The Top 5 Priorities for Growth, Efficiency and Agility
For decades CPG companies have experienced fast growth due to relatively
easy expansion and consolidation in emerging markets, net new consumers
and brand globalization. In an increasingly competitive and unpredictable marketplace where consumer demands continue to evolve in different ways in different markets, CPG companies who want to ensure profitable growth are creating a “Triple Advantage”: They are achieving growth by setting the focus on the consumer and brand experience, as well as routes to market across evolving channels. They have a relentless focus on efficiency and they are becoming increasingly agile through evolution to a more modular and networked operating model.
To achieve growth, efficiency and agility, CPG companies are relying increasingly on social, mobile, analytics and cloud (SMAC) technologies and on the ability to connect these to their coe global ERP platforms. In the past, however, many have taken a tactical approach to these technologies – adopting them when they need them and making incremental adjustments where required to core systems and processes.
Rather than approaching the future tactically, industry leaders today are designing "roadmaps" to define a more strategic approach to digital. Doing so helps them shape their investment priorities and decide upon the right focus for IT. For many, a successful roadmap would address the following five imperatives.
A scalable and resilient core
Achieving growth frequently means making the underlying systems work twice as hard. For a shampoo company to double in size, for example, it may need to source twice as much palm oil, run twice the number of manufacturing plans process twice the number of warehouse movements, , process twice the number of sales orders schedule twice the number of trucks and issue twice the number of invoices. Put simply, the CIO cannot afford to neglect the resiliency and efficiency of the core. This may mean underpinning operations with a new platform to handle growing data volumes, modularizing ERP, or centralizing functions as well as focusing on simplification of applications. to maintain efficiency in parallel with expansion.
Modular and flexible architecture
A resilient global core does not mean a rigid one – it needs to flex and adjust to meet evolving needs across markets. One approach taken by industry leaders is to identify a set of markets “archetypes” and tailor their architecture in line with them. Doing so may, for example, mean decoupling front-end and supply chain capabilities – depending on what is needed in each market – leveraging hybrid cloud applications able to plug and play flexibly in the core enterprise solutions and processes. This flexibility enables CPG companies to adjust processes around consumers, being more effective and focus on providing a more valuable customer experience.
Networked and extended ecosystem
Another way of achieving agility is through building collaboration platforms and integration architectures enabling more seamless and stronger relationships with external partners. Industry leaders are learning to use technologies to interact more effectively with partners, employees and suppliers. Today, many are working in extended enterprise networks. To scale quickly into a new market to meet a fleeting opportunity, for example, this may mean leveraging positive relationships with retailers, third-party logistics providers and forwarding agents on the ground.
Digital consumer engagement
To delight consumers with rewarding digital-enabled experiences, CPG companies are learning to understand and engage with them in new ways. This may mean developing new technology capabilities to listen to consumers' needs while managing proliferating channels and touchpoints. To date, this has been a greater concern for retailers than it has been for CPG companies. But it is rising up the agenda fast as CPG companies expand into countries where there is a digital-first agenda. China’s e-commerce market, for example, is much bigger than that in Europe or North America. To grow in this market, CPG companies will need to understand how to engage consumers digitally – whether through Amazon or Alibaba – and to build their brand through digital marking campaigns
Data-driven insights to action
CPG companies need to be able to leverage the power of data. As they collect more and more valuable consumer data, they need the right architecture to monetize that data. Through the Internet of Things, for example, the amount of information that companies can capture is huge. CPG companies need to understand that it’s not just about being able to report on the findings; it’s also about being able to use it to direct organizational activity, such as getting the right information when required to those making major branding and manufacturing decisions. This may mean embedding analytics into core processes while investing in developing advanced analytic, prescriptive and predictive capabilities.
CPG companies are making progress on many of these areas in isolation – the real challenge is in achieving a balanced approach across all five.
Getting it right involves underpinning the strategy with key technology enablers. CPG companies needs to identify the “emerging digital themes” that will drive the organization throughout its journey so that they can shape investment priorities and the right IT focus. Getting all of this right, however, can prove the edge in winning new customers and keeping them into the future.
easy expansion and consolidation in emerging markets, net new consumers
and brand globalization. In an increasingly competitive and unpredictable marketplace where consumer demands continue to evolve in different ways in different markets, CPG companies who want to ensure profitable growth are creating a “Triple Advantage”: They are achieving growth by setting the focus on the consumer and brand experience, as well as routes to market across evolving channels. They have a relentless focus on efficiency and they are becoming increasingly agile through evolution to a more modular and networked operating model.
To achieve growth, efficiency and agility, CPG companies are relying increasingly on social, mobile, analytics and cloud (SMAC) technologies and on the ability to connect these to their coe global ERP platforms. In the past, however, many have taken a tactical approach to these technologies – adopting them when they need them and making incremental adjustments where required to core systems and processes.
Rather than approaching the future tactically, industry leaders today are designing "roadmaps" to define a more strategic approach to digital. Doing so helps them shape their investment priorities and decide upon the right focus for IT. For many, a successful roadmap would address the following five imperatives.
A scalable and resilient core
Achieving growth frequently means making the underlying systems work twice as hard. For a shampoo company to double in size, for example, it may need to source twice as much palm oil, run twice the number of manufacturing plans process twice the number of warehouse movements, , process twice the number of sales orders schedule twice the number of trucks and issue twice the number of invoices. Put simply, the CIO cannot afford to neglect the resiliency and efficiency of the core. This may mean underpinning operations with a new platform to handle growing data volumes, modularizing ERP, or centralizing functions as well as focusing on simplification of applications. to maintain efficiency in parallel with expansion.
Modular and flexible architecture
A resilient global core does not mean a rigid one – it needs to flex and adjust to meet evolving needs across markets. One approach taken by industry leaders is to identify a set of markets “archetypes” and tailor their architecture in line with them. Doing so may, for example, mean decoupling front-end and supply chain capabilities – depending on what is needed in each market – leveraging hybrid cloud applications able to plug and play flexibly in the core enterprise solutions and processes. This flexibility enables CPG companies to adjust processes around consumers, being more effective and focus on providing a more valuable customer experience.
Networked and extended ecosystem
Another way of achieving agility is through building collaboration platforms and integration architectures enabling more seamless and stronger relationships with external partners. Industry leaders are learning to use technologies to interact more effectively with partners, employees and suppliers. Today, many are working in extended enterprise networks. To scale quickly into a new market to meet a fleeting opportunity, for example, this may mean leveraging positive relationships with retailers, third-party logistics providers and forwarding agents on the ground.
Digital consumer engagement
To delight consumers with rewarding digital-enabled experiences, CPG companies are learning to understand and engage with them in new ways. This may mean developing new technology capabilities to listen to consumers' needs while managing proliferating channels and touchpoints. To date, this has been a greater concern for retailers than it has been for CPG companies. But it is rising up the agenda fast as CPG companies expand into countries where there is a digital-first agenda. China’s e-commerce market, for example, is much bigger than that in Europe or North America. To grow in this market, CPG companies will need to understand how to engage consumers digitally – whether through Amazon or Alibaba – and to build their brand through digital marking campaigns
Data-driven insights to action
CPG companies need to be able to leverage the power of data. As they collect more and more valuable consumer data, they need the right architecture to monetize that data. Through the Internet of Things, for example, the amount of information that companies can capture is huge. CPG companies need to understand that it’s not just about being able to report on the findings; it’s also about being able to use it to direct organizational activity, such as getting the right information when required to those making major branding and manufacturing decisions. This may mean embedding analytics into core processes while investing in developing advanced analytic, prescriptive and predictive capabilities.
CPG companies are making progress on many of these areas in isolation – the real challenge is in achieving a balanced approach across all five.
Getting it right involves underpinning the strategy with key technology enablers. CPG companies needs to identify the “emerging digital themes” that will drive the organization throughout its journey so that they can shape investment priorities and the right IT focus. Getting all of this right, however, can prove the edge in winning new customers and keeping them into the future.