WEBCAST
23 FEBRUARY 2011
© 2011 The Consumer Goods Forum, Capgemini, HP. Microsoft . All rights reserved
THE EVOLUTION OF THE FUTURE VALUE CHAIN
2020 Future Value Chain Building Strategies for the New Decade2
© 2011 The Consumer Goods Forum, Capgemini, HP. Microsoft . All rights reserved
2020 Future Value Chain: Objectives and Principles
3 2020 Future Value Chain Building Strategies for the New Decade
Objectives-‐ Bring a collective vision to the CP&R Industry-‐ Ensure the Industry is best prepared to continue to meet the needs of shoppers and consumers in a changing world
Principles-‐ New report every two years -‐ 10-‐year perspective-‐ (Executive) industry expertise via workshops-‐ Not a consultant project
© 2011 The Consumer Goods Forum, Capgemini, HP. Microsoft . All rights reserved
2016: A Vision of the Future Value Chain
80 executive participantsTwo global workshops (Utrecht, NL & Chicago, USA)Follow-up:
2016 Future Supply ChainInformation Sharing reportNew Ways of Working Together
2018: Succeeding in a Volatile Market
130 executive participantsGlobal workshop (Utrecht, NL)Asian workshops:
Hong Kong (Asian region)Mumbai (Indian market)Tokyo (Japanese market)
Follow-up:Succeeding in a Volatile Market
2020 Future Value Chain: The Future Value Chain Genesis
2020: Building Strategies for the New Decade
200 executive participantsGlobal workshops (Chantilly, FR)Regional workshop
GS1 in Europe (Antwerp, BE)Country workshops:
Australia (Melbourne)France (Paris)Netherlands (Utrecht)US (Chicago)Mexico (Mexico City)
4 2020 Future Value Chain Building Strategies for the New Decade
© 2011 The Consumer Goods Forum, Capgemini, HP. Microsoft . All rights reserved
© 2011 The Consumer Goods Forum, Capgemini, HP. Microsoft . All rights reserved
2020 Future Value Chain Framework: Trends, Objectives and Tactics
6 2020 Future Value Chain Building Strategies for the New Decade
© 2011 The Consumer Goods Forum, Capgemini, HP. Microsoft . All rights reserved
TRENDS:
WHAT IS DRIVING OUR OBJECTIVES
7 2020 Future Value Chain Building Strategies for the New Decade
© 2011 The Consumer Goods Forum, Capgemini, HP. Microsoft . All rights reserved
We see rapid changes in societies around the world
2020 Future Value Chain Building Strategies for the New Decade8
Increased urbanization
10 2020 Future Value Chain Building Strategies for the New Decade
Example consequencesShift to smaller-footprint storesNo room for unproductive inventorySupply and logistical challengesNew infrastructures required
Today:Close to 180,000 people move into cities daily, adding roughly 60 million new urban dwellers each year
2015: Doubling of cities > 8 million 2020: 8 Megacities (>20 million)2050: 70% of world population lives in urban centers
Aging population
11 2020 Future Value Chain Building Strategies for the New Decade
Older consumersHave substantial ecomomic powerDevote greater portion of total expenditure to necessitiesMay soon represent majority of voting public in many countries
Example consequencesChanges to business models to meet needs of different populationReview products and processes(e.g. wider aisles, largeprint labels)Shrinking workforce challenges
Middle class is rapidly expanding (mostly in developing regions)2000: 56 % of global middle class in developing countries2030: 93 % of global middle class in developing countries
Increasing spread of wealth
12 2020 Future Value Chain Building Strategies for the New Decade
Example Consequencessource of growth for manufacturers and retailersImplications for availability and prices of commoditiesPotential protectionistic country policies
Economic powers like China, Brazil and India continue to rise
Volatile global economy will remain the norm for coming decade
Shifting of economic power
18 2020 Future Value Chain Building Strategies for the New Decade
© 2011 The Consumer Goods Forum, Capgemini, HP. Microsoft . All rights reserved
changes in consumer and shopper behaviour
2020 Future Value Chain Building Strategies for the New Decade9
Shoppers continue to become more empowered using technologyExplosive growth of mobile features and device convergence
2013: over 2 billion mobile users globally will have purchased via handsets
Crucial role of social media
Increased impact of consumer technology adoption
13 2020 Future Value Chain Building Strategies for the New Decade
Example consequencesGrowth of mobile interaction and commerceConsumer technology used in storesAddressing social communitiesLeveraging huge amounts of dataDealing with privacyBecoming more transparent and collaborative towards shoppers
Example consequencesMore demanding consumersNew service models needed
Increase in consumer service demands
15 2020 Future Value Chain Building Strategies for the New Decade
Exponential growth and adoption of consumer technologies drives new levels of service demandsRise of stronger web-based service economy
Consumers demand 24/7 serviceOnline sales will grow to 25 % to 30% of total retail sales (now: 4 % to 15%)
Growing consumer concern about sustainability
17 2020 Future Value Chain Building Strategies for the New Decade
increases significantlyRegulation carbon footprint increase significantlyConsumers expect governments and companies to play major roleUS Green marketplace grows from $420 billion in 2010 to $845 billion by 2015Food, beverage and personal and household goods sectors particularly exposedWaste becomes key focus sustainability discussion
Shoppers want more healthy products and a healthier lifestyleEmerging consumjer segments like LOHAS(Lifestyles of Health and Sustainability)LOHAS In US are approximately 19% of adult population: 41 million consumersSales from LOHAS expected to quadruple in five years
Increased importance of health and wellbeing
16 2020 Future Value Chain Building Strategies for the New Decade
© 2011 The Consumer Goods Forum, Capgemini, HP. Microsoft . All rights reserved
other changes in our environment
2020 Future Value Chain Building Strategies for the New Decade10
Demand larger than supply2030: World population 8.3 billion
Demand for food +50%Demand for energy +50%Fresh water demand +30%
Scarcity of natural resources
20 2020 Future Value Chain Building Strategies for the New Decade
Example consequencesEnergy revolutionNew Water policiesImpact on food pricesPressures on food quality & Safety
Regulatory pressure expected to increaseHot button areas:
EnvironmentSustainabilityfood safety
Increase in regulatory pressure
21 2020 Future Value Chain Building Strategies for the New Decade
More synchronized value chain with greater visibility and traceabilityImproved collaborationNew supply chain / logistics technologiesInformation transparency
Rapid adoption of supply chain technology capabilities
22 2020 Future Value Chain Building Strategies for the New Decade
Example consequencesNeed to improve visibility and traceabilityNeed to share information over company boundariesNeed to adopt right technologies
Information Technology shifts from indispensable support function to the way to become adaptive
New ways of business due to next generations of ITNew ways of managing business processesMajor new opportunities for innovationFreeing up from current IT constraints
Impact of next-generation information technologies
23 2020 Future Value Chain Building Strategies for the New Decade
© 2011 The Consumer Goods Forum, Capgemini, HP. Microsoft . All rights reserved
OBJECTIVES:
WHAT WE WANT TO ACHIEVE
11 2020 Future Value Chain Building Strategies for the New Decade
© 2011 The Consumer Goods Forum, Capgemini, HP. Microsoft . All rights reserved
Make Our Business More SustainableFrom Niche to Norm
2020 Future Value Chain: Four Strategic Objectives
Optimize a Shared Supply ChainCollaborate Differently, Compete Differently
Engage with Technology-Enabled ConsumersThe Consumer in the
Serve the Health and Wellbeing of ConsumersFocus on Quality of Life
12 2020 Future Value Chain Building Strategies for the New Decade
© 2011 The Consumer Goods Forum, Capgemini, HP. Microsoft . All rights reserved
Success means consumers trust our industryRetailers and brand manufacturers collaborate
Tackling big challenges (e.g., deforestation) Helping consumers understand their role in living an environmentally friendly lifestyle
Common measures, language and consistent messagingHelping consumers understand their roleHelping to make the right decisions, enabling a significant change in consumer behavior
Competitiveness delivered by Brand and store performanceBreakthrough innovations improving sustainability
Working with upstream suppliers to extend our influence over many other contiguous industries
1. Make Our Business More Sustainable: From Niche to Norm
Success will come when consumers begin
to trust our industry
13 2020 Future Value Chain Building Strategies for the New Decade
© 2011 The Consumer Goods Forum, Capgemini, HP. Microsoft . All rights reserved
The 2020 future supply chain reconsiders assumptions
New parameters include:Reduced CO2 emissionsEnergy consumption
Driven by consumers; they are the trigger for an optimized collaborative supply chain flow
2. Optimize a Shared Supply Chain: Collaborate Differently, Compete Differently
Success will come when supply chain optimization is treated from a total
value chain perspective rather than from individual company perspectives
14 2020 Future Value Chain Building Strategies for the New Decade
© 2011 The Consumer Goods Forum, Capgemini, HP. Microsoft . All rights reserved
Consumer technologyChanges lives of consumersChanges shopping journeyIncreases marketplace transparency
ConsumersDemand personalized dialogues and offerings anytime, anywhereEmbrace technology quicker than the industryDigital natives are increasingly big consumer baseDigital immigrants also heavily use consumer technologies
The industryNeeds to figure out how to effectively interactNeeds to be viewed as a trusted source for informationWill be more successful when companies engage consumers in new product and service development
3. Engage with Technology-Enabled Consumers: The Consumer in the
Success will come when we understand how to maintain a true dialogue with consumers via their preferred channels
and technologies
15 2020 Future Value Chain Building Strategies for the New Decade
© 2011 The Consumer Goods Forum, Capgemini, HP. Microsoft . All rights reserved
Health and wellbeing of consumers: physical, emotional, spiritual, intellectual and sustainable wellbeingPositive changes in consumer behavior
Healthy choices available for all budget levels Information/education to make informed choices
Improved availability and quality of water and hygieneReduce diseases and infant mortality rate
To be established via a new way of working together Governments, consumer goods companies, pharmaceutical companies and NGOsEnabling new business modelsEnabling a dialogue to collaboratively work on concrete solutions
4. Serve the Health and Wellbeing of Consumers: Focus on Quality of Life
Success will come when we focus
16 2020 Future Value Chain Building Strategies for the New Decade
© 2011 The Consumer Goods Forum, Capgemini, HP. Microsoft . All rights reserved
TACTICS:
HOW WE WILL ACHIEVE OUR OBJECTIVESAS AN INDUSTRY
17 2020 Future Value Chain Building Strategies for the New Decade
© 2011 The Consumer Goods Forum, Capgemini, HP. Microsoft . All rights reserved
2020 Future Value Chain:
18 2020 Future Value Chain Building Strategies for the New Decade
© 2011 The Consumer Goods Forum, Capgemini, HP. Microsoft . All rights reserved
HOW TO USE THE FUTURE VALUE CHAININ YOUR COMPANY
19 2020 Future Value Chain Building Strategies for the New Decade
© 2011 The Consumer Goods Forum, Capgemini, HP. Microsoft . All rights reserved
You can already be inspired by a lot of good example initiatives across the industry
2020 Future Value Chain Building Strategies for the New Decade20
Unilever Collaborates with Walmart (ASDA) to Create Awareness and Educate Customers on Sustainable Living
METRO Group Develops a Sustainable Aquaculture Program for Fish in the Mekong Delta in Vietnam
Many Consumer Product Companies are Committed Towards Sustainable Production of Palm Oil
Coca-Cola Hellenic Runs Energy-Efficient Plants that Reduce CO2 Emissions
Albert Heijn Uses Dynamic Pricing and Digital Signage to Reduce Waste on Fresh Produce
-and Track and Reduce Energy Usage for Its Products
Make Our BusinessMore Sustainable
Illustrative Examples
Optimize a Shared Supply Chain
Colgate-Palmolive (as many other Companies) Uses Global Data Synchronization to Standardize Business Processes, Drive Efficiency and Enable Faster Innovation
United Biscuits and Nestlé Collaborate to Generate Significant Environmental and Cost Savings
Mars and Kuehne + Nagel Measure and Visualize Order Placement Impact to Gain Environmental Benefits and Improve Efficiency
Danone Works with Carrefour to Improve On-Shelf Availability and to Leverage Supply-Driven Shopper Insights
© 2011 The Consumer Goods Forum, Capgemini, HP. Microsoft . All rights reserved
You can already be inspired by a lot of good example initiatives across the industry
2020 Future Value Chain Building Strategies for the New Decade21
Engage with Technology-Enabled Consumers
Serve the Health and Wellbeing of Consumers
PepsiCo Successfully Engages a Large Customer Base to Interact in Product Development
Coca-Cola in Japan Uses Interactive Vending Machines to Increase Consumer Engagement
through an Innovative Mobile Marketing Solution Offered by O2 Mobile in UK
Unilever and Albert Heijn Jointly Work on Strategic Activation Platforms, Using Shopper Insights to Drive Joint Growth
CFBAI Initiative Seeks to Address the Problem of Childhood Obesity by Self-Regulating Advertising to Children under 12 Years
Product Recall Service of GS1 in U.S. and Canada Has Helped to Build an Efficient Process for Handling Product Recalls
Nestlé Helps Raise Awareness about the Importance of Proper Nutrition and Health and Wellness to Children through Its Healthy Kids Global Program
Hindustan Unilever Limited Educates Rural Women to Enter the Growing Consumer Market in Rural India
Walmart Collaborates to Make Technology More Accessible and Affordable for Small Health Practices
Illustrative Examples
© 2011 The Consumer Goods Forum, Capgemini, HP. Microsoft . All rights reserved
Make Your Business More SustainableWill you drop product lines that are fundamentally not sustainable?Do you have a contingency plan for an unexpected eco-disaster or climatic disruption?Do you have programs in place to address, for example, restrictions on truck emissions, access to urban zones and noise pollution?Are you prepared to transparently report the detail of your
How Robust Is Your Strategy?
2020 Future Value Chain Building Strategies for the New Decade22
Optimize a Shared Supply ChainDo you still see your supply chain as a source of competitive advantage?Would you share a truck or a warehouse with a competitor?Is your supply chain able to cope with the impact of oil returning to its 2008 historical high of $147 a barrel? Or even exceeding that, and hitting $200? Are you willing to share non-competitive information with trading partners including competitors about product movements along the supply chain?
Serve the Health and Wellbeing of ConsumersAre your products creating the health crisis rather than solving it?Are you prepared to meet the new demands of older consumers? Do you know where you will get your labor force once your current labor force retires?How will you efficiently serve the underserved customers in developing markets?
Engage with Technology-Enabled ConsumersDo you know how to survive a negative social network viral fan page?Is your company really differentiating between a
Do you know who else is providing information about your brands or stores to consumers or shoppers?How do you create transparency with consumers while maintaining control?
Q & A
© 2011 The Consumer Goods Forum, Capgemini, HP. Microsoft . All rights reserved
Three Ways Companies Can Leverage the Future Value Chain in their Own Business
1. Apply the Future Value Chain framework inside your company
What strategic objectives should we have inside our company?What tactics do we need to put into place to achieve the objectives?
2. Implement the relevant tactics and ideas from the Future Value Chain initiativeExisting company programs address strategic objectives
3. Challenge yourself to see how robust your strategy really is to:Make your business more sustainableOptimize a shared supply chainEngage with technology-enabled consumersServe the health and wellbeing of consumers
24 2020 Future Value Chain Building Strategies for the New Decade
© 2011 The Consumer Goods Forum, Capgemini, HP. Microsoft . All rights reserved
workshop that will lead you from Inspiration toward a concrete Roadmap
Future Value Chain Discovery-day
Inspiration by concrete business solutions and best-in-class reference examples Blending with company-specific issues and initiatives in an unconventional facilitated processResulting at the end of the day in a high level roadmap that fits your business context
Building Strategiesfor the New Decade
© 2011 The Consumer Goods Forum, Capgemini, HP. Microsoft . All rights reserved
The Consumer Goods ForumSabine RitterThe Consumer Goods Forum+33 1 82 00 95 [email protected]
Marc van der LietThe Consumer Goods Forum+33 1 82 00 95 [email protected]
Contact details
CapgeminiKees JacobsCapgemini+31 653 292 [email protected]
Brian GirouardCapgemini+1 952 212 [email protected]
MicrosoftTed CombsMicrosoft+1 630 725 [email protected]
David BaileyMicrosoft+44 118 909 [email protected]
HPMario VollbrachtHP+1 404 551 [email protected]
www.hp.com/go/retailwww.hp.com/go/consumergoods
2020 Future Value Chain Building Strategies for the New Decade26
www.theconsumergoodsforum.comwww.capgemini.comwww.hp.comwww.microsoft.com
©2011 The Consumer Goods Forum, Capgemini, HP, Microsoft. All rights reserved.
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