Changing Priorities in Consumer Goods: Supply Chain is Key to Unlocking the Growth Agenda
In today’s competitive and fast-moving consumer goods sector, market leaders recognize that success relies on their ability to deliver differentiated products that are carefully personalized to satisfy specific market segments, if not the tastes of individual consumers. At the same time, they need to get to grips with direct-to-consumer channels without alienating traditional big-box retailers, and they need to do so while giving consumers a seamless, anytime-anywhere shopping experience.
Yet, consumer goods companies cannot afford to overlook the fundamentals. Ultimately, they still need to get the right product to the right customer at the right time. They need the flexibility to meet sudden spikes or falls in demand and supply. And, they need a flexible channel structure that supports a customer's preference to buy online and return goods in the way that suits them.
A well-managed and flexible supply chain is as important now—if not more—than ever before. Moving from bulk shipments to personalized direct-to-consumer delivery is a massive shift and, if the supporting infrastructure isn’t there, all the product and channel innovation will have been for naught.
The issue is that up to now, supply chain leaders have not always been an integral part of shaping the strategic growth agenda. Primarily, they have been more focused on optimizing costs and improving operational efficiencies. According to Accenture Strategy research, approaching half (42 percent) of Chief Supply Chain Officers prioritize cost efficiency as their top level of improvement[1].
As a result, we don’t see supply chain leaders contributing their expertise as much as they should be—in terms of infrastructure and operational feasibility—to strategic growth discussions. Today, around three in four consumer goods executives think their supply chain and front office are misaligned when it comes to responding to market needs[2]
So what needs to change? As a priority, we see three areas where senior leadership can start bringing supply chain higher up the growth agenda.
How to Become an Adaptive Retailer
In order to achieve the adaptability necessary to spur and sustain growth, Accenture recommends retailers take the following three actions:
1) Rethink the operating model: Digitizing operations and ensuring operating models are fully digital-centric will help enable adaptive retailing, reducing the lead time from product planning to sales, and in turn fuelling growth. Taking it a step further, operating in the cloud will grant businesses access to additional information and technologies.
2) Make "digital inside" a key element of the business strategy: Digital should be infused in retailers’ core business strategy to help reduce operating costs and increase agility. Digital enhances retailers’ ability to gain and use customer insights to other personalized omni-channel experiences that seek to address customer needs. To be digital inside, retailers should embed analytics everywhere, enable talent with digital tools and adopt multi-speed IT, among other tactics.
3) Gain everyone on board: Success boils down to leadership support, change management and governance. Retail businesses need to make sure leadership is aligned – from using data to support business decisions, to fully communicating the business strategy, value drivers and anticipated outcomes. Retailers should also organize a dedicated transition team throughout the transformation to becoming an adaptive retailer.
Methodology
Accenture conducted quantitative and qualitative research across 700 executives in 13 industries and nine geographies to analyze the challenges and opportunities associated with creating cost-competitive operating models and reinvesting in growth. In parallel, Accenture interviewed 65 industry analysts across these industries to understand what external stakeholders measure, value and expect from the companies they cover.
Mohammed Hajibashi:
Mohammed is a retail industry managing director in Accenture Strategy. He is experienced in large/global project transformation programs, supply chain strategy, operating model and business architecture design with great experience in all phases of strategy, business process definition, design, development, implementation and integration. Accenture Strategy shapes the future of its clients, combining deep business insight with the understanding of how technology will impact industry and business models. In doing so, Accenture Strategy focuses on issues related to digital disruption, redefining competiveness, global operating models, and talent and leadership to help drive both efficiencies and growth.
Yet, consumer goods companies cannot afford to overlook the fundamentals. Ultimately, they still need to get the right product to the right customer at the right time. They need the flexibility to meet sudden spikes or falls in demand and supply. And, they need a flexible channel structure that supports a customer's preference to buy online and return goods in the way that suits them.
A well-managed and flexible supply chain is as important now—if not more—than ever before. Moving from bulk shipments to personalized direct-to-consumer delivery is a massive shift and, if the supporting infrastructure isn’t there, all the product and channel innovation will have been for naught.
The issue is that up to now, supply chain leaders have not always been an integral part of shaping the strategic growth agenda. Primarily, they have been more focused on optimizing costs and improving operational efficiencies. According to Accenture Strategy research, approaching half (42 percent) of Chief Supply Chain Officers prioritize cost efficiency as their top level of improvement[1].
As a result, we don’t see supply chain leaders contributing their expertise as much as they should be—in terms of infrastructure and operational feasibility—to strategic growth discussions. Today, around three in four consumer goods executives think their supply chain and front office are misaligned when it comes to responding to market needs[2]
So what needs to change? As a priority, we see three areas where senior leadership can start bringing supply chain higher up the growth agenda.
How to Become an Adaptive Retailer
In order to achieve the adaptability necessary to spur and sustain growth, Accenture recommends retailers take the following three actions:
1) Rethink the operating model: Digitizing operations and ensuring operating models are fully digital-centric will help enable adaptive retailing, reducing the lead time from product planning to sales, and in turn fuelling growth. Taking it a step further, operating in the cloud will grant businesses access to additional information and technologies.
2) Make "digital inside" a key element of the business strategy: Digital should be infused in retailers’ core business strategy to help reduce operating costs and increase agility. Digital enhances retailers’ ability to gain and use customer insights to other personalized omni-channel experiences that seek to address customer needs. To be digital inside, retailers should embed analytics everywhere, enable talent with digital tools and adopt multi-speed IT, among other tactics.
3) Gain everyone on board: Success boils down to leadership support, change management and governance. Retail businesses need to make sure leadership is aligned – from using data to support business decisions, to fully communicating the business strategy, value drivers and anticipated outcomes. Retailers should also organize a dedicated transition team throughout the transformation to becoming an adaptive retailer.
Methodology
Accenture conducted quantitative and qualitative research across 700 executives in 13 industries and nine geographies to analyze the challenges and opportunities associated with creating cost-competitive operating models and reinvesting in growth. In parallel, Accenture interviewed 65 industry analysts across these industries to understand what external stakeholders measure, value and expect from the companies they cover.
Mohammed Hajibashi:
Mohammed is a retail industry managing director in Accenture Strategy. He is experienced in large/global project transformation programs, supply chain strategy, operating model and business architecture design with great experience in all phases of strategy, business process definition, design, development, implementation and integration. Accenture Strategy shapes the future of its clients, combining deep business insight with the understanding of how technology will impact industry and business models. In doing so, Accenture Strategy focuses on issues related to digital disruption, redefining competiveness, global operating models, and talent and leadership to help drive both efficiencies and growth.