In collaboration with
INFORMAL PREVIEW
Not to be distributed
Kees Jacobs, Capgemini, ECR European Leaders Form, 15 october 2015
2 © 2015 Capgemini and The Consumer Goods Forum. All Rights Reserved
Rethinking the Value Chain: New realities in collaborative business
The CGF Board initiated this study to address the new
realities in collaborative business
Board Co-Sponsors
of The Consumer
Goods Forum’s End-to-
End Value Chain &
Standards Pillar
The Board of The Consumer Goods Forum initiated the
strategy and steps that led to the creation of this report.
This paper considers some of the essential ways of
anticipating and addressing profound shifts in consumer
behavior and the industry landscape.
Muhtar Kent
Chairman & CEO
The Coca-Cola Company
Motoya Okada
President & Group CEO
AEON Co., Ltd.
3 © 2015 Capgemini and The Consumer Goods Forum. All Rights Reserved
Rethinking the Value Chain: New realities in collaborative business
New thinking emerged from collaborative visioning
The Consumer Goods Forum is please to invite you, as a leader
in the Consumer Goods Industry, to participate in a workshop that
will help define the future of our business.
5 © 2015 Capgemini and The Consumer Goods Forum. All Rights Reserved
Rethinking the Value Chain: New realities in collaborative business
Macro-trends driving sweeping global change
Aging global population in developed nations
Rising middle class and emerging young consumers in
developing nations
Increased urbanization – Rise of Megacities
Shifting regional and global economic centers
Insufficient Infrastructure investment in developing nations
Resource stresses – water, energy, land, time & more
Population growth of 8.2 billion people by 2025
6 © 2015 Capgemini and The Consumer Goods Forum. All Rights Reserved
Rethinking the Value Chain: New realities in collaborative business
At the heart of it all…the empowered consumer
drives demand
5 billion connected to the web by 2025
More reliance on online social networks for info vs. traditional
communications
Consumers now have greater visibility into businesses and
Share of Voice
Greater focus on sustainability, health and wellbeing
Rising bar for consumer trust
70% of consumers won’t buy from a company they don’t like
90% in the US consider where a product is made before buying
7 © 2015 Capgemini and The Consumer Goods Forum. All Rights Reserved
Rethinking the Value Chain: New realities in collaborative business
Example: How could urban living look like in 2025?
RETHINKING THE VALUE CHAIN
New realities in collaborative
business
Value chain
collaboration
changed
9 © 2015 Capgemini and The Consumer Goods Forum. All Rights Reserved
Rethinking the Value Chain: New realities in collaborative business
We see an evolution of Industry Collaboration
Industry Track (Collaborate)
Best Practices/ Standards
Documentation, Education,
Communication
Guiding Principles and Frameworks
Share Results
• Common Goals & Measures
• Information Sharing*
• EPC
• Data Sync
Connected Business
Information
• Knowledge, Skills & Capabilities
• Incentives & Rewards
• Organisation Design
Prepare People for New World
• Sustainability
• Cross Industry Integration
• Integrated Supply Chain
Share Our Supply Chain
Trading Partner Track (Competitive Advantage)
Strategic Issues Between Trading
Partners
Common Goals, Common Measures
Specific Measures & Priorities
Other Data Sharing
Opportunities
Consumer/
Shopper
Satisfaction• StrategyAlignment
• JAG Framework
Focus on
Consumer
Mid-nineties
Efficient Consumer Response
Mid-2000’s 2015 – 2025
EFFICIENCY GROWTH
Long-term growth by
NEW VALUE
CREATION
Supply-side focus
Demand-side focus
New Ways of Working Together Value Networks
Co
llab
ora
tio
n V
alu
e
10 © 2015 Capgemini and The Consumer Goods Forum. All Rights Reserved
Rethinking the Value Chain: New realities in collaborative business
We need to address the challenges to traditional value
chain models
Move away from traditional linear value chains
to a value network approach
Increasing multi-lateral collaboration across
multiple stakeholders
Opening up new opportunities through the use
of disruptive technologies to enable strategic
and transformational collaboration initiatives
11 © 2015 Capgemini and The Consumer Goods Forum. All Rights Reserved
Rethinking the Value Chain: New realities in collaborative business
Moving from linear Value Chains to
Consumer-driven Value Networks
12 © 2015 Capgemini and The Consumer Goods Forum. All Rights Reserved
Rethinking the Value Chain: New realities in collaborative business
Future Value Networks organised around ageing
consumers
13 © 2015 Capgemini and The Consumer Goods Forum. All Rights Reserved
Rethinking the Value Chain: New realities in collaborative business
Example of an health-related Future Value Network
Other
Retailers Other
Manufacturers Pharmacy
Retailer Pharmacy
Manufacturer
Healthcare
Insurer
Medical
Charities
Healthcare
Provider
Technology
Provider
Choice and
budget
Understand
medication
impacts
Health
monitoring
Health
Advise and
Care
Consumer and
health behaviour
Insights
Based on the input from Stefano Pessina, executive vice chairman
and acting chief executive officer of Walgreens Boots Alliance,
at the 2015 Global Summit of The Consumer Goods Forum
14 © 2015 Capgemini and The Consumer Goods Forum. All Rights Reserved
Rethinking the Value Chain: New realities in collaborative business
This will impact consumer experiences, business
operations and business models
RETHINKING THE VALUE CHAIN
New realities in collaborative
business
Strategic
thrusts for the
industry
16 © 2015 Capgemini and The Consumer Goods Forum. All Rights Reserved
Rethinking the Value Chain: New realities in collaborative business
We prioritised 3 strategic collaboration thrusts where the
industry is underperforming, which will help to establish
new value creation
Transparency Consumer
Engagement Last Mile Other....
Business
Revenue
Consumer
Trust
Operational
Efficiency
Health &
Sustainability
Bu
sin
ess
Drive
rs
Co
llab
ora
tio
n
Prio
ritie
s
Long-term growth by
NEW VALUE
CREATION
enabled by Modular Technology
1 2 3
4
17 © 2015 Capgemini and The Consumer Goods Forum. All Rights Reserved
Rethinking the Value Chain: New realities in collaborative business
The CGF Consumer Engagement Principles initiative
provides a platform to build consumer trust
Consumer engagement
Taking part in a dialogue with consumers,
justifying their trust in the industry
CEP is created and driven by the industry - for the
industry and for the consumer
The CEP is forward looking and a ‘living’ set of principles,
which will evolve over time
It creates balance between value for the business, for the
consumer and for society
CEP links to and builds on existing initiatives, platforms
and policies (such as data privacy laws all over the world)
CEP aims to provide positive and pragmatic guidelines to
build/maintain consumer trust
CEP will help industry with practical resources
1
18 © 2015 Capgemini and The Consumer Goods Forum. All Rights Reserved
Rethinking the Value Chain: New realities in collaborative business
The 7 Consumer Engagement Principles
1. Simple Communications
Communicate in a clear, simple and easy to understand language
2. Value Exchange
Inform consumers about the benefits and value that the use of their
personal information provides to both businesses and consumers
3. Transparency
Inform consumers about what we do with the personal information they provide
4. Control and Access
Enable consumers to easily choose whether and how their personal information
is used; and to have access to information on how their personal information is
used, and the ability to correct it and/or have it removed
5. Ongoing Dialogue
Listen and respond to consumer feedback about the use of their personal data
6. Protection of Personal Information
Protect the integrity, reliability and accuracy of consumers’ personal information
and be open about the status of their personal information
7. Integrity in Social Media
Preserve integrity through proper disclosure of commercial interests in social
media practices such as ratings, recommendations, endorsements and work
with regulatory agencies on alignment of practices and guidelines
1
19 © 2015 Capgemini and The Consumer Goods Forum. All Rights Reserved
Rethinking the Value Chain: New realities in collaborative business
Specific aspects of ingredient provenance and
supplier ethics, as well as environmental and
ecological impact, can become important to
consumers overnight, depending on the public
agenda
Transparency through standardized, industry-wide
approaches to maintain consumer trust
Consumer trust takes decades to
build but can unravel in a day….and
can tarnish industries as a whole…
Trust is volatile
Our ambition is to consistently provide consumers
with exactly the right, accurate information they
need, at the right moment and via the right channels
Meet demand for (new) information hitting the public
agenda via standard, global approaches
Balancing prescriptive rules with principles and
guidelines
Make information online consistent with information
on packaging
Currently this information most often resides in
silos; it needs to be more open and connected
Agree on a clear strategy for unique product
identification and align initiatives and GS1 Standards
that enable provision of transparent information to
consumers
Signal to consumers a strong declaration of a
trustworthy promise.
Successful companies assign a specific executive
role to address transparency
Transparency helps in turning declining trust around Transparency
• Keeping consumers informed about
products’ key attributes, ingredients,
nutrients and provenance as well as their
environmental and societal impacts
This is not a new topic. Our industry has been struggling
to share consistent and accurate product information with
business partners and with consumers for many years now.
We have not been able to solve the issue.. !
2
20 © 2015 Capgemini and The Consumer Goods Forum. All Rights Reserved
Rethinking the Value Chain: New realities in collaborative business
The last mile of distribution: evaluating collaboration benefits
for efficiencies, sustainability and consumer convenience
Consumers expect more when it comes to
availability, convenience and choice, and want
personalized experiences and service levels in
how goods get to them
Conventional retailers with both a physical store
and online presence face the pressure of meeting
consumer expectations of the last mile without
incurring prohibitive costs
How to manage sustainability of the last mile?
Is the last mile of distribution a ‘customer facing
experience’? What does it mean for our brand?
How do we balance independent execution with the
benefits of collaboration in efficiency, costs,
sustainability and consumer convenience?
Questions to think about
Companies that try to defend their traditional models
and assets will not win
Companies such as Amazon and eBay are already
experts in rapid experimentation and the consumer
goods industry needs to learn from them to compete
effectively
There is little evidence or data on which approaches
to collaboration work best where. Analysis is needed
to understand the business case
Building blocks for success
The last mile of distribution – both to the
retail store and to the consumer
• Reconsidering the assumption that it is an
area where companies operate
independently of each other, and exploring
opportunities to collaborate, under certain
circumstances, to improve speed, efficiency
and consumer satisfaction
3
21 © 2015 Capgemini and The Consumer Goods Forum. All Rights Reserved
Rethinking the Value Chain: New realities in collaborative business
Our current technology capabilities are hindering our ability
to respond to the rapid pace of change
IT systems adhere to established business models
and value chains, leading to inflexibility and hindering
agility to change
Data is often trapped - business applications and
organizations create silos that makes it difficult to
share information
The problem is also culture, skills and leadership.
There is genuine resistance to change
The current issue
Need to exploit the next generation of business
technology that is faster to deploy, more agile and
designed to openly share data
The hallmarks of this approach will be:
– Autonomous and cleansed data
– Services-oriented business technology
– Corporate commitment to governance disciplines
Building blocks
Enabled by Modularized Technology
• Business agility and rapid collaboration
require the transformation from rigid and
purpose-built IT structures into multi-use,
component-based technology capabilities
which allow for easy assembling or
dissembling according to business needs.
‘ from train to scooter’
4
22 © 2015 Capgemini and The Consumer Goods Forum. All Rights Reserved
Rethinking the Value Chain: New realities in collaborative business
Way forward for companies
Based on the research-based framework of MIT Centre of Digital Business and Capgemini (‘ Leading Digital’)
‘It is up to individual
companies to rewrite
strategies and adopt
collaborative cultures
so they can generate
value from networked
economies and
consumers’
Va
lue
Ne
two
rk C
ap
ab
ility
Value Network Leadership
The What
The How
Customer
ExperienceOperations
Business
Models
Vision Culture Governance Technology
23 © 2015 Capgemini and The Consumer Goods Forum. All Rights Reserved
Rethinking the Value Chain: New realities in collaborative business
In summary…
Enabled by Modularized Technology
The last mile of distribution
Reconsidering the assumption that it is an area
where companies operate independently of each
other, and exploring opportunities to collaborate
Consumer engagement
Taking part in a dialogue with consumers,
justifying their trust in the industry
Transparency
Keeping consumers informed about products’ key
attributes, ingredients, nutrients and provenance
as well as their environmental and societal
impacts
1
2
3
4
‘Let’s help ensure that future value networks strengthen our industry
and benefit consumers through the challenges that lie ahead’