Brand


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The Challenge: The Perect Storm

In the current economic climate, the challenge oachieving organic growth while bringing productsto market at the lowest possible cost seems almostinsurmountable. Add the new imperative o doing that

in an environmentally sustainable way and the taskbecomes even more daunting.

While over 80% o consumers are aware o theimportance o sustainability, less than 20% are willingto pay more or products oering these benets.These innovations must be delivered at competitivepricing.

Leading Consumer Packaged Goods (CPG) companiesare asking themselves:

How do we develop new, successul, andenvironmentally-sustainable products, at acompetitive price, and increase proftability at the

same time?

Many o these companies are realizing that they haveto change the way that they operate as an organizationand with their partners and customers.

As in most industries, the process or developing newproducts in the CPG industry ollows a logical step-by-step approach where each unctional group completestheir task and passes the results to the next. Forexample, marketing provides product design criteriato research and development to develop the product.Once the design is approved and tested, they send it tomanuacturing to be produced.

In a global economy where consumer preerenceschange by the minute, however, organizationsneed fexibility in order to adapt and respond tonew demands promptly as well as understand thedownstream implications o design changes onmanuacturability, shel-lie, and supply chain. Thisfexibility is too oten prohibited due to the act thatmost o these unctional groups have implementedindividual inormation systems to help manage theirprocesses. Over time, this linear approach has resultedin strengthening silos o inormation versus inusingcollaborative behavior and sharing o ideas andinormation.

Organizational Amnesia Sties InnovationA recent study showed that CPG organizationswith revenues o more than $1 billion per year havean average o more than 750 dierent sotwareapplications. This prolieration o applications directs

inormation into these silos where it is hidden romthe rest o the organization, impeding the innovationprocess.

This problem is oten reerred to as organizationalamnesia. Lessons learned during the productdevelopment process include, to name a ew:

ConsumerPreferencesRawMaterialPerformanceSupplyChainPerformanceEnvironmentalPerformanceManufacturingCapabilitiesDistributionChainCapabilitiesRetailSpaceLimitations

More are either not captured or are captured inragmented systems or personal les unavailable toothers in the organization. It is then not available to the

people that need the inormation during the productdevelopmentprocessforreuseinfutureprojects.Forexample, the product may not run eciently on themanuacturing line or the package cannot be stackedproperly in a warehouse or ecient use o space.

These problems are oten discovered at the last minuteaspartofthevalidationprocessjustpriortolaunchand result in late and costly changes such as:

aredesignoftheproductretoolingmanufacturingprocessndingnewsuppliersmodifyingthedistributionchain,etc.

All o these problems have a direct impact on grossrevenue and prots.

Some companies have tried to address this problembycustomizingenterpriseresourceplanning(ERP)systems to connect the dierent organization silosinvolved in the ront end o the innovation process.ButERPiscentereduponatransaction-basedmodelin which inormation fows in a rigidly-dened linearpath and looks at the history to understand productbehavior. This approach is appropriate or managingthenancialandmanufacturingdatathatERPwasdesigned to handle. But an eective innovationprocessrequiresamuchmoreexible,iterative,knowledge-based system in which inormation fowsonacontinuousbasis.Asaresult,acustomizedERP

solution usually impedes innovation more than it helps.

So how are companies addressing the organizationalamnesia problem and the need or better, aster,smarter innovation in a challenging economy?


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PLM Cures Organizational AmnesiaDuring a time o downsizing, leading CPG companiesare deploying PLM practices as a strategic pillar orcreating business growth. PLM enables better, directedinnovation that is linked intrinsically to business

strategy, while providing open collaboration acrossunctional boundaries within the organization as well aswith consumers and suppliers.

PLM also provides aster innovation through ecientuse o internal and external resources and repeatablephase-gate processes.

While recent signs o a recovering market are hopeul,news o our challenged global economy persists unemployment rates continue to rise, home oreclosure

rates in the United States are the highest in decades,and consumer condence is slowly rebounding aterhitting the lowest scores ever recorded.

Consumers are experiencing unprecedented changeand behaviors have shited toward conservativespending. And yet, CPG companies continue toshow greater resilience than other industries (seeFigure 1). With this change CPG companies arepoised to take advantage o the situation i they canaddress the internal collaboration issues and increasecommunication externally.

And nally, PLM provides or smarter innovation byeciently capturing and re-using intellectual propertyand value chain capabilities throughout the productdevelopment process.

As a result, leading CPG companies are improvingthe success rate o new product introductions anddeliveringhigherqualityproductstothemarket,achieving rapid prototypes and lower developmentcosts, and reusing organizational memory toeectively and eciently create viable, environmentallysustainable products.

The CPG industry sells large volumes o products ata low cost to the consumer. They are consumableproducts,thingsthatgetusedupquicklyandneedto

be replaced such as, ood, beverages, personal careitems and household cleaning supplies. New products,new variations o old products and new orms appearon retail shelves daily. In these challenging timeswhere organizations leaders and managers mustcontend with doing more with less every day, howmight they leverage current relationships, whiledeveloping new ones, to generate enough innovationto meet internal organic growth targets and remaincompetitive?

Figure 1:CPG companies show greater resilience in tough economic times(Jan Dec 2008).

Better:ImproveSuccessRateofNewProductIntroductionsandDeliverHigherQualityProducts


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Open Innovation Leads to SuccessLeading CPG companies are implementing openinnovation practices.

This approach undamentally refects how innovationshould come together as an iterative, on-goingcollaborative process.

Implementing open innovation in an organizationmay seem like a daunting task. You can either obtainleadership support ahead o time, or fy under the radaruntil you try some things, demonstrate success andbuild your case.

Regardlessofyourapproach,youshouldbeginby

evaluating your organizations current position relativeto strategic goals, then establish your open innovation

goals, strategies and tactics, and nally, measure yoursuccess and ailures along the way.

In addition, you will need to ensure sucient

mechanisms are in place to support a cultural shittoward this new thinking. For example, you couldcreate a proudly invented elsewhere award to rewardthose involved in the open innovation success.

And nally, you will need to evaluate what might workor your organization and take small steps orward thatwillallowyoutoscalequicklyafterthemomentumbegins to build.

PLM Supports Open InnovationPLM provides the visibility needed to align openinnovation processes to organic growth innovationtargets to ensure strategic t, consumer t, nancialtandoperationaltforallprojects.Byestablishingdened processes and providing visibility, PLM

provides a governance inrastructure that helps theorganization make better decisions and achieve bothstrategic and operational goals.

The ability o PLM to provide collaboration acrossall disciplines involved in the innovation process isenabled by a collaborative environment that providesa common repository or ormulas, specications,packaging design, and distribution channel inormationas single version o the truth or all participants (seeFigure 2). As a result, CPG companies can reduce thenumberofqualityincidents,achieveright-rst-timespecications perormance, and increase purchasingsavings.

The central idea behind open innovationis that in a world o widely distributedknowledge, companies cannot aord to relyentirely on their own research, but should

instead buy or license processes or inventions(e.g. patents) rom other companies. In

addition, internal inventions not being used ina frms business should be taken outside thecompany through licensing, joint ventures,

and spin-os.

HenryChesbrough,AdjunctProfessor,HaasSchool o Business, University o Caliornia atBerkley and executive director at the Center

or Open Innovation at Berkeley.1

Figure 2:

PLM provides a single source o inormation to all stakeholders.


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Figure 3:Average PLM value achieved by leading consumer companies.2

LeadingCPGcompanieshavealsomademajorstridesby implementing a phase-gate process to drive productdevelopment. Cross-unctional teams complete a

prescribed set o related activities in each stage prior toobtaining management approval to proceed to the nextstage o product development.

Each activity is undertaken in parallel to enhancespeed to market. As a result, phase-gate methodologyhas substantially increased the speed o the productdevelopment process by enabling activities to proceedin parallel while managing risk. By establishing denedprocesses and providing visibility throughout theproduct development process, phase-gate coupledwith portolio management practices allows anorganization to make business-ocused decisions.

PLM Drives Organic Growth

Management teams can establish common hurdlesearly and evaluate them oten throughout the productdevelopment cycle. This enables the development

o only those concepts that align with a companysstrategic goals and best satisy consumer needs.

Actionable process metrics provide the ability to

measure its process against innovation imperatives andmake appropriate changes. As a result, PLM enorcesstandard processes and over time creates world-classbusiness best practices or aster innovation.

Strategic application o PLM practices enablesan organization to link its innovation engine toa companys business strategy to drive organicgrowth. This enables companies to dene andstandardize workfows across the organization thatmatch the natural innovation process and supportcommunications across all disciplines so changes canbe rapidly implemented.

Synchronizing the contributions o internal and external

resources through the creation o cross-unctionalgroups and open innovation processes can reducetime to market by up to 75%.

Faster:EnableRapidPrototypingandLowerDevelopmentCostswithStrongProjectOversight


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Virtual Product Development ReducesDevelopment Costs

Virtual product development (VPD) the collective useo virtual product design, virtual product simulation,

virtual product manuacturing, and virtual consumerexperience tools is a new practice being used byleading CPG companies to complement phase-gateprocesses and augment PLM applications.

The use o virtual product design and simulation allowsengineers to evaluate perormance o the productand package in the early design stage long beorephysical prototypes are available. For example, you canautomatically determine the weight o dierent productand package design alternatives and calculate shippingcosts with a sotware prototype. Or, you can dene asimulated drop test and perorm it automatically onproposed packaging designs as part o the workfow.Youcanalsosetupasimulationthatquicklyevaluates

many dierent package design alternatives one ateranother and provides the results in a report.

In each case, the results are posted to the t-or-use scorecard visible to all stakeholders to showhow the design aligns with dened business goalsand success criteria such as consumer preerences,manuacturing capabilities, supply chain capabilities,and retail shel space considerations. These scorecardscan then be compared against corporate level strategicgoals.

Virtual product manuacturing also compliments phase-gate capabilities by allowing process engineers to plan

and model new manuacturing process technology andsimulate the production line. In addition, manuacturingengineers can create a complete denition o theproductionfacilityandequipmentneededtoproducethe product. Once such a model is established, anychange can be analyzed such as throughput, cycletime, and product count.

Since virtual product manuacturing capabilities arelinked directly to the other applications, they are ableto test their ideas rapidly and provide eedback beorethe design has been stabilized. The use o digitalmanuacturing and rapid prototyping in a ully digitalenvironment allows you to get rom concept to shelin weeks as opposed to years. In addition, with ewer

physical prototypes, ewer tooling modications arerequired,andpackagingdesignscanbeoptimizedtoconsume the least possible amount o materials.

As a result o applying all o these technologies phase-gateprocessesinconjunctionwithvirtualproduct design, virtual product simulation, andvirtual product manuacturing lower overall totaldevelopment costs can be achieved.

Figure 4: VPD supports the end-to-end development process and provides acommon system or all users.


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Smarter:Reuse Organizational Memory Eectively and Create

Viable, Environmentally Sustainable Designs

PLM provides real-time access to the organizationalmemory needed to ensure that the proper product

specications are used and lessons learned rom pastdesigns are captured and applied or uture innovation.

AsopposedtoERP,PLMenablesaniterative,intuitivedesign process that delivers fexibility plus visibility,allowing intellectual property to be shared across theenterprise. As appropriate, PLM enables collaborationacross all boundaries, resulting in identication o thebest ideas at the astest possible speed.

PLM oers an inormation warehouse that providesor ecient re-use o material specications, productdesign properties, supplier perormance data,regulatory compliance specications, and much more.The resulting organization memory creates a truly

learning product development system.

VPD and PLM Enable Proftable, SustainableDesignsBy providing fexibility and transparency in the productdevelopment process, VPD allows intellectual propertyto be shared throughout the enterprise enablingcompanies to be more innovative and deliver productsat a aster rate.

Using VPD, CPG companies can learn early andmeasure oten throughout the entire productdevelopment process and learn how each designiteration measures up against decision criteria,consumer preerence scores, nancial and operational

benchmarks through automated t-or-use scorecards.

VPD also enables CPG companies to better developenvironmentally sustainable products. With VPD,companies can decrease the consumption o non-renewable energy and solid waste throughout thedesign and production liecycle. Additionally, the abilityto minimize material usage and still meet packagedesign/performancerequirementsresultsinsignicantmaterial cost savings and a lighter environmentalootprint.

Finally, VPD provides virtual consumer experiencecapabilities that enable users to create a virtual

product and experience it rom the perspective o theirconsumers inside a virtual store. The user lays out theproduct on-line rom a dynamic 3D library, animatesand explores dierent congurations by customizingcolors, lighting, and assembling elements in order tocreate the product he or she would like to see on themarket.

The next step is creating the virtual store by choosing3Dobjectslikedoors,tables,chairs,devices,shelvesand selling goods. This solution enables productdevelopers and retailers to simulate product andconsumer behavior in the rst moment o truth (instore) and the second moment o truth (in use) priorto the delivery o any product. As a result, product

developers and retailers can easily optimize theproduct or the marketplace without spendingadditional costs or physical prototypes.

VPD Facilitates New Product IntroductionsMarketing and sales team can test consumersshopping, consuming and merchandising experiencebeore the product, store or commercial space evenexists. Maintaining design ocus on consumer needsat rst moment o truth (FMOT) and second momento truth (SMOT) increases the likelihood o success onew products in the market.

VPD acilitates new product introductions bydemonstrating compliance with consumer design

constraints throughout the development process andprovidingearlyandfrequentconsumerfeedback.

Used collectively, the application o strategic PLMpractices coupled with the components o VPD makeit possible to virtually dene, test, plan, manuacture,and monitor all phases o the product developmentprocess, truly enabling smarter innovation acrossthe enterprise. These tools allow companies toocus on achieving growth and delivering successul,sustainable products; directed innovation that isintrinsically linked to business strategy while providingopen collaboration throughout the organization andwith consumers and suppliers.


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PLM enablesbetterinnovation by providing the visibility that aligns the

product development pipeline with top and bottom line goals ensuring

a strategic, consumer, nancial, and operational t or all new product

introductions.

The approach delivers asterinnovation by allowing you to virtually test

and validate design concepts prior to manuacturing and delivery. PLM

provides orsmarterinnovation by eciently capturing and re-using

intellectual property and value chain capabilities on an on-going basis

and throughout the product development process.

With the right tools and processes, you too can deliver better, more

innovative, environmentally-riendly products at the lowest possible cost,

and achieve sustainable, organic growth.

EnablingBetter, Faster, Smarter Innovationrequiresconsiderationof

the practices o open innovation, leveraging the intellectual propertygenerated both inside and outside the organization or maximum value

attainment.Itrequiresenhancedandconnectedphase-gateprocesses

withdenedmetricssothatyoucanconsidereachprojectsmeritsonan

evenplayingeldandallowresourcestobeallocatedtotheprojectsthat

can deliver the greatest value.

And nally,Better, Faster, Smarter Innovationrequiresastrategic

implementation o PLM business process applications so that you

can reuse the intellectual capital o your organization eciently and

acceleratefutureinnovation.InconjunctionwithVirtualProduct

Development and automated ft-or-use scorecarding,3 this technology

will revolutionize the way you innovate and leave your competition

squarelyinyourrearviewmirror.

Conclusion:Leave Your Competition Behind


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PLM Solutions or Your Business

Contact us today to ind out how leading companies worldwide are using ENOVIA PLM solutions to beat the competition andspeed time-to-market.

About Dassault Systmes

As a world leader in 3D and Product Liecycle Management (PLM) solutions, Dassault Systmes brings value to more than 100,000customers in 80 countries. A pioneer in the 3D sotware market since 1981, Dassault Systmes develops and markets PLMapplication sotware and services that support industrial processes and provide a 3D vision o the entire liecycle o products romconception to maintenance. The Dassault Systmes portolio consists o CATIA or designing the virtual product - SolidWorksor 3D mechanical design - DELMIA or virtual production - SIMULIA or virtual testing - ENOVIA or global collaborative liecyclemanagement, and 3DVIA or online 3D lielike experiences. For more inormation, visit http://www/3ds.com/cpg

About the Authors

Rosemary Grabowski, VP Business Development and Strategy with Dassault Systmes, has held several executive positionsover her 24 year career history and has experience in leveraging innovation to drive organic growth. Prior to Dassault Systmes,she lead innovation process design, implementation, change management and executive strategic innovation portolio reviewsatCadburySchweppes. Hermulti-disciplinecareerprovides leadershipexperiencein strategy, innovationprocessdesignandimplementation, brand licensing, promotion, channel management, brand marketing, and supply chain management.

Vince Sonson, Director o CPG Product Strategy or Dassault Systmes, owns the product roadmap or ENOVIAs CPG solution setand provides thought leadership on the application o leading-edge technologies and practices that raise the bar o PLM practicein CPG. Vince has dedicated his career to designing and delivering best in class enterprise sotware solutions to leading consumergoods manuacturers and their extended value chains.

DassaultSystmes,2009.AllRightsReserved.

1. Open Innovation: Researching a New Paradigm (Oxord, 2006).

2. Dassault Systmes Services Business Value Assessment benchmark study, Consumer (2008).

3. Go to http://perspectives.3ds.com/2009/06/08/it-or-use-lead-design/ to learn more about Fit-or-Use lead design


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Dassault Systmes 900 Chelmsford Street, Lowell, Massachusetts 01851 978 442 2500 3DS.com

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