To consumer product goods company Reckitt, process excellence is the fuel for its broader digital transformation strategy. Its roadmap will embed process mining and execution management throughout its operations, culture and sustainability efforts.
With a Center of Excellence in India, the British multinational focused on health, hygiene and nutrition products such as Lysol, Mucinex and Airborne, the company is looking to deliver value while navigating multiple challenges. The bet: applying technology to drive digitization and process excellence can enable the company to perform well despite demand spikes, supply chain imbalances and inflation.
Reckitt CEO Laxman Narasimhan said on a recent earnings conference call that the company's melding of IT and business strategy will provide the levers to manage economic uncertainty. "We remain confident in the strength of our brands and our ability to use various pricing levers to continue to drive our top line and to help mitigate ongoing cost pressures, allowing us to grow margins next year," said Narasimhan.
Celonis' Execution Management System (EMS) is being deployed across multiple processes ranging from purchasing to accounts receivable and payable and order management. Celonis is providing visibility across Reckitt's SAP infrastructure and recommending data-driven process changes to drive performance. Reckitt has moved to a value-based contract with Celonis to reflect a long-term partnership that gives both parties skin in the process improvement game.
Vijay Purohit, IT Director of Corporate Functions & Automation at Reckitt, said digital transformation is the lens the company uses to view process excellence and the intersection of technology and business strategies. Purohit, who is responsible for process excellence, process mining and process automation, said Reckitt is taking a digital-first approach.
"We are looking at finding efficiencies within the landscape and trying to get to the digital first approach," explained Purohit. "Celonis and the other automation products we use are helping us to get there faster than before. So, this opens up a lot of doors for us, customers, go-to-market strategy and building up new products."
For Reckitt to truly leverage process excellence across the company, scale is critical. For instance, Reckitt has more than 43,000 employees around the world in 60 locations, more than 20 million products sold daily and more than 80,000 vendors.
Purohit's remit is to transform Reckitt's sprawling set of processes, ranging from procurement to financials to order management through automation. Ultimately, Reckitt aims to deploy machine learning and predictive models. Process excellence and execution management has become critical given the uncertainty brought on by the COVID-19 pandemic and its aftermath.
"We started our journey with Celonis a couple of years back, focusing mainly on a couple of functions, which was typically to look at finance and procurement, and exploration was limited due to a limited set of data with a limited agenda," said Purohit. "But as we learned more of what the Celonis EMS is capable of we understood how much more there is to learn and explore."
Once it became clear that Celonis an engine for their value and efficiency program, Reckitt built a Center of Excellence (CoE) in India. Celonis also opened an India office in 2021 to better serve its growing global ecosystem. Purohit said the CoE is looking to build out Reckitt's operating model for the future. For that operating model to be institutionalized, however, process excellence needs to be democratized.
“We are currently centrally-managed, where we are providing the rights of resources and the value propositions to the business, but as we go forward in the hybrid mode, it will be more democratized for the business to pick the efficiency role for their own functions," said Purohit.
The democratization goal also meant that Reckitt's relationship with Celonis had to become strategic. "Rather than having Celonis as a one time project, this is more of a continuous value efficiency improvement program within Reckitt," said Purohit.
Celonis and Reckitt collaborate on identifying value and then realizing it as well as sharing knowledge and best practices. For Purohit, the partnership allows Reckitt to foster a bottoms-up approach to process excellence, starting with various functions. The top-down approach to process excellence is already in play because Reckitt's goal is to improve operating margins to drive greater value.
Purohit said Reckitt is working with Celonis to identify and realize value across multiple functions including human resources, procurement, finance and sustainability.
If successful, Purohit will boot up an "automation-first culture."
Becoming an automation-first culture isn't easy, said Purohit, who added that Reckitt’s automation approach is a work in progress. However, he did offer the following tips.
Bring the business side and technical side together with a vision of standardizing, simplifying and automating as part of a broader agenda for the company.<!— htmlmin:ignore —>
Automation needs to be embedded into every transformation program. "What used to happen is that the transformation programs were run independently on their own with the long-term benefits and programs," said Purohit. Now, we are evaluating our portfolios to see which programs can give us the immediate short-term benefits we can leverage, which can then be reinvested back into programs and transformation on our businesses to get better value."<!— htmlmin:ignore —>
Notch up quick wins and reinvest. There is a cost to big bang transformation projects and it's more effective to take a short-win approach and reinvest. "You need to start now and start getting your returns within, say, six months or on a one year timeline and start building," said Purohit.<!— htmlmin:ignore —>
Grow process excellence talent. Reckitt is taking an IT-led approach to its CoE and pairing technical knowledge with what the company calls "business value architects," explained Purohit. These business value experts have functional knowledge in areas like finance, supply and order to cash. Celonis data scientists, internal resources and consultants churn out data models so the business architects can capture the value.<!— htmlmin:ignore —>
Over time, Purohit argues that process excellence will become part of the culture and Reckitt will be focused on continual improvement.
Purohit's to-do list in the future is extensive, but the big themes are that Reckitt will build up its CoEs on a regional basis, expand definitions of value and expand process mining into sustainability.
"We are also giving flexibility to get more out of our markets and regions. We are shifting the responsibility back to the business to come to us as much as possible about what can be done better in innovation, in automation, in machine learning, in AI, in the whole gamut of digital transformation and linking that with our cloud journey as well," said Purohit.
In addition, Reckitt and Celonis will continue to scout for more value opportunities. "The value-based contract we recently moved to is a fresh model where Celonis will take this value proposition journey with us," said Purohit.
While it's early in the agreement, Celonis and Reckitt are identifying value milestones and specific gains as well as governance models. Key performance indicators (KPIs) will be developed for business functions on a daily, weekly, monthly and quarterly basis. “Prioritization will revolve around the value generated for Reckitt,” said Purohit.
Sustainability will also likely be a key topic in the value-based arrangement between Celonis and Reckitt. Purohit said that sustainability is a thread in every transformation program.
"With respect to process mining, we are building some of the pilots to get an end-to-end view of our value chain and where we can also nudge our buyers on the sustainability indexes. Our intent is to calculate CO2 emissions based on the logistics and how we procure a particular raw material from suppliers," said Purohit. "Celonis can help us identify the vendor which can give us a much more sustainable target compared to any other supplier with a similar profile."
Purohit noted that these sustainability efforts are pilots for now, but "our business is very keen to understand more about Celonis and how it can help our sustainability goals. It's top of our agenda."
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