Innovation’s missing link

Can ERP systems drive corporate innovation strategies? EEF senior economist Jeegar Kakkad talks to Malcolm Wheatley, IT Contributing Editor at The Manufacturer.

“Manufacturers have woken up to the fact that they can’t compete with China on price—and that they must do it through innovation. That’s the good news. The bad news? Many of them haven’t made innovation a core business process—and haven’t woken up to the extent to which their ERP system can help them do this.”

Blunt words. But the speaker, the redoubtable Jeegar Kakkad, senior economist at manufacturing employers’ organisation EEF, is in no mood to mince words. Manufacturing industry, in short, is close to his heart—and he thinks that it’s in danger of missing a trick.

It’s a theme, what’s more, that is central to his upcoming keynote speech at ERP Connect 2011, a free-to-attend event held on the 19th May at Ansty Hall Hotel in Coventry.

“Innovation shouldn’t be something that happens in a laboratory, or as a side issue,” insists Kakkad. “If it’s to succeed, it’s got to be an absolutely core business process. It’s got to be strategic, it’s got to be central—and it’s got to be data driven. An ill-informed approach to innovation, in short, is an approach that is set up to fail.”

Look at companies such as Apple, where insights gleaned from shoppers in company-owned retail stores are fed right back to the designers working in the lab. Or Unilever, where extensive product testing and focus groups drive development decisions. As such examples aptly illustrate, designers have a clear picture of what they’re looking for before they start searching.

Now, think ‘IT systems’ in the context of innovation, and most manufacturers’ first port of call might be a Product Lifecycle Management (PLM) system. And to be sure, PLM has a lot to offer. But it’s chiefly around managing the nuts and bolts of innovation, rather than the original insights that drive innovation.

And those insights, in Kakkad’s view, come from the wealth of data buried in ERP and CRM systems. Data on which models are selling fastest—and where, and why. Data on best-selling colours, attributes, and styles. Data on what customers and consumers are asking for—and how often those requests can be met. Data on which items are co-ordered with what other items. And so on.

In short, says Kakkad, for every innovation that is brought about through sheer serendipity—such as the accidental discovery of the non-setting glue found on yellow sticky Post-It notes, or penicillin, or polythene—there are many, many more that are driven by research programmes triggered by the knowledge that customers want something better.

And better, what’s more, in certain specific ways—if only a way could be found of achieving that. But how many manufacturers think of their ERP and CRM systems as a tool for gleaning such insights, and so driving innovation?

“Too few,” says Kakkad, simply. “And it’s something that’s holding UK manufacturing industry back.”

There’s more—much more. But to hear it, you’ll have to attend ERP Connect 2011, a free-to-attend event held on the 19th May at Ansty Hall Hotel in Coventry. Have you booked your place? Click here to attend: www.themanufacturer.com/erpconnect