J A N U A RY / F E B RU A RY 2017
CONTENTS
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COVER STORY
2017 Readers’ Choice CGT’s readers have again spoken to help us showcase the consumer goods industry’s preferred technology solution and service providers across 15 key categories. Now in its 17th year, our annual feature presents the vendor lists and accompanying commentary from experts and analysts to help guide decision makers in their efforts to find the right providers to fulfill their business needs in the increasingly competitive CG landscape. 07 METHODOLOGY & DEMOGRAPHICS
|||||||||||||||||||||||||||||||||||||||||||||| Departments 05 E D I T O R ’ S N O T E Big ideas from the Big Show
34 B E S T P R A C T I C E S Consumer goods companies test direct to consumer sales in unique ways
Features S T R A I G H T TA L K :
27 Separating IoT Fact from Fiction 29 Wading through the Trade Promotion Hype
35 B E T W E E N T H E L I N E S SAP’s Mark Osborn looks at key considerations for starting your digital transformation Consumer Goods Technology (USPS 0011-255, ISSN 1530-8421) is published 7 times per year: February, March, May, June, September, October, and December, by Ensemble IQ, 4 Middlebury Boulevard, Randolph, NJ 07869. Subscription rates: $89 for U.S. addresses; $99 for Canadian addresses; $109 for all other addresses. Single copies are $20; add $2 for postage to Canada, or $5 to other countries. For Air Mail, add $65. Copyright 2016 by Ensemble IQ. All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopy, recording or information storage and retrieval system without permission in writing from the publisher. Periodicals postage paid at Dover, NJ 07801-9998 and additional mailing offices. For article reprints & e-prints, please contact PARS International at (212) 221-9595, Fax (212) 221-9195 or email: edgellreprints@parsintl.com. POSTMASTER: send address changes to: Consumer Goods Technology, PO Box 261, Lowell, MA 01853.
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08 CUSTOMER MANAGEMENT 08 Consumer Relationship Management 10 Trade Promotion Management 11 Mobility 11 Retail Execution 12 DIGITAL MARKETING 12 Customer Experience Management 13 Digital Commerce 13 Product Information Management 14 SUPPLY CHAIN 14 Supply Chain Planning 16 Supply Chain Execution 17 New Product Development & Introduction 17 IT INFRASTRUCTURE 18 Enterprise Resource Planning 18 Business Intelligence 20 Demand Data Analytics 21 EXTERNAL RESOURCES 21 Consulting 22 Outsourcing 23 EDITORS’ PICKS 14 Unique Technology Providers to Explore in 2017
MANAGING DIRECTOR AND PUBLISHER Albert Guffanti aguffanti@ensembleiq.com
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I’ve attended the National Retail Federation’s “Big Show” for most of the last 20 years. But my mission, first as a representative of PROMO Magazine, then for the last 14 years on behalf of the Path to Purchase Institute, has always been a lot easier: I’d listen to a few mass retailers speak, find a few shopper-facing technologies that were already in the field (not quite a needle in a haystack, but close), and I’d be done. The rest of the show was for, you know, retailers. The job got a little tougher at this year’s show in January, my first as a representative of CGT. No, NRF’s focus hasn’t changed. All 600-plus exhibitors are still selling their wares to retailers. It’s just that so much of what they offer now has the potential to benefit consumer goods manufacturers as well. And, at the risk of simplifying things too much, it’s all technology-based. That made for a much busier show. Regardless of their primary function, many of the store technologies showcased at the event — at-shelf pricing networks, digital signage, personnel improvement tools, promo-
tion applications, security systems — also have been designed to track and collect shopper data. Heck, now you can even buy yourself a lighting system that sends targeted offers to shoppers and builds traffic heat maps. Yes, it is more than a little ironic that so many shopper-data technologies are hitting the market at a time when e-commerce growth has put the entire retail landscape at risk. But as even Amazon has implied by continuing to experiment with brick-and-mortar stores, a physical retail presence is still necessary (for various, evolving reasons, to be sure); and as the e-tailer’s recent launch of the Amazon Go store suggests, technology will be driving the evolution, or revolution, of the retail industry. So if all this new technology can finally provide the shopper data that has been the missing ingredient in effective manufacturer-retailer collaboration all these years, then the future sounds pretty exciting. And a much tougher three days at the Big Show was well worth the effort. For more coverage of this year’s show, visit consumergoods.com. Ask for Pepper. Peter Breen, Editor-in-Chief
EDITORIAL Editor-in-Chief: Peter Breen pbreen@ensembleiq.com Editor: Alarice Rajagopal arajagopal@ensembleiq.com Contributing Editors: Tim Binder, Jamie Grill-Goodman, Nidhi Madhavan, Patrycja Malinowska, Charlie Menchaca, Samantha Nelson SALES Associate Brand Director: Diana Masurack Mann dmann@ensembleiq.com Director of Business Development: Mike Johnson mjohnson@ensembleiq.com Assistant to Brand Director: Jen Johnson jjohnson@ensembleiq.com EVENTS SVP, Events & Conferences: Maureen Macke mmacke@ensembleiq.com Director, Event Planning: Patricia Benkner pbenkner@ensembleiq.com Director, Event Content: John Hall jhall@ensembleiq.com MARKETING VP, Marketing & Communications: Bruce Hendrickson bhendrickson@ensembleiq.com MARKETING DIRECTOR: Kim Sterling ksterling@ensembleiq.com CIRCULATION Director of Audience Development: Gail Reboletti greboletti@ensembleiq.com Audience Development Manager: Jeffrey Zabe jzabe@ensembleiq.com ONLINE MEDIA Director Product Development: Jason Ward jward@ensembleiq.com Web Development Manager: Scott Ernst sernst@ensembleiq.com Online Project Manager: Whitney Ryerson wryerson@ensembleiq.com ART AND PRODUCTION Corporate Director of Production: Kathryn Homenick khomenick@ensembleiq.com
CGT ADVISORY BOARDS EXECUTIVE COUNCIL Tony Bender Edgewell Personal Care Justin Honaman PRGX, Inc. Michael Forhez Mike Gorshe Accenture Jon Harding Conair Corporation EJ Kenney SAP Doug Rammel BAI Suavecito John Rossi Capgemini Steve Sigrist Newell Brands EDITORIAL Kevin Barnes CIO, Ferguson Enterprises Tony Bender Global CIO, Edgewell Personal Care
Rick Brindle VP, Industry Development Mondelez International Ann Dozier CIO, Southern Wine & Spirits Michael Ferrara CMO, HairUWear Jon Harding Global CIO, Conair Corporation Peter Hatch Sr. Director, Information Management - Demand, Reynolds American Inc. Service Co. Chris Hobson VP Business Systems, VF Corp. Constance Howlett VP, Packaging Operations The Estée Lauder Companies, Inc. Betsey Nohe VP Supply Chain, Morton Salt, Inc.
John Phillips SVP Customer Supply Chain & Global Go-To-Market, PepsiCo Kevin Puppe Senior Director, IT, Johnson & Johnson Doug Rammel VP Corp. Development, BAI Suavecito Steve Sigrist VP Customer Development Operations, Newell Brands Dan Woo Director of E-Business, Nestlé USA Filiz Yavuz VP Business Process Engineering, Perry Ellis International RESEARCH Gene Alvarez Gartner Lora Cecere Supply Chain Insights Michael Forhez Brian Girouard Capgemini
Kimberly Knickle IDC Don Lanham, Hitachi Consulting Meena Surti Patel Cognizant Cheryl Perkins Innovationedge LLC Radha R Mindtree Steve Rosenstock Clarkston Consulting John Rossi Capgemini Sanjay Saigal Infosys Renee Sang Accenture Mark Smith Ventana Research Ben Stiller Deloitte Consulting LLP Hans Kristan Van Delden Strategy& Andrew White Gartner
Creative Director: Colette Magliaro cmagliaro@ensembleiq.com Production Manager: Pat Wisser pwisser@ensembleiq.com Subscriptions: 978-671-0449 Reprints: edgellreprints@parsintl.com, 212-221-9595 CORPORATE OFFICERS Alan Glass Executive Chairman Peter Hoyt President & CEO Rich Rivera Chief Operating Officer Jeff Greisch Chief Brand Officer Len Farrell Chief Financial Officer Korry Stagnito Chief Business Development Officer & President, EnsembleIQ, Canada Ned Bardic Chief Customer Officer/ President of Strategic Platforms Joel Hughes Chief Digital Officer Greg Flores Chief Human Resources Officer
CORPORATE OFFICE 4 Middlebury Blvd, Randolph, NJ 07869-1111 (973) 607-1300 • Fax (973) 607-1395 PRINTED IN THE U.S.A. www.consumergoods.com
CONSUMERGOODS.COM | JANUARY/FEBRUARY 2017 | CGT
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Top Tech Providers for a Hyper-Competitive Marketplace
I
n these modern times, you can’t run a successful, competitive consumer goods business without forging a solid foundation in technology. And you can’t build that foundation without enlisting help from reliable technology and service partners. But which firms do consumer goods professionals favor? From ERP to Retail Execution and every function in between, CGT’s 17th annual Readers’ Choice Survey shines a spotlight on the industry’s preferred solution and service providers. The resulting Top Providers lists in 15 mission-critical categories can serve as a valuable investment guide for your company’s future business and IT decisions.
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BY ALI ORR
In addition, we’ve enlisted help from a powerhouse panel of industry experts to pinpoint how technology is being leveraged to transform five critical business areas: Customer Management, Digital Marketing, Supply Chain, IT Infrastructure and External Resources. (Like we said, no one can do it alone these days.)
Survey Methodology
The Top Providers list for each category showcases the 10 companies (or fewer, in some cases) that received the best overall scores for the solutions and/or services they deliver to consumer goods organizations. Presented in alphabetical order, with the provider selected as “Best in Category” identified at the top, these lists were determined by responses from hundreds of executives and employees who work with these tools daily. To ensure the integrity of the survey, only consumer goods executives — the clients of these providers — are eligible to vote, and only once. (CGT has internal checks in place to detect fraudulent voting activity.) We also ask respondents to vote only in the categories that match their own areas of expertise, whether that’s in supply chain, product development, sales and marketing or general IT. In each relevant category, respondents were asked to identify the provider whose tools or services they currently use. They were then asked to rank their level of satisfaction with that provider on a scale of 1 to 5 (with 1 being “extremely dissatisfied” and 5 being “extremely satisfied”). A company’s total score was then computed by multiplying the number of votes it received in the category by its average user satisfaction rating in that same category. In addition to the list of Top Providers in each category, CGT highlights three companies that received special honors based on the results: ●
●
●
Best in Category: This recognition identifies the provider
that received the highest total score in its category. Customer Experience Leader: This recognition identifies the provider that earned the highest average user satisfaction rating in the category, regardless of the number of votes received. SMB Market Leader: This recognition identifies the provider that received the highest total score in the category from respondents whose companies generate annual revenues of $1 billion or less.
As usual, CGT also presents its “Editors’ Picks” to showcase an additional group of intriguing technology and service providers that aren’t represented in the list, but which nonetheless are doing noteworthy work for the industry.
Survey Demographics Company size by annual revenue:
55%
Greater than $1 billion
45% Less than $1 billion
Area of expertise, all companies: Sales and marketing Supply chain Product development General IT/All of the above
43%
21% 8% 28%
Area of expertise, companies < $1B in annual revenue: Sales and marketing Supply chain Product development General IT/All of the above
43%
18% 11% 28%
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Customer Relationship Management Best in Category SAP www.sap.com
CUSTOMER MANAGEMENT Trey Alexander Partner PwC Strategy& Technology capabilities that enable consumer goods companies to better serve their retail customers are evolving with the times. Trey Alexander, Partner at PwC Strategy&, explains why consumer goods companies are now better positioned than ever to enhance customer management processes — and where there is still room for improvement.
Q
HOW DOES TECHNOLOGY IMPACT BUSINESS PROCESSES IN THE AREA OF CUSTOMER MANAGEMENT?
ALEXANDER: Over the past 10 to 15 years, nearly every consumer packaged goods manufacturer has implemented some form of trade promotion management tool, often with the hope that it would deliver robust customer planning capabilities. But most of these efforts have only delivered trade payments and robust financial control. Customer planning, for a variety of reasons, tends to remain a spreadsheet-based activity. However, TPM solution vendors have continued to enhance their offerings, often leveraging advances in technology, and are now well positioned to focus on customer management. For example, solutions have now advanced to support a full-volume customer plan. Planners typically have the ability to view a projected base forecast and adjust that base for various reasons (customer growth, marketing, etc.). Everyday discounts and trade terms are managed for the total plan rather than being embedded in yearlong promotions. The promotions themselves are now just one component of the comprehensive plan. As a result, tools can
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Accenture CAS
www.accenture.com/cas
AFS Technologies
www.afsi.com
Aptos
www.aptos.com
JDA Software Group www.jda.com
Microsoft
www.microsoft.com
Oracle
www.oracle.com
RW3 Technologies www.rw3.com
Salesforce.com
www.salesforce.com
StayinFront
www.stayinfront.com
‘‘
Best in Category “SAP … has dramatically improved the Mohawk customer experience, adding great value to our business. It helps our reps focus on the most important items for each individual customer, enabling a more personalized conversation.” — BRIAN NOONEY, DIRECTOR OF SALES SOLUTIONS, MOHAWK INDUSTRIES INC.
Customer Satisfaction Leader: RW3 Technologies SMB Market Leader: Microsoft
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4HANK 9OU &OR 6OTING 3TAYIN&RONT "EST IN #LASS
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now enable a more robust planning process. Similarly, customer planning has evolved from a “one size fits all” process. Many past TPM implementations focused on planning the Top 20 customers, the ones that typically represent more than 80 percent of revenue. These processes required lots of details (SKU/week level) for every single planned activity. Unfortunately, configuring a tool to support that level of detail for 20 customers then required the same level of detail for the 300+ other customers. Sales teams beyond the Top 20 were overburdened with entering vast quantities of information, making the quality of that information suspect at best. Now, tools have evolved to support multiple methods of planning. Large customers can be planned in detail where necessary, but smaller customers can be grouped into regions or teams and planned more holistically. While the information for smaller customers may not be as detailed, the information provided tends to be more accurate.
CUSTOMER MANAGEMENT
Trade Promotion Management Best in Category Oracle www.oracle.com
Accenture CAS
www.accenture.com/cas
Adesso Solutions
www.adessosolutions.com
AFS Technologies
TPM solution vendors have continued to enhance their offerings … and are now well positioned to focus on customer management.
www.afsi.com
Exceedra
www.exceedra.com
Nielsen
www.nielsen.com
SAP
www.sap.com
UpClear
www.upclear.com
Q
HOW HAVE SOLUTION AND SERVICE PROVIDERS ADAPTED THEIR OFFERINGS TO MEET NEW DEMANDS AND TRENDS?
ALEXANDER: The continued rise of the digital sales channel has driven a significant amount of change among service providers. One of the more significant changes has been the increase in information available from data providers to help quantify and analyze online sales and behavior. For example, shopper behavior and purchase patterns are easier to track online and can be obtained through several third-party providers. Other service providers make reports available that look at a manufacturer’s product set across online retailers to provide insights on pricing, ratings, reviews, etc. However, it’s still difficult to obtain sales information at the same level of detail that is provided in traditional channels. Consulting is another service area that is adapting rapidly. The major consultants have all launched some form of a digital service offering. Firms mainly seek to help their clients develop end-to-end digital strategies. (Where does the company need to play to be successful? What are competitors doing in this space? What capabilities are needed?) Some firms also focus on building
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Vistaar
www.vistaar.com
Wipro
www.wipro.com
Best in Category “Oracle Demantra helps us to be more efficient with our trade spending so that, for every dollar we spend, we can get more sales.” — BOYD SMYTHE, SENIOR DIRECTOR OF ANALYTICS, PEPSICO/FRITO-LAY
Customer Satisfaction Leader: SAP SMB Market Leader: Exceedra
|||||||||| tailored digital capabilities. For example, firms have hired “user experience” teams that help clients envision new ways of interacting with consumers in a digital marketplace. These engagements often provide prototypes and interactive videos to help sell the concepts internally.
Q
RECENT RESEARCH FINDS THAT IT BUDGETS HAVE INCREASED SLIGHTLY FOR THE FIRST TIME IN MANY YEARS. WHAT ARE THE MOST STRATEGIC TECHNOLOGY INVESTMENTS THAT A CONSUMER GOODS COMPANY CAN MAKE TODAY IN CUSTOMER MANAGEMENT?
ALEXANDER: The most important investment is a focused effort to build strategic insights capabilities. Companies are rapidly evolving to bring all forms of data insights into a single group, supported with appropriate skills and technologies. Today, many of these capabilities are distributed throughout the company, with shadow spend used to solve a particular function’s specific data challenge. A focused insights group can ensure that investments are prioritized and maximized to serve the entire organization.
CUSTOMER MANAGEMENT
CUSTOMER MANAGEMENT
Retail Execution
Mobility Best in Category AT&T www.att.com
Best in Category Salesforce.com www.salesforce.com
Accenture CAS
www.accenture.com/cas
Accenture CAS
www.accenture.com/cas
AFS Technologies www.afsi.com
AFS Technologies
IBM
www.afsi.com
www.ibm.com
Kantar Retail XTEL
Microsoft
www.kantarretail.com/xtel
www.microsoft.com
Oracle
Salesforce.com
www.oracle.com
www.salesforce.com
Retail Solutions Inc.
SAP
www.retailsolutions.com
www.sap.com
Retail Velocity
Spring Mobile Solutions
www.retailvelocity.com
www.springglobal.com
RW3 Technologies
StayinFront
www.rw3.com
www.stayinfront.com
SAP
Verizon Wireless
www.sap.com
www.verizonwireless.com
StayinFront
Best in Category “From fleet and workforce management, machine-to-machine, messaging and remote-access services to mobile security, mobile management tools and consulting, AT&T helps customers mobilize their business processes and has delivered solutions of every scope.”
www.stayinfront.com
Best in Category “[We] use sales force automation software from Salesforce.com to speed and streamline all phases of sales, from lead management to analytics and forecasting.”
Customer Satisfaction Leader: Verizon Wireless
Customer Satisfaction Leader: RW3 Technologies
SMB Market Leader: Microsoft
SMB Market Leader: Oracle
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Consumer Experience Management Best in Category Salesforce.com (including Demandware) www.salesforce.com
Adobe Systems
DIGITAL MARKETING
www.adobe.com
Astute Solutions
www.astutesolutions.com
Bond Brand Loyalty
www.bondbrandloyalty.com
Mike Gorshe Partner Accenture Over the last 10 years, there’s been an explosion of “digital age” brands that identified a need in the marketplace and built a cult following from a low base — and with no retailer customers. Subject matter expert Mike Gorshe explains why technology will undoubtedly help start-up businesses continue to challenge the market and compete head to head with established players.
Q
HOW DOES TECHNOLOGY IMPACT BUSINESS PROCESSES IN DIGITAL MARKETING?
GORSHE: While digital technologies are driving change, consumers are also changing. Going forward, being a successful consumer goods company will have less to do with having any actual physical inventory or infrastructure, and more to do with building a community that connects consumers both with the products they want, and each other, through digital and social platforms. Personalization will be the key to success.
Q
HOW HAVE SOLUTION AND SERVICE PROVIDERS ADAPTED THEIR OFFERINGS TO MEET NEW DEMANDS AND TRENDS?
GORSHE: Over the past decade, we’ve seen a steady stream of disruptive technologies, driven by advances in mobile computing, social media and cloud-based services. Five categories of emerging technologies that have already begun to demonstrate their disruptive powers across the industry are: IoT (Internet of Things), wearables, cognitive computing and machine learning, digital fabrication and digital payments. Successful consumer goods companies are also ramping up their data and analytics capabilities to enable personalized experiences and pricing based on loyalty, purchase history and demographics. They are increasingly utilizing predictive analytics to provide personalized service offerings, and they’re leveraging location-based services to embed themselves within consumer lifestyles.
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Marketo
www.marketo.com
Oracle
www.oracle.com
SAP
www.sap.com
Sitecore
www.sitecore.net
Sprout Social
www.sproutsocial.com
Upside Commerce
www.upsidecommerce.com
Best in Category “The Salesforce Commerce Cloud … enables brands to provide personalized experiences for shoppers that span web, mobile, social and in-store. Brands can deliver completely unified experiences for customers that extend beyond commerce to include marketing, customer service and more.” Customer Satisfaction Leader: Adobe Systems SMB Market Leader: SAP
|||||||||| Some brands are embracing digital technologies to help change the consumer experience. For example, smart stores with connected devices and sensors will give brands a better understanding of in-store consumer behavior to help them optimize marketing, merchandising and operations.
Q
RECENT RESEARCH FINDS THAT IT BUDGETS HAVE INCREASED SLIGHTLY FOR THE FIRST TIME IN MANY YEARS. WHAT STRATEGIC TECHNOLOGY INVESTMENTS SHOULD COMPANIES MAKE IN DIGITAL MARKETING?
GORSHE: Consumers are willing to stop being anonymous and provide more personal information. However,
many brands still don’t have the capacity to handle, and therefore use, big data to their advantage. Manufacturers rely on valuable information, such as the buying patterns of consumers, for marketing purposes. Some companies have global sales figures but may not track who is actually consuming their products. This is a huge opportunity for consumer goods companies, who are now focusing on their e-commerce function to gather the data they need to really make the most of new technologies. But the key to success is communication with the consumer on every level. The consumer has to have a satisfying brand experience from the very beginning to the very end. Consumer goods companies need to make critical investments in their social media strategy now, to ensure that it’s not just a sideline activity but a real source of top-line growth potential. Successful consumer goods companies need to recognize the importance of social
buying and create an integrated approach to fully leverage this channel. It’s not about offering shoppers the same buying experience they receive through traditional e-commerce. It’s about redefining the experience for a new medium, clearly owning the consumer experience, and managing social as you would any potentially profitable sales channel, rather than as an add-on.
DIGITAL MARKETING
Product Information Management Best in Category SAP Hybris www.hybris.com
1WorldSync
www.1worldsync.com
DIGITAL MARKETING
Gladson
Digital Commerce
www.gladson.com
Best in Category SAP
Liaison Technologies
InRiver
www.inriver.com www.liaison.com
www.sap.com
Demandware (part of Salesforce.com) www.demandware.com
Planview
www.planview.com
Riversand Technologies www.riversand.com
Digital River
www.digitalriver.com
Salsify
www.salsify.com
IBM
www.ibm.com
Shotfarm
www.shotfarm.com
Oracle
www.oracle.com
Stibo Systems
Best in Category “With omnichannel commerce solutions from SAP, companies gain more consistent and contextual experiences across touch points; enhanced, more uniform distribution across channels; and more centralized order management and streamlined distribution.” Customer Satisfaction Leader: Digital River SMB Market Leader: IBM
www.stibosystems.com
Best in Category “There are huge cost-saving advantages to having a single order management system around the world, a single content management system around the world, and a single e-commerce system around the world, and SAP Hybris has provided all of those in one product package.”
Customer Satisfaction Leader: Shotfarm SMB Market Leader: 1WorldSync
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Supply Chain Planning Best in Category SAP www.sap.com
SUPPLY CHAIN
Datalliance
www.datalliance.com
E2open (including Terra Technology) www.e2open.com
Exceedra
www.exceedra.com
Jake Barr CEO Blueworld Supply Chain Consulting
(including GT Nexus)
www.infor.com
Technology has become a tipping point for enabling and driving major transformation in the supply chain. Expert Jake Barr explains how technology is reshaping the paradigm for undertaking changes in business processes and how your company should invest in its supply chain.
JDA Software Group
Q
Manhattan Associates
HOW DOES TECHNOLOGY IMPACT BUSINESS PROCESSES IN THE AREA OF SUPPLY CHAIN?
BARR: In the past, slow, incremental modifications were the order of the day on how you would either initiate or implement process change. But recent breakthroughs in a number of areas — demand sensing, concurrent planning, the use of IoT sensor-based feedback loops, and the capability of big data applications to sort, interrogate and identify issues in massive quantities of data — have enabled step changes. Properly combined, such technology capabilities are allowing companies to leap frog [stages that] previously would have taken five to 10 years to accomplish. It’s allowing the concurrent combination of process and technology, as well as major organizational model changes in how work is done. I view this in many ways as an “arms race.” The capabilities make it possible to collapse organizing models while simultaneously offering deeper process control of the work that is proactive exception management and trade-off option-based. Leading-edge firms understand this as a “tipping point,” where you can leverage capabilities to outflank competitors while better serving the market and locking in stronger financial results at the same time.
Q
HOW HAVE SOLUTION AND SERVICE PROVIDERS ADAPTED THEIR OFFERINGS TO MEET NEW DEMANDS AND TRENDS IN THE CONSUMER GOODS INDUSTRY?
BARR: We are witnessing two key trends playing out. First, providers are starting
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Infor Global Solutions
CGT | JANUARY/FEBRUARY 2017 | CONSUMERGOODS.COM
www.jda.com
Logility
www.logility.com www.manh.com
Microsoft
www.microsoft.com
Oracle
www.oracle.com
Best in Category “SAP’s integrated solutions enable proactive supply chain planning information to deliver: greater speed, agility, and accuracy of planning; increased inventory efficiency to reduce costs; and improved balance between demand and supply as markets change.” Customer Satisfaction Leader: Logility SMB Market Leader: JDA Software Group
#1 in Customer Satisfaction for Supply Chain Planning Thank you for naming Logility as Readersâ&#x20AC;&#x2122; Choice for 17 consecutive years!
Worldwide Headquarters: 800.762.5207 EMEA Headquarters: +44 (0) 121 629 7866
www.logility.com
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to embrace the idea of interoperability and problem solving across an end-to-end supply chain process. This, honestly, was merely lip service when promised in the past. The architecture and limitations of the solutions essentially facilitated modular-based problem solving, offering little ability to interject information updates or changes that might be occurring (in “near time”) in an upstream or downstream process and then change how you calculate an option for completing a step of work or scheduling activity, etc. But this has changed dramatically. Best-in-class providers now deliver solutions that let you continually interrogate your current business situation (based on the data flows you can provide) and both monitor and offer intelligent solutions to consider offsetting issues and take advantage of selling opportunities. I’m especially encouraged by how providers are redefining what they see as the boundaries of your supply chain — more specifically, allowing the live incorporation of data flows from suppliers, contract manufacturers, distributors and customers into your problem-solving equations. The second trend is among firms who can’t do this. They are quickly undertaking M&A activities to provide more complete end-to-end supply chain process coverage. I expect this to accelerate.
Q
RECENT RESEARCH FINDS THAT IT BUDGETS HAVE INCREASED SLIGHTLY FOR THE FIRST TIME IN MANY YEARS. WHAT ARE THE MOST STRATEGIC TECHNOLOGY INVESTMENTS FOR THE SUPPLY CHAIN THAT A CONSUMER GOODS COMPANY CAN MAKE TODAY?
BARR: I’m a firm believer that technology investments must follow a clear decision about what step change you’re attempting to deliver. I also strongly believe that you layer on capabilities incrementally — typically best following a “crawl, walk, run” approach. Unfortunately, I see a lot of tactical investments in supply chain technology. This is often due to one of two things. It might be a situation where the company doesn’t have a real supply chain organization with a clear strategy yet. Or, it has a functional desire to address a real near-term need, but doesn’t ask the necessary follow-up questions about how the capability will have to function in a larger context as the business develops the broader capabilities it needs to succeed. Much is made today of supply chain visibility products. But the fact remains that a company that’s blind to where materials, ingredients, co-manufactured items, finished product, etc., are at any given moment in time is really at a major competitive risk. Knowing the information in advance is simply a foundational item in today’s chaotic business environment. Concurrent dynamic planning capability is also a must. Knowing where everything is or that there’s an issue with supply is great, but not being able to spin up and compare trade-off options and solutions, or to involve leadership in these critical business decisions, is an opportunity for a giant “Going Out of Business” scenario over time. Finally, whether you want to admit it or not, cloud-based solutions — both for the first two needs and a myriad of others — are here to stay. They are a smart, effective way to both drop infrastructure and capital expense and concurrently enable a dramatic reduction in the organizational costs to execute processes with excellence.
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SUPPLY CHAIN
Supply Chain Execution Best in Category SAP www.sap.com
Amber Road
www.amberoad.com
Aspen Technology
www.aspentech.com
HighJump
www.highjump.com
Infor Global Solutions
www.infor.com
JDA Software Group www.jda.com
Logility
www.logility.com
Manhattan Associates www.manh.com
Oracle
www.oracle.com
QAD
www.qad.com
Best in Category “[SAP] has helped us raise productivity, reduce costs, improve the customer experience, and become a safer place to work. We are seeing less travel time, fewer unnecessary exits from the forklifts, shorter loading and unloading times, and a more accurate order-picking process.” — VENKAT PARUCHURI, DIRECTOR OF SUPPLY CHAIN IT, DR PEPPER SNAPPLE GROUP
Customer Satisfaction Leader: Manhattan Associates SMB Market Leader: JDA Software Group
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New Product Development & Introduction Best in Category Microsoft www.microsoft.com
Centric Software
www.centricsoftware.com
Dassault Systèmes www.3ds.com
Infor Global Solutions
IT INFRASTRUCTURE
www.infor.com
Oracle
John Rossi Vice President, Consumer Products, Retail & Distribution, Capgemini Consulting
www.oracle.com
PTC
www.ptc.com
SAP
www.sap.com
Selerant
www.selerant.com
Siemens PLM Software
www.plm.automation.siemens.com
Sopheon
www.sopheon.com
Best in Category “Microsoft can help consumer goods companies manage a pipeline of ideas and align them with strategic priorities to bring new and innovative products and services to market rapidly and effectively. [It also helps] to foster a culture of innovation by making it easier for people to connect, share information and work together.” Customer Satisfaction Leader: Oracle SMB Market Leader: Dassault Systèmes
Can you imagine running your business without an ERP system? How about performing demand planning without at least a spreadsheet? How long did the monthly close process used to take? How about manual paychecks? Technology positively impacted all of these areas during the first “Technology Revolution.” At the dawn of a third revolution, industry veteran John Rossi explains how consumer goods executives must prepare with smart IT investments.
Q
HOW DOES TECHNOLOGY IMPACT BUSINESS PROCESSES IN THE AREA OF IT?
ROSSI: In today’s world, you can’t separate IT from the business process or vice versa. All consumer goods companies have technology completely embedded within their critical functions. Technology is required for ERP, planning, trade promotion, shopper experience, human resources — the list goes on and on. Many are working on “digital” or “digital transformation” and mistakenly see this as a separate capability and stream. It is not separate; it needs to be embedded in every aspect of the company. Reaching the shopper and consumer by creating terrific journeys and experiences will change the industry and technology will be a gigantic enabler of this evolution. Functions and processes will change greatly, empowered by a combination of existing and new technologies. And what was the second technology evolution? The Internet’s emergence as a business tool.
Q
HOW HAVE SOLUTION AND SERVICE PROVIDERS ADAPTED THEIR OFFERINGS TO MEET NEW DEMANDS AND TRENDS?
ROSSI: Service providers are experiencing a disruption in their typical models.
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Cover Story
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The ser vice provider of the future must be able to create and enable the end-toend journey, especially for the consumer.
IT INFRASTRUCTURE
Business Intelligence Best in Category SAP www.sap.com
EnVista
www.envistacorp.com
Consumer goods companies themselves cause part of the disruption and their supply chains — i.e., their people — cause another part. Service providers are all touting digital transformation capabilities but, in reality, many have very little digital experience — let alone expertise. Carving out one small portion of a large initiative and calling the entire project “digital” could be construed as deceptive and hurts everyone, especially the service providers who actually do have digital expertise. Service providers are adapting — some quicker than others, and many via targeted acquisitions. These undertakings are great for everyone. The service providers increase their capabilities through targeted acquisitions while the consumer goods industry gets what it needs: truly experienced people. As a consumer goods executive, look for services that have added capabilities — especially in consumer experience; digital marketing and commerce; analytics and insights: and building consumer-driven supply networks. Consumer goods companies are driving another service provider disruption: rationalization. Companies are looking for their service firms to provide more and more capabilities, which lets them
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IT INFRASTRUCTURE
Enterprise Resource Planning Best in Category SAP www.sap.com
IBM
www.ibm.com
Microsoft
www.microsoft.com
MicroStrategy
www.microstrategy.com
Oracle
www.oracle.com
Epicor
Qlik
Infor Global Solutions
SAS
Microsoft
Tableau
Oracle
Teradata
Best in Category “We no longer wanted to live in functional silos. We needed one source of truth. Those factors led us to start the search for a new platform to support our consumer-branded business goals.”
Best in Category “SAP … gave us unprecedented capabilities powered by speed, integration, and innovation, making our business partners more successful.”
www.epicor.com www.infor.com
www.microsoft.com www.oracle.com
— DONNIE STEWARD, CHIEF INFORMATION OFFICER, ACH FOOD COMPANIES INC.
Customer Satisfaction Leader: Oracle SMB Market Leader: Microsoft
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www.qlik.com www.sas.com www.tableau.com www.teradata.com
— MUSTAFA MUSTAFA, DIRECTOR BI AND APPLICATION DEVELOPMENT, FERRARA CANDY COMPANY
Customer Satisfaction Leader: EnVista SMB Market Leader: Microsoft
Cover Story
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‘‘
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The desire for economies of scale and ‘one throat to choke’ is driving the present cycle. reduce the number of vendors they need. The desire for economies of scale and “one throat to choke” is driving the present cycle. We are seeing firms who only provide one major service (such as infrastructure, or application development/ maintenance, or business process outsourcing) under tremendous pressure to provide at least two and often three or four major services. The last major disrupter is the need to provide end-to-end capabilities. Not in the consulting-plus-technologyplus-BPO sense, but in the consumer and customer lifecycle. Service providers can’t just focus on supply chain, or trade promotions, or HR/ finance. The service provider of the future must be able to create and enable the end-to-end journey, especially for the consumer. Service firms providing this level of capability will be the major winners over the next decade. Silos must be eliminated.
Q
RECENT RESEARCH FINDS THAT IT BUDGETS HAVE INCREASED SLIGHTLY FOR THE FIRST TIME IN MANY YEARS. WHAT ARE THE MOST STRATEGIC TECHNOLOGY INVESTMENTS THAT A COMPANY CAN MAKE TODAY IN IT?
20
ROSSI: The most strategic investments are in direct-toconsumer technologies, especially ones related to marketing. For true leaders, e-commerce should be at the top of everyone’s list. Some basic building blocks that are a “must have in the budget” include a consumer data hub and a digital asset management platform. These are important pieces for creating a better consumer experience. Many believe creating this experience is more important for the retailer. But if you want to be a consumer goods leader, it’s important to create the consumer journeys and experiences that can build direct relationships with your shoppers and consumers. In the operational areas, look at technologies related to the IoT to create better data visibility and drive business functions toward using near-real-time data. Having increased visibility, coupled with changing your processes, will create an opportunity to significantly reduce supply chain and manufacturing costs. Lastly, invest in service providers that utilize machine learning to help reduce their labor costs — especially related to support activities. In 2017, that may require funding a few proofs of concept, but these investments will allow consumer goods companies to reduce future technology costs.
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IT INFRASTRUCTURE
Demand Data Analytics Best in Category IRI
www.iriworldwide.com
Dunnhumby
www.dunnhumby.com E2open (including Orchestro) www.e2open.com
IBM
www.ibm.com
JDA Software Group www.jda.com
Market6
www.market6.com
Nielsen
www.nielsen.com
Oracle
www.oracle.com
Retail Solutions, Inc.
www.retailsolutions.com
Teradata
www.teradata.com
Best in Category “IRI’s singular focus is on delivering growth for its clients. In 2016, the company did just that by expanding its innovative analytics capabilities, broadening its partner ecosystem through strategic alliances with leading retail, media and e-commerce companies, and enhancing its technology platform.” Customer Satisfaction Leader: Retail Solutions, Inc. SMB Market Leader: Nielsen
||||||||||||||||||| EXTERNAL RESOURCES
Consulting Best in Category Accenture www.accenture.com
Clarkston Consulting
www.clarkstonconsulting.com
EXTERNAL RESOURCES
Cognizant
www.cognizant.com
Deloitte Consulting www.deloitte.com
Ernst & Young
Simon Ellis Program Vice President, Supply Chain IDC Manufacturing Insights
www.ey.com
Hewlett Packard Enterprise www.hpe.com
Outsourcing and consulting continues to be a robust market in the consumer goods space. Although it might seem that companies would already have outsourced all they can, that doesn’t appear to be the case. Long-time industry analyst Simon Ellis comments on noteworthy new developments in the established external resources market.
Infosys
Q
www.tcs.com
HOW DOES TECHNOLOGY IMPACT BUSINESS PROCESSES ASSOCIATED WITH EXTERNAL RESOURCES?
www.infosys.com
PwC Strategy& www.pwc.com
Tata Consultancy Services Wipro
www.wipro.com
Ellis: Service providers are nothing if not adaptable, and they have moved quickly into the digital transformation domain. In some instances, projects have been “re-categorized” as digital transformation; in other cases, they are new initiatives. Some of these older (although still very relevant) initiatives include digital commerce, global supply networks and mobility. Newer initiatives include customer/consumer experience, connected consumers, digital personalization, and IoT. Regardless, there is a growing realization among many consumer products companies that technology is passing them by and partners are key to both keeping up and deriving competitive differentiation.
Q
RECENT RESEARCH SHOWS THAT IT BUDGETS HAVE INCREASED SLIGHTLY FOR THE FIRST TIME IN MANY YEARS. WHAT ARE THE MOST STRATEGIC TECHNOLOGY INVESTMENTS THAT A CONSUMER GOODS COMPANY CAN MAKE TODAY IN OUTSOURCING AND CONSULTING?
Ellis: Driven in part by both the threat and the opportunity of digital transformation, industries that engage with the consumer are showing an uptick
Best in Category “Accenture has been an exceptional partner to help us with transforming our sales capabilities across several markets. Its collaborative approach and engagement model work well with our culture.” — CRAIG NOWOKUNSKI, VICE PRESIDENT OF SALES, LATIN AMERICA ORGANIZATION, KIMBERLY-CLARK CORP.
Customer Satisfaction Leader: Clarkston Consulting SMB Market Leader: PwC Strategy&
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Cover Story
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The best thing that companies can do is to ensure that they’re prepared, both from a business process and a technology awareness perspective, to adapt and adopt new capabilities.
EXTERNAL RESOURCES
Outsourcing Best in Category Accenture www.accenture.com
Capgemini Consulting www.capgemini.com
Cognizant
www.cognizant.com
Deloitte Consulting www.deloitte.com
HCL Technologies www.hcltech.com
in their appetite for technology adoption. In the consumer products space specifically, we see IT budgets increasing by slightly more than 6% moving into 2017, and we expect to see that reflected in outsourcing and consulting. Digital transformation means different things to different companies, and the projects undertaken in 2017 and beyond will reflect these differing perspectives. The question for the consumer products company is whether to engage in evolutionary projects that drive incremental change versus revolutionary projects that drive disruptive change. Although disruptive
change may seem more appealing initially, the reality is that it’s less predictable and the results are much less clear. In 2017, the best thing that companies can do is to ensure that they’re prepared, both from a business process and a technology awareness perspective, to adapt and adopt new capabilities that will drive business efficiency and effectiveness and will best position them to take advantage of new opportunities that arise quickly and completely. Partnering with a flexible and open-minded outsourcing and consulting partner is an important step in this journey.
Hewlett Packard Enterprise www.hpe.com
IBM
www.ibm.com
Infosys
www.infosys.com
Tata Consultancy Services www.tcs.com
Wipro
www.wipro.com
Best in Category “Accenture works hard to combine the best people with intelligent and secure technology and advanced analytics to help improve revenue and reduce costs for clients. It delivers these integrated capabilities as a service: clients can plug-in and quickly take advantage of the specific capabilities they require to achieve key, measurable business outcomes.” Customer Satisfaction Leader: Hewlett Packard Enterprise SMB Market Leader: IBM
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READERS’ CHOICE
EDITORS’
T
PICKS
he editors at CGT have handpicked a small group of additional technology companies that consumer goods organizations should consider when looking to solve their unique IT and business needs. Their distinctive business models and intriguing offerings — like an artificial intelligence-based personal analyst and a customer identity management tool —
preclude them from fitting snuggly into the existing Readers’ Choice survey categories. But take it from us: Their uncommon, groundbreaking solutions and services deserve some attention when you’re looking for possible game-changing solutions.
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Editors’ Picks
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CPGToolBox
EnterWorks
EXIM Bank supported $2.6 billion in exports from U.S. small businesses.
SPECIALTY: The only TPM solution built on the Salesforce.com platform gives manufacturers of all sizes access to an affordable, feature-rich alternative to managing trade with spreadsheets. NEW IN 2016: CPGToolBox added six new customers to its client roster including Vega, Hanover Foods and Truco Enterprises.
SPECIALTY: EnterWorks’ solution for master data and product information management enables companies to acquire, manage and transform product information into persuasive content that drives sales and new competitive strengths. NEW IN 2016: EnterWorks was named a “Strong Performer” in “The Forrester Wave: Product Information Management Solutions” report in fourth-quarter 2016, earning praise for providing customers with strong reporting capabilities and cloud-architecture flexibility.
Ivy Mobility, Inc.
Eversight
www.janrain.com
SPECIALTY: Eversight delivers “Offer Innovation” solutions that enable manufacturers and retailers to increase trade promotion effectiveness. NEW IN 2016: Eversight began work with its first manufacturer and retailer clients in Europe and its first e-commerce merchant. It more than doubled the total number of CPG clients it serves overall
SPECIALTY: Janrain’s “Identity Cloud” helps clients give their customers safe and seamless digital experiences while generating deep customer insights. NEW IN 2016: Janrain entered the Latin America market in March, bringing its operations into 65 countries worldwide and helping to push the total number of customer identities it manages beyond one billion soon after.
www.cpgtoolbox.com
Cuddle.ai
www.cuddle.ai SPECIALTY: An artificial intelligence-based personal analyst that can integrate a company’s essential data sources to uncover and deliver tailored business insights in the form of bite-sized cards on a smartphone. NEW IN 2016: Parent company Fractal Analytics recently raised $100 million to invest further in Cuddle.ai and other AI — and deep learning-based software.
EdgeVerve
www.edgeverve.com SPECIALTY: TradeEdge is an insightsdriven sales platform that helps global brands maximize visibility as well as accelerate profitable growth in emerging markets. NEW IN 2016: EdgeVerve was mentioned as a “Representative Vendor” in the “Gartner Market Guide for Supply Chain Visibility Software 2016,” which cited the company’s executional visibility.
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www.enterworks.com
www.eversightlabs.com
Export-Import Bank of the United States www.exim.gov
SPECIALTY: A U.S. federal agency, EXIM Bank offers products that protect companies of all sizes from nonpayment by international buyers and help them improve cash flow with working capital loan guarantees. NEW IN 2016: During fiscal 2016,
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www.ivymobility.com SPECIALTY: Ivy Mobility provides a single, fully configurable platform to support direct store delivery, van sales, retail execution, merchandising, distributor management, counter sales and data insights. NEW IN 2016: Ivy now serves customers in 25-plus countries, supporting more than 105,000 endusers and transactions from 5.5 million outlets.
Janrain
L&T Infotech
www.lntinfotech.com SPECIALTY: L&T Infotech provides consulting and technology services around five pillars — IoT, automation, analytics, artificial intelligence and cloud — to help CG companies effectively respond to digital disruption. NEW IN 2016: LTI helped clients in advanced analytics reduce
|||||||||||||||||||||||| DSO (day sales outstanding); in robotics process automation to drive multi-million dollar savings; and in bridging the IT-OT divide via SMART factories and energy management to optimize cost of operations.
NTT Data, Inc.
www.nttdata.com/americas SPECIALTY: NTT delivers a comprehensive suite of solutions, including industry-specific offerings that provide a single point of accountability for all services,
hardware and software. NEW IN 2016: Dell Services was a milestone acquisition in the company’s efforts to help clients navigate digital disruption in today’s markets. The combined company represents a comprehensive services portfolio designed to modernize business and technology.
Pitcher
www.pitcher.com SPECIALTY: Pitcher enables mobile sales and content management for
field sales and marketing teams. Its cloud-based software can make it easier for CPG clients to plan, execute and analyze business meetings. NEW IN 2016: Pitcher received many accolades, including a Stratus Award in cloud computing, an Aragon Research Hot Vendor nod, and Editors’ Choice recognition at the Path to Purchase Expo. The company also earned a patent for the “Sentiment Analysis Module” feature of its sales and marketing enablement platform.
excellence c o m e s s t a n d a r d.
‘‘
Clarkston clearly differentiates themselves by the trust they create and the value they deliver.
’’
Chris Boever EVP, Chief Customer Officer Pinnacle Foods
We make our client’s purpose, our purpose. For 25 years, we’ve provided strategic solutions to leading consumer products companies in the areas of innovation, sales, marketing, supply chain, and technology. With Clarkston, excellence comes standard.
www.clarkstonconsulting.com
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Editors’ Picks
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Tech Mahindra
T-Pro Solutions
Vistex
SPECIALTY: Tech Mahindra helps its global clients (including Fortune 500 companies) transform their businesses to prepare for a connected future. NEW IN 2016: Tech Mahindra can digitize all functional areas of consumer goods companies via solutions in Business Process as a Service platforms: R&D, product development, manufacturing, sales & marketing and supply chain.
SPECIALTY: T-Pro Solutions’ predictive analytics and post-promotion analysis tools empower manufacturers and retailers to control and maximize the return on their promotion investment. NEW IN 2016: Customers are seeing measurable results from using T-Pro Optimum’s trade promotion optimization enhancements, which combine post-event analytics with prescriptive, constraint-based planning.
SPECIALTY: Vistex provides enterpriseclass software to manage trade programs, including promotional and contract pricing, rebates and market development funds to help save time, control costs and drive revenue. NEW IN 2016: Vistex’s “Go-to-Market Suite” trade program application will be available in February 2017. It runs in the cloud and with any ERP to offer deep visibility into program performance. CGT
www.techmahindra.com
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www.t-prosolutions.com
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www.vistex.com
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CGT Straight Talk REALITY MYTH
vs.
SEPARATING IoT FACT FROM FICTION BUILDING OUT CAPABILITIES MIGHT NOT BE AS HARD AS SOME CONSUMER GOODS EXECUTIVES THINK
When it comes to understanding the Internet of Things, you not only need to separate the myths from the reality, but also the facts from the science fiction. IoT technologies offer the potential not only to seamlessly align the entire business enterprise — without, of course, requiring physical connections — but also to link consumer goods manufacturers directly with their end-user consumers. The opportunities to streamline business processes and build stronger relationships are nearly limitless. But that doesn’t mean implementing an IoT strategy has to be viewed as a Herculean task; in fact, many of the basic elements you need to get started have been in place for decades — as we learn in this month’s Straight Talk.
SPONSORS
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C O N T E N T
Separating IoT Fact from Fiction Myth
The Internet of Things is an expensive investment that is still more science fiction than supply chain fact.
Reality
M AT T G U N N Manager, Industry & Solutions Strategy GT Nexus / Infor
gtnexus.com
“The fundamental pieces of the IoT are already here and it doesn’t necessarily require a massive investment in new hardware to get started.”
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Most forward-thinking analysis of the Internet of Things is just that: optimistic predictions that tell us the proliferation of connected devices will reach staggering global numbers in 10 to 15 years. But there’s a lot of empty space between where consumer goods manufacturers stand today and how the industry will reach that hyper-connected reality a decade or so down the road. So how do we bridge the gap between reality and vision, and what’s it going to cost? The good news is that the underpinnings of the IoT have been in place for more than 30 years. You’d be hard-pressed to find a manufacturer who doesn’t use at least some of the basic technology that connects the physical things in the supply chain to this greater digital vision. The bad news — or, at least, the challenge right now — is that most companies lack the ability to handle all the data. The IoT revolution began on June 26, 1974, when the first barcoded product — a pack of Wrigley’s Juicy Fruit gum — was sold
CGT | JANUARY/FEBRUARY 2017 | CONSUMERGOODS.COM
at a Marsh supermarket. Barcodes aren’t very exciting in a world looking ahead to smart devices. But the ability to tag and identify products in a supply chain is essential. In other words, the fundamental pieces of the IoT are already here and it doesn’t necessarily require a massive investment in new hardware to get started. The question is, how do we put all that information to work? Interconnectivity with suppliers and partners across the supply chain is the first step. A cloudbased network approach can connect thousands of nodes in the global manufacturing ecosystem, including devices and things. Most importantly, it helps capture all of this data and turn it into actionable insights. This is where the IoT becomes powerful. Those who have adopted this networked approach to the supply chain — using technology available today — are already realizing some of the promise of the IoT.
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CGT Straight Talk REALITY MYTH
vs.
WADING THROUGH THE TRADE PROMOTION HYPE THINK IT’S TOO HARD TO IMPROVE CAPABILITIES AND PERFORMANCE? THINK AGAIN Trade promotion hasn’t quite been around since the dawn of retailing, it just seems that way — especially when you’re neck-deep in a spreadsheet trying to rationalize program allocations that seem like they haven’t changed in years. You’d think that there’d no longer be any myths surrounding a practice that’s been around here so long, is so critical to the sales process and is so prominent on the corporate expense ledger. But you’d be wrong. And a number of the remaining myths involve the industry’s willingness to treat trade promotion as a necessary evil that’s too costly, too time-consuming or simply too much work to try improving, as we learn in this month’s Straight Talk.
SPONSORS
TM
UpClear
R
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C O N T E N T
Wading Through the Trade Promotion Hype Myth
Predictive analytics requires a tremendous amount of metrics.
Reality
S H E R Y L E B L A S KO Enterprise Accounts Director, FS TPM Division afs Technologies
tpm.afsi.com/
“The account manager only needs to understand two numbers: what is my base, and what Shotfarm, LLC is my Email: info@shotfarm.com lift on deal.” http://www.shotfarm.com
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Account managers are often challenged to forecast additional volume opportunities when planning trade events. To do this, they often look historically, to project what the lift would be based on prior year events. However, challenges arise when they are required to forecast against a new price point or a new performance tactic for which no historical reference is available. Account managers then need to look to Corporate for direction on the impact to incremental volume when considering this new event. But Corporate may not understand the AM’s customer, or may only be able to provide an incremental volume forecast from an unrelated retailer; Corporate often assumes a broad-stroke lift factor for volume forecasting and doesn’t apply any per-retailer methodology. The impact to this type of assumption is that it does not consider consumer motivation to assume that price variances will fluctuate from retailer to retailer. Corporate will often inundate the AMs with an inordinate number of metrics to understand what this projection of
CGT | JANUARY/FEBRUARY 2017 | CONSUMERGOODS.COM
lift will be. In reality, the AM only needs to understand two numbers: what is my base, and what is my lift on deal. In the amalgam, the greatest task is to understand what your base volume is, and there is no fancy calculation or technology that is going to predict that number with 100% accuracy — it is an assumption. So, at the end of the day, what’s required is an agreedupon base number (consumption versus shipment) and a simplistic way to obtain and understand a projected lift number, along with scenario plans or multiple “what if’s” to help determine the right price point. By understanding the lift at multiple price points or tactics, the account manager can understand the combination of price, tactic and spend required to confidently execute plans that will achieve expectations.
TM
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C O N T E N T
Wading through the Trade Promotion Hype Myth
Trade promotion is a “zero-sum” game: if the manufacturer wins, the retailer has to lose (and vice-versa).
Reality
GARY SINGER Principal, Advisory Services Practice Ernst & Young LLP
www.ey.com
“With margins under pressure, trade promotion has become a point of contention rather than collaboration Shotfarm, LLC Email: info@shotfarm.com — yet 35% http://www.shotfarm.com of promotion events are actually winwin for both the manufacturer and retailer.”
Consumer goods manufacturers urgently need to find new ways of making themselves relevant to consumers. Retailers face the same challenge. This is a problem they could solve together. For decades, manufacturers have worked with retailers to give people the products they wanted —and to sweeten the purchase with the right price, a tempting discount or a great deal. Collectively, manufacturers spend around $200 billion each year on trade promotion. But with margins under intense pressure, trade promotion has become a point of contention rather than collaboration. Too often, each side negotiates pricing and promotion as though it were a “zero-sum game,” where a “win” for one side means a “loss” for the other. It doesn’t have to be this way. Last year, EY analyzed data from more than 2,200 promotion events across the U.S. and found that 35% were actually “winwin” — defined as generating incremental profit for both the manufacturer and retailer. Opportunities for both sides to improve their business performance occur more frequently than conventional thinking would suggest. We’ve set out the actions compa-
nies can take to capture these opportunities in a white paper (available at ey.com and consumergoods.com). Two of these actions stand out. First, manufacturers and retailers need to collaborate better; we found that companies are achieving 67% promotion compliance on average — but leading companies are achieving better than 80%. Second, companies need to invest in their data analytics capabilities. According to EY research, only 15% of manufacturers and 17% of retailers feel confident in their use of analytics to make better decisions on pricing and promotion. However, for companies that work with insights that are detailed and reliable, more “win-win” events are possible. In doing so, our analysis shows the potential for manufacturers and retailers to achieve a 10-fold and four-fold increase, respectively, in incremental revenue per promotion event.
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C O N T E N T
Wading through the Trade Promotion Hype Myth
Trade promotion planning is a once-a-year process.
Reality
RICK HALL Global Head, Sales Effectiveness Nielsen
nielsen.com
“If you are currently treating trade promotion planning as an annual event, you are likely not reaching your budget’s full ROI potential.”
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Perhaps the easiest way to evaluate this statement is to question whether once a year is indeed frequent enough to manage what is often the largest line item on your company’s P&L. Imagine balancing your own checkbook and setting your personal budget only once a year. Are there ever any surprises (either good or bad) in your personal finances? Would you really want to just “set it and forget it”? The same holds true for trade promotion planning. Trade promotion planning is not really a one-and-done kind of process; it’s more of a collaborative exchange between two parties, with all the negotiation and back and forth that goes along with that. The retailer has a calendar, and the manufacturer has a calendar, and they’re different. You may have a headquarters-driven annual plan that gets created —with all the anchor events, like movie tie-ins, new product launches, etc. — but that doesn’t mean the process is over once that plan has been defined. Things happen that necessitate a course correction: the cost of goods increases, a new product enters the market, there is a product shortage, the retailer (or manufacturer) decides to respond to a specific competitive activity, and so on. There’s no doubt that it’s worthwhile to plan ahead so you know what’s com-
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ing. But as stated, that doesn’t signal the end of the process. Besides, every plan has a little wiggle room, something around the edges at the very least. For example, the headquartersdriven plan may very well have a builtin allowance for retailer- or accountspecific promotions. Finally, and critically, once the promotions start running, you need to be able to measure performance and react. This requires analytics and tools. And having the right analytics enables you to adjust in real time to make the most out of your finite promotional budget. If you are currently treating trade promotion planning as an annual event, you are likely not reaching your budget’s full ROI potential. Help is available: You can start by benchmarking your current processes against the best in class. Then, with access to powerful analytics and tools, you can maximize the profitability of those everyday decision opportunities that are expected in today’s ever-changing retail environment. It really can be as easy as balancing your checkbook.
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C O N T E N T
Wading through the Trade Promotion Hype Myth I need to invest in a full-blown TPO solution to avoid being left behind.
Reality
THIERRY SOUDEE CEO UpClear
upclear.com
“At its core, TPO is an extension of the TPM process and does not have to be as Shotfarm, LLC complex as Email: info@shotfarm.com http://www.shotfarm.com some might say.”
The definition of “trade promotion optimization” is, as a relatively new concept, still unclear. For some, it refers to total category promotional planning for X number of months or years in the future, while for others it is more focused on “What if?” scenario planning or simply dynamic baselines. In either case, the perception is that a complex and expensive TPO system must be implemented that sits on top of an existing trade promotion management process to keep up with the industry.
TO BE CLEAR: TPO IS, FIRST AND FOREMOST, A PROCESS, NOT A SOLUTION. Do you have to pay exorbitant fees for a custom, standalone TPO solution that depends on good TPM data and gets you, let’s say, 95% of the way? Or can basic analysis, TPM system capabilities, and your internal knowledge get you started quickly at 80%? At its core, TPO is an extension of the TPM process and is not as complex as some might say. So, why not start with embedded TPO built into your TPM process? The starting point for “TPO Light”
is leveraging the knowledge you already have, including existing (clean) promo data, and then making use of vendor capabilities to develop a dynamic baseline, real-time historical promotion benchmarks, and lift factors based on one-part science and one-part common sense. Modern software-as-a-solution TPM options benefit from agile and continuous development and are therefore designed to meet these evolving needs. They make it easy to capture accurate and reliable information. These tools avoid legacy issues such as incompatibility and the inefficiency of integrating yet another system. This embedded “TPO Light” will utilize machine learning to continually improve based on new data and feedback from the people who are closest to the promotion: the account managers. Over time, users will find themselves with an intelligent, “full” solution, without the added costs.
UpClear
R
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REAL-WORLD EXAMPLES OF HOW CONSUMER GOODS COMPANIES AND RETAILERS ARE TESTING DIRECT TO CONSUMER SALES THROUGH UNIQUE CONCEPTS — ALTHOUGH NOT EVERYONE IS QUITE SOLD ON THE IDEA JUST YET.
NIBBLING ON ONLINE FULFILLMENT
In December, Mondelez International tested gifts.oreo.com, an e-commerce website that let holiday shoppers in the U.S. buy festive tins filled with White Fudge Covered Oreo cookies. The buyers simply supplied an email or mobile phone number for the intended recipient, who was then contacted directly to provide a shipping address. Mondelez partnered with Jifiti, a Columbus, Ohio-based e-commerce company that bills itself as a specialist in providing an “online gifting experience.” But for the first time online, it handled fulfillment directly rather than working with a retailer, according to media reports. The company said it would use the learning to
launch more e-commerce programs in other markets. ALEXA SPREADS THE GOOD WORD
HarperCollins Christian Publishing began testing a new marketing channel last December by providing daily inspirational messages through the Amazon Alexa “intelligent assistant” voice control system. Through the new “Devotionals” app, the book publisher is releasing a daily audio clip culled from the works of its stable of Christian authors. Users who are especially inspired by particular clips can simply tell the transaction-capable Alexa to add the related books to their Amazon. com shopping carts. “This is an unprecedented opportunity to gain new exposure and awareness,” said Sally Hofmann, senior vice president of direct-to-consumer sales and marketing. NORDSTROM LOOKS TO PREEMPT RETURNS
In a partnership with prepaid commerce provider CashStar, upscale department store chain Nordstrom in December began offering “Product eGifting,” a service
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56.2% of consumer goods manufacturers still “have no plans to sell directly” to consumers, while 27.4% are already doing so and 16.4% are currently working on a strategy. Not surprisingly, response totals varied significantly based on product category: 75% of non-consumer packaged goods manufacturers said they’re already selling directly, versus just 18% of CPG respondents. However, the ranks of nonbelievers are not as flush as they seem to be based solely on the
CGT | JANUARY/FEBRUARY 2017 | CONSUMERGOODS.COM
that lets holiday shoppers choose a gift that recipients can alter to suit their own preferences. The all-online service lets shoppers choose an item at Nordstrom. com without committing to a size or a color, then provide the intended recipient’s email address. Recipients get an email with a personal message and a description of the gift, for which they choose the size and color. But they also have the option of selecting a different gift or receiving the value of the original selection as a digital Nordstrom gift card — without the sender being notified. STUDY: NOT ALL CGS SOLD ON DTC
According to the “Shopper Marketing Trends Report 2017,”
percentages. Several respondents clarified their response by noting that, while their company literally has “no plans” for direct sales, it is, in fact, investigating the possibility. One even noted that the corporate website actually facilitates direct sales as a way to gather shopper information, but the effort doesn’t reflect a true strategic direction. Respondents whose companies have more definitively dismissed direct sales as a strategic option (at least for now) cited general fulfillment costs, category-specific obstacles (such as refrigerated-food distribution hassles) and regulatory constraints as the reasons behind the decision. Shopper Marketing is a sister publication to CGT. CGT
FOUR STEPS TO STARTING A SUCCESSFUL JOURNEY
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MARK OSBORN VP, Digital Strategy & Business Planning SAP Consumer Products Industry Business Solutions
“Rather than putting digital transformation on hold, CP companies should feel empowered with the resources available to make smaller, but impactful, shifts to their strategy.”
One of the critical steps a company should take in 2017 is to embrace digital transformation. But many companies struggle to define which initiatives qualify as being “digital,” and what steps leadership should take to ensure they’re effectively navigating these unknown waters. CGT spoke with Mark Osborn, vice president, Digital Strategy & Business Planning, SAP Consumer Products Industry Business Solutions, who explained how consumer products (CP) companies can take advantage of digital initiatives to drive their businesses forward.
What is the reasoning at companies that have yet to embrace digital transformation? OSBORN: There seems to be a prevailing sense among
CP companies that embracing digital transformation requires significant investments and disruptive, largescale technology projects. However, this isn’t the case. Embracing digital can begin with simple shifts in strategy that eventually scale into larger initiatives. Look at companies that use an existing channel in a new way, like Frito-Lay, which transformed its Twitter account into a product development channel through the “Do Us a Flavor” campaign. The company solicited flavor recommendations from consumers, thereby increasing sales by 12% while dramatically decreasing product development and launch cycle costs. Often, CP companies look at digitally run businesses and think they don’t have the resources, skill set or time to drive meaningful change within their organizations. Rather than putting digital transformation on hold, CP companies, no matter the size, should feel empowered with the resources available to make smaller, but impactful, digital shifts to their strategy.
Are there different categories of digital transformation? OSBORN: Yes, recently I described four categories of
digital transformation that companies can consider as they embark on their digital journey, all based on varying types of strategic external intent. The first is AD INDEX ACCENTURE..................................36 CLARKSTON CONSULTING ........25
LOGILITY, INC ................................15 SAP................................................. 2-3 STAYINFRONT, INC. ........................9
SOPHEON ....................................... 26 WIPRO LTD .....................................19
“Differentiate.” When a company chooses to differentiate, it is working to find new and innovative ways to set the company apart; often, this can be achieved with a smaller-scale initiative. The Frito-Lay campaign is a great example — it was simply an add-on to practices already in place and helped accelerate product development efforts. The next is “Disturb,” which means to redefine a business process and create a new way to compete. Often this means the company is bypassing traditional channels to engage with customers directly. Dollar Shave Club did this while tackling a well-established category. By approaching the market with a new value proposition, the company was able to shake up the established order, bypassing traditional advertising, promotion and merchandising in the process. Third is “Displacement,” when a company uses digital to redefine itself and the category in which it competes. Nest did this when it expanded beyond its traditional positioning as a thermostat, paving the way for an entirely new category of “smart home” devices. The fourth degree of digital transformation is “Disrupt.” iTunes and Netflix are two companies that disrupted their industries by creating new business models that fundamentally undermined established industry norms.
How should companies begin to approach digital transformation? CP companies have options to consider when it comes to digital transformation — from smaller, tactical investments to larger, strategic investments. Rather than wrestling with the prospect of a complete overhaul, CP companies have an opportunity to approach digital transformation by using these categories to help define what they hope to achieve. By asking “What do we want to achieve” rather than “What do we need to do,” companies will be in a better position to understand what is realistic, how and where they can begin to scale their transformation efforts, and then apply the right technology to assist, accordingly. CGT
OSBORN:
STRAIGHT TALKS AFS TECHNOLOGIES, INC. ...........30 ERNST & YOUNG ...........................31
GT NEXUS, INC...............................28 NIELSEN COMPANY .....................32 UPCLEAR, INC. ...............................33
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