How Consumer Products Companies Can Drive Digital Transformation

John Terzis and Michael Racey

Emerging technologies such as artificial intelligence and intelligent automation are transforming the consumer products industry. Consumer products companies are embracing these smart technologies to enable their digital transformation goals and to gain greater operational efficiencies and competitive advantages in the marketplace.

But many large consumer products organizations — who grow through acquisitions, mergers, and globalization — struggle to integrate newly acquired businesses into their highly customized systems and processes. Thus, every acquisition involves an arduous integration project that consumes time and resources and requires custom development. Eventually, large consumer products enterprises reach a point where they can no longer grow because the challenges of integrating cutting-edge technology become prohibitive.

This dilemma has sparked a growing realization among consumer products organizations: To achieve digital transformation, scale quickly and successfully integrate new acquisitions, organizations must forgo detailed customizations and instead adopt a standardized solution flexible enough to work across multiple organizations. Many consumer products companies are eager to embrace business process best practices that are standard across companies in their industry — even across multiple industries — but that aren’t differentiators and don’t drive growth and revenue. Examples include financial accounting and supply chain planning.

Seeking simplicity

Leading organizations now choose to focus their implementation effort on less than 20 percent of their business processes that are unique differentiators and drive revenue growth — products, services and value-added services such as customer support. For other core processes, these companies leverage out-of-the-box best practices that are standard and simplified across different business units, locations, product lines, and more.

Many consumer products companies choose a next-generation ERP suite as their digital core to get the most out of the intelligent automation of non-differentiating business processes and to enable growth and rapid integration of acquired entities. These companies want to position themselves for the future of process automation and, on a larger scale, to transform their organizations into cognitive enterprises — even though they don’t yet know what a full-blown cognitive enterprise would be. (That’s another challenge companies today face.) And beyond the ability to integrate new businesses, consumer products companies want to increase their speed to benefit of acquisition integration and implementation.

Take, for example, a multinational food, snack, and beverage corporation that manufactures, markets and distributes thousands of consumer products in more than 200 countries. Despite having a legacy ERP system, the company was burdened with more than 10,000 process customizations. The resulting business and management complexity problems made it difficult to compare markets and product lines and to move around employees to leverage their unique skills. There was no standardization or uniformity of business processes across product, brand or geographic lines.

Now they are working on a program to harmonize, standardize, and simplify operational processes across all markets, including financial processes, order cycles, supply chains, and manufacturing procurement. The company has been able to standardize the majority of its business processes that aren’t competitive differentiators but are nonetheless critical to running an efficient organization. As a result, this consumer products giant has been able to save millions of dollars through better quality control, shorter integration cycles, improved synchronization of data and more efficient sales processes. Perhaps more significantly, by leveraging out-of-the-box solutions for non-differentiator business processes, the company can focus its resources on processes that offer unique competitive advantages.

Delivering with impact

With preconfigured, cross-industry and industry-specific best business processes that can be implemented quickly, organizations can adopt out-of-the-box solutions for standard business procedures and operations with greater ease. These solutions help enterprises avoid hundreds or thousands of hours of internal and consulting effort to redefine processes, document solution designs, develop new training materials and automate test scripts. All of this accelerates an organization’s speed to benefit, which in the digital economy can mean the difference between success and failure.

Learn more about IBM’s SAP S/4 HANA consulting services, as well as IBM’s partnership with SAP in the consumer products industry.

John Terzis

About John Terzis

John Terzis is recognized as a leader in the delivery of large-scale, multi-dimensional, complex SAP-enabled enterprise transformation programs involving complex supply chain and organization challenges within the Retail, Consumer Products and Life Sciences industries. John has over 20 years of experience driving transformative initiatives involving strategic planning, process and organization improvement, and technology enablement. In addition, he is a proven change leader, guiding organizations through the process of adopting improved processes and technologies to sustain performance improvements.

Michael Racey

About Michael Racey

Michael Racey is an outcome-driven business executive with over 30 years of experience leading technology-enabled business transformation programs in the consumer products industry. He focuses on global transformation programs enabled by SA, particularly in food and beverage companies. Michael is also a hands-on leader who uses disciplined governance, business leadership alignment, and team building to lead complex programs to successful completion. He provides thought leadership as a trusted advisor on the design and building of global template solutions, deployment strategies, and governance models.