1、A NEW WAY TO SERVE The Big Opportunity for FMCG and Retail How a global requirement to immediately scale digitisation confrmed supply chain as the next customer experience battleground for fast-moving consumer goods and retail 2 Preface The Industrial Revolution lasted more than a century.Businesses

2、 around the world adjusted to new ways of manufacturing and selling.At the same time,consumerswho received more choices than ever beforeadopted new brands and became accustomed to new channels and formats.Through most of this period,incremental improvements steadily increased the efciency of the con

3、sumer markets right up to the 2000s,when a fourth wave fundamentally altered the rules of the road.So what does this mean for us now?Consumers still want choices,just not too many.We also want convenience,customization,personalisation,and localisation.As a result,manufacturers and retailers now fnd

4、themselves at an infection point where the primary goal for making and selling ever more efciently is giving way to an expanded promise,with purpose-driven products,global sustainability,and social responsibility at its core.Driven by the dawn of the internet,emerging and advanced technologies,and e

5、nhanced information processing systems,this most recent wave has accelerated the transformation timelineonce measured in decadesto a matter of months.In tandem,an unforeseen pandemic has exposed the fragility of the global supply chain,built for trading partners,now beholden to the emotions and mind

6、sets of often difcult-to-discern consumers.With the world emerging from lockdown,the combined consumer goods and retail sector has found itself not just at a tipping point but at a point of no return.Consumers who were experimenting with purchasing household essentials online suddenly found this con

7、venience indispensable.With shoppers becoming more technically savvy and demanding,it is now highly unlikely that the world will ever go back to where it was before the pandemic.Whats more likely is that the adaptation curve will accelerate with shoppers becoming far more consequential in everything

8、 suppliers and retailers are concerned with,from raw commodity procurement to process manufacturing to supply chain enablement,merchandising,selling,and after-sale servicing.The Consumer Goods Forum 3 “The shift in purchasing patterns at the start of the pandemic amounted to three to fve years of ac

9、celeration in eCommerce,really in weeks and months.”Brett Biggs,CFO,Walmart What complicates matters further is that neither the digital channel nor the physical store has emerged as the dominant means for shopper satisfaction.Instead,some combination of both,including intermediary routes to market(

10、think BOPIS/curbside pick-up,lockers,and direct-to-consumer)will be in play for the foreseeable future.End-to-End Value Chain 4 The Consumer Goods Forum Serving Todays Always-Online Consumer Todays connected consumers are no longer satisfed with being marketed to.Instead,they expect brands to recogn

11、ise who they are,what they want,and what issues are important to them,including global sustainability,health and wellness,product safety and transparency,social justice,and fair trade.A modern customer experience(MCX)must deliver on each of these fronts,evolving to meet changing needs and preference

12、s in the moment while fulflling our industrys intention for providing quality products that consumers actually need and want.We live in an experience economy:journeys are nonlinear,the shopper is the innovator,and experience defnes value.For brands and retailers,this means putting individual shopper

13、s at the very center of their business models for new product development,supply chain and demand management,promotion planning,merchandising,and customer engagement with greater authenticity.It also means evolving the supply chain by understanding the consumer better,delivering relevance,personalis

14、ation,choice,convenience,and simplicity along the path-to-purchase.This can only be achieved by tightly connecting the supply chain with customer data and touchpoints,leveraging supply chain transparency in concert with an updated,vastly improved customer experience designed not only to sell product

15、s but to build trust.To serve todays empowered consumer,brands must make and sell what shoppers actually want to buy versus sell what they have decided to make.Conversely,retailers must buy what they can sell versus promoting to sell what they just bought.5 End-to-End Value Chain Consumers demand mo

16、re People of all ages have changed the way they work,shop,eat,and live during the pandemic.1 75%of consumers now expect brands to make more of a contribution to their well-being and quality of life.2 69%of consumers say customer service is very important when it comes to their loyalty to a brand.2 8

17、0%of consumers are more likely to make a purchase from a brand that provides personalised experiences.3 1 in 3 customers will quit on you after a single bad experience.4 Digital-savvy retailerssome selling fast-moving consumer goods,others in diferent retail subsegmentshave stepped up by building an

18、d rolling out data-driven experiences distinct from traditional business models.Hybrid retailers like Amazon Fresh combine the convenience of digital commerce with the tangible familiarity of brick-and-mortar stores to embody the phygital movement.Stitch Fix has zeroed in on personalisation with a w

19、ide range of curated fashion,based on customer-specifc preference data,using AI and machine learning to optimise selection options,with the added beneft of ensuring more predictive demand and supply.Pinduoduo,a fve-year-old e-commerce app that turned discount shopping into an online game,has overtak

20、en Alibaba Group as Chinas most popular marketplace with 800 million users in 2020.5 1 Smarter CX:What Consumers Purchased During the Covid-19 Pandemic2 SmallBizGenius:40 Amazing Customer Loyalty Statistics in 20213 Epsilon:The Power of Me The Impact of Personalization on Marketing Performance 4 Min

21、dy Support Outsourcing5 WSJ:How Pinduoduo Beat Alibaba to Become Chinas Top Shopping Site6 The Consumer Goods Forum Resilient Supply Chain,a New Reality For some decades now,the supply chain has been fne-tuned to remove excess,match ever more precisely supply to demand.This has helped organisations

22、improve various processes within the enterprise.However,many brands and retailers still fnd themselves exposed,leaving them vulnerable in meeting unexpected surges in demand,as witnessed in a string of signifcant out-of-stock conditions during the pandemic.The traditional supply chain has been a one

23、-way,linear path.Products went from factories to warehouses,backrooms to shelves.Now,and increasingly,right to our doorsteps.While certainly complex in its own right,the old model was generally more predictable and manageable than the tri-model;a supplier-retailer-consumer ecosystem that trading par

24、tners are only just now beginning to understand the implications of as they pivot for a new era.For example,in the UK,an analysis of 100,000 consumers shopping habits found that only a slight minority of shoppers engaged in stockpiling during the initial COVID-19 outbreak.6 In fact,just three percen

25、t of dry pasta shoppers and six percent of liquid soap buyers took home what could be considered unusual quantities.What is more,only a few extra products were added on average to the signifcant majority of baskets during this period.This relatively minor shift in buying habits,coupled with more fre

26、quent shopping visits,was able to disrupt the just-in-time inventory model,resulting in the temporary shortages that reverberated throughout collaborative supply networks.“While todays supply chains have better visibility and resilience than ever before,they still arent resilient enough.Understandin

27、g the multidimensional nature of risk and creating a resilient supply chain is essential to minimising risk,especially when disruptions seem poised to occur more frequently and with greater severity.”Bart Talloen,VP of Supply Chain Innovation,Johnson&Johnson 6 Kantar:Accidental Stockpilers Driving S

28、helf Shortages in the UK 7 End-to-End Value Chain7 Capgemini Research Institute,The Wake-Up Call:Building supply chain resilience in consumer products and retail for a post-COVID worldFor fast-moving consumer goods companies and retailers,supply chain gaps,such as those experienced in the UK,eroded

29、consumer trust and confdence that their needs,however they might perceive them,would be met.A recent research report authored by Capgemini Research Institute,“The Wake-Up Call:Building supply chain resilience in consumer products and retail for a post-COVID world”surveyed more than 400 executives fr

30、om consumer products and retail companies across 11 countries about the efects of COVID-19,found 63 percent of consumer products organisations and 71 percent of retailers took at least three months for their supply chains to recover from the disruptions.23%of consumer product organisations and 28%of

31、 retailers believe that their supply chain is agile enough to support the organisations evolving business needs.7 The temporary shortages experienced during the early months of the COVID-19 pandemic underscore the need for organisations to strengthen the supply chain through advanced demand-plan-nin

32、g capabilities.In the end,planning needs to explicitly account for the vagaries of consumer behavior under any condition.Capgemini Research Institutes,The Wake-up Call,goes on to say that 68 percent of organisations faced difculties in demand planning due to a lack of accurate and up-to-date informa

33、tion on fuctuating customer demand during the pandemic.To that end,66 percent of organisations plan to segment supply chains according to demand patterns,product value,and regional dimensions post-pandemic.In comparison,54 percent say they will use analytics/AI/machine learning for demand forecastin

34、g to cope with disruptions such as the impact of COVID-19.8 The Consumer Goods Forum In a recent CGT supply chain report,83 percent of surveyed consumer goods executives cited the inability to make rapid adjustments with supply chain partners as a major supply chain obstacle.Some 75 percent stated t

35、hat expanding collaboration with supply chain partners is a high or medium priority supply chain investment area.8 58%of retailers and 61%of consumer products companies say they will increase investments in supply chain digitisation.9 These technologies can help organisations review historical patte

36、rns,select best-ft statistical models,and draw on a variety of inputs and forward-looking variables,such as promotional grids,sell-out data,and environmental factors,to create more accurate demand forecasts with less manual efort.As organisations continue to build maturity,they will also be able to

37、support a planning system that is autonomous and touchlessmeaning that it can identify disruptions,shortages,transportation delays,and any other number of issues and then automatically replan to account for that event.Current and evolving technical capabilities are absolutely essential to the abilit

38、y of fast-moving consumer goods and retailers to weather future disruptions,be they public health events,geo-political issues,or natural disasters.8 Consumer Goods Technology:The Evolving Global Supply Chain Where Do We Go From Here9 Capgemini Research Institute,The Wake-Up Call:Building supply chai

39、n resilience in consumer products and retail for a post-COVID world9 End-to-End Value Chain Investments in supply chain digitalisation,especially cloud computing,by consumer products companies set to increase.Cloud Computing 47%Automation 45%AI 44%IoT/Sensors 43%Robotics 39%Investments in supply cha

40、in digitalisation,especially automation,by retail companies set to increase.Automation 49%Robotics 44%Cloud Computing 43%AI 40%Cybersecurity 40%Source:Capgemini Research Institute,Supply Chain Survey,August-September 2020,N=400 CPR organizations.*Automation-business process automation,robotics proce

41、ss automation.Building a next-generation replenishment algorithm that trading partners can live with A major European grocer wanted to develop a data-driven replenishment algorithm that could predict transaction forecasts across stores.Leveraging machine learning,the retailer was able to segment sto

42、res,determine relevant features,calculate event efects,and clean the data in order to create a next-generation algorithm.The algorithm also considered external variables,such as weather forecasts and local events,to ensure optimal performance.Built with fexibility in mind,the algorithm is equipped w

43、ith a prediction mode for daily use and a calibration mode to reft the model.Model calibration takes less than 10 hours while utilising 16 CPU cores at 100 percent capacity.Outcomes Leveraged 1.6 million rows of historical data to predict 27,944 transaction forecasts daily per store Reduced more tha

44、n 1 million features and interaction terms to just 44 for fnal calibration Analyzed more than 5 million yearly event-store combinations to determine uplift 10 An Empowered ConsumerPaves the Path At the heart of the supply chain is data,structured and unstructured.The former includes inventory-in-tra

45、nsit information;store,SKU,and PLU inventory data,forecast,and past purchase data.Unstructured data isnt new and,until recently,was costly and time-consuming to analyse.There are more unstructured data sources today,thanks to social listening,online search history,that can be leveraged for upstream

46、planning while doing a better job fulflling shopper expectations.10 To enable a true,omnichannel experience,retailers must pool these data sets,unlocking the visibility needed to understand and serve todays and tomorrows shopper.As Walmarts renowned supply chain management has shown,sharing data-dri

47、ven insights across suppliers,warehouses,and stores can help drive down inventory and transportation costs and reduce stock-outs.It is arguable that enabling its supply chain partner network to behave as part of a single frm is among the chief reasons why Walmart has been able to outlive and outgrow

48、 so many of its rivals.But its abundantly clear that this model has served its most loyal customers well for decades.To modernise the consumer experience,this collaborative visibility must now also extend to the whole value chain including the consumer.Todays consumer expects a higher level of trans

49、parency and traceability,matching their interest in knowing where product commodities are sourced from,what labour practices are in place and certifed,and how or even if these products are efciently brought to market.Increasingly,brands and retailers fnd that consumers are altering their purchase pr

50、eferences based on these very points and related issues,including health and safety,social responsibility,inclusiveness,and environmental impact.In fact,the concern for sustainability registered as one of the more prominently measured upticks in consumer sentiment during COVID-19,according to a 2021

51、 Forbes article.11 This fts well with the current trend towards local supply chains,hastened by more aware shoppers.The Consumer Goods Forum 10 Oracle:How Retailers Can Easily Leverage Mountains of Unstructured Data11 Forbes:Sustainability In 2021:Everything Companies Should KnowEnd-to-End Value Cha

52、in“The power of the technology means we have the ability to add human value to the data for augmented intelligence.By having a consumer psychology or a research lens on the data,tools,and technology help us create meaningful insights.”Paul van Gendt,CMI Director for the People Data Center,Unilever12

53、 12 Capgemini Research Institute,The Age of Insights:How Consumer Products and Retail organizations can accelerate value capture from data 11 12 The Consumer Goods Forum Moving from Supply and Demandto Fulflling Shopper Need-States,When and Where They Want Tying together supply chain and customer ex

54、perience data threads can help create a context-aware system that works both up and downstream,from manufacturing through distribution,from the shelf or digital store to any shoppers home.This three-way conversation has the potential to both transform and enhance the interrelationships between buyer

55、-seller-consumer,whether on-premise,through BOPIS,some combination of both,or,where desirable,direct-to-consumer.The basis for this enhanced process solves for:Which products are available by store location at any given time What products are in route,by store or for home delivery When high-demand p

56、roducts may suggest shortages,how do we communicate between and among suppliers,stores,shoppers to ensure out-of-stocks can be better managed,with need-states more immediately satisfed Enabling Efcient andCost-Efective,Last-Mile Delivery While the shift to digital may have accelerated rapidly in 202

57、0,it was not necessarily smooth.During this period,72 percent of retailers and 75 percent of brands faced difculties in switching to digital channelswith delivery being one of the biggest pain points.Online commerce is not just a logistical issueit also adds costs with last-mile delivery services ac

58、counting for 41 percent of overall supply chain expenses.Aside from picking,packing,and delivery,return rates can also be high.Organisations need to rebalance the delivery costs to increase the proftability of online order delivery through automation,optimisation,and collaboration.13 End-to-End Valu

59、e Chain“The company doubled down on its AI modeling,continually retraining its delivery route optimisation algorithms on the latest data.And that means that on a daily basis we run over a billion iterations in which we basically try to optimise our overall delivery schemes and our overall delivery r

60、outes.”Guus Dekkers,CTO,Tesco 14 The Consumer Goods Forum Using Dark Stores as a Delivery Asset Given the signifcant upsurge for eCommerce,retailers may Dark stores have been found to be 23 percent less expensive than consider repurposing a portion of their stores as distribution conventional stores

61、 for same-day deliveries.While operational centers.“Dark stores,”as they have come to be known,are used improvements beneft retailers,the consumer is engaged in a for online order fulfllment and returns,vs.only for on-premise new way with the dark stores as well.Independent operations shopping.and h

62、yper locality enable immediacy and real-time engagement.If deliveries from dark stores increase by 50 percent,proft margins could grow by 7 percent due to lower delivery costs and higher delivery throughput compared to stores while not afecting store operations.15 Starting the Conversation To remain

63、 relevant,brands need to create a more resilient supply chain while serving a more empowered,increasingly demanding consumer.But how?With its pan-global reach and member roster,we see The Consumer Goods Forum as the perfect place to start this discussion.Here,manufacturers,retailers,technologists,an

64、d consultancies have already committed to a core vision for helping to create better lives through better business.Here,we are best arrayed to share and discuss,in an open forum,the following topics:Why this is a pivotal moment for our mission What meaningful change would look like How we might brin

65、g this all about with speed-to-value for all involved A Bold Call to Action Moving forward,we are recommending a broad-based,cross-industry discussion to examinewith radical claritywholly new ways of working together.Of course,for this to work,a critical mass of suppliers and retailers would need to

66、 connect and pool specifed non-competitive data.This outcome will only be possible through candid discussion for a shared vision that begins by asking:1.What business do we really think we are in?2.What is the opportunity cost and beneft for the change we seek?3.What is the cost of not seeking and i

67、mplementing such change?The fast-moving consumer goods and retail sector has performed admirably for decades in providing for the well-being of the worlds population in food production,health and beauty care,and household products.So it is a big step to imagine rethinking the trusted models that hav

68、e served for decades.But,just as some early adopters and disrupters have already demonstrated,one companys bold move in a successful new direction can set a precedent for an entire industry.A near quarter through the 21st century we might ask of ourselves,what is next?At Oracle and Capgemini,we beli

69、eve that intelligent supply ecosystems yield resilient supply networks.Coupling a newly empowered consumer with such a network sets the stage for change we seek.Let us take the conversation we are having today to impact for a brighter tomorrow.A Resilient Supply Chain Network+An Empowered Consumer=A

70、 New Way to Serve RSCN+EC=NWTS End-to-End Value Chain Acknowledgements:David Fleischer,Senior Director Supply Chain,Planning and Optimization Strategy,Oracle Retail Strategy&Solution Management Michael Forhez,Global Managing Director,Consumer Markets Oracle Industry Strategy Group Kees Jacobs,Vice P

71、resident Global Consumer Products and Retail,Capgemini Lindsey Mazza,Global Retail Lead Capgemini Gerald Poncet,Global Senior Director Consumer Markets,Oracle Industry Strategy Group Aaron Shidler,Vice President Oracle CX Cloud Product Development,Industry Solutions Mario Vollbracht,Global Senior Di

72、rector,Consumer Markets,Oracle Industry Strategy Group For more information on building supply chain resilience in the consumer products and retail industry,download The Wake Up Call,a Capgemini Research Institute report.How to Make Your Supply Chain More Agile,Responsive and Secure,a report by CGT

73、and Oracle:https:/ 16 The Consumer Goods Forum About The Consumer Goods Forum(CGF)is a global,parity-based industry network that is driven by its members to encourage the global adoption of practices and standards that serves the consumer goods industry worldwide.It brings together the CEOs and seni

74、or management of some 400 retailers,manufacturers,service providers,and other stakeholders across 70 countries,and it refects the diversity of the industry in geography,size,product category and format.Its member companies have combined sales of EUR 3.5 trillion and directly employ nearly 10 million

75、 people,with a further 90 million related jobs estimated along the value chain.It is governed by its Board of Directors,which comprises more than 57 manufacturer and retailer CEOs.Visit us at: For more than four decades,Oracle has delivered innovation upon which entire industries have been built.Ora

76、cle provides a complete,open,and integrated platform for best-of-breed business applications,cloud services,and hardware that are engineered to work together.Leading retail and fast-moving consumer goods companies use Oracle solutions to accelerate from best practice to next practice,drive operation

77、al agility,and refne the customer experience.For more information,visit our website: Capgemini is a global leader in partnering with companies to transform and manage their business by harnessing the power of technology.The Group is guided everyday by its purpose of unleashing human energy through t

78、echnology for an inclusive and sustainable future.It is a responsible and diverse organization of 270,000 team members in nearly 50 countries.With its strong 50 year heritage and deep industry expertise,Capgemini is trusted by its clients to address the entire breadth of their business needs,from st

79、rategy and design to operations,fueled by the fast evolving and innovative world of cloud,data,AI,connectivity,software,digital engineering and platforms.The Group reported in 2020 global revenues of 16 billion.Visit us at: End-to-End Value Chain 17 For more details contact:Ruediger Hagedorn Director End-to-End Value Chain&Standards The Consumer Goods Forum Michael Forhez Global Managing Director,Consumer Markets Oracle Industry Strategy Group Kees Jacobs Global Lead,CPRD Insights&Data Capgemini Lindsey Mazza Global Retail Lead Capgemini