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Julia Anderson Smithfield Foods

Jon Harding Conair Corporation

Denny Belcastro Kimberly-Clark

EJ Kenney SAP

Tony Bender Edgewell Personal Care

John Phillips PepsiCo

Pam Brown Del Monte Foods

Kevin Puppe Johnson & Johnson

Justin Honaman Accenture

Doug Rammel BAI Suavecito

Constance Howlett Estée Lauder

John Rossi Capgemini

Michael Forhez Oracle

Steve Sigrist Newell Brands

Mike Gorshe Accenture

Swan Sit Revlon

EDITORIAL Kevin Barnes Ferguson Enterprises

The rate at which technology is transforming business, digital capabilities are revolutionizing the shopping experience, and new and better sources of data are redefining consumer engagement has been staggering. CGT’s 13th annual Visionaries showcase profiles 18 forward thinkers who’ve been helping their organizations stay ahead of the many sea changes confronting the consumer goods industry.



03 E D I T O R ’ S N O T E Building a Smarter Community CGT’s Executive Council co-chairs make an open “call to arms” to the consumer goods industry.

Special Report 2017 SALES & MARKETING REPORT

13 Over the next decade, 90% of industry growth will be captured by companies that successfully engage directly with consumers, according to IDC. That’s all you need to know to understand how critical the right sales and marketing strategies will be to the future of consumer goods companies. CGT and IDC present their eighth annual exploration of current and future marketplace trends.

Tony Bender Edgewell Personal Care Rick Brindle Mondelez International Ann Dozier Southern Wine & Spirits Michael Ferrara HairUWear Jon Harding Conair Corporation Peter Hatch Reynolds American Inc. Service Co. Chris Hobson VF Corp.

Constance Howlett The Estée Lauder Companies, Inc. Betsey Nohe Morton Salt, Inc. John Phillips PepsiCo Kevin Puppe Johnson & Johnson Doug Rammel BAI Suavecito Steve Sigrist Newell Brands Dan Woo Nestlé USA Filiz Yavuz Perry Ellis International

RESEARCH Gene Alvarez Gartner

Don Lanham Hitachi Consulting

Lora Cecere Supply Chain Insights

Meena Surti Patel Cognizant

Michael Forhez Oracle

Cheryl Perkins Innovationedge LLC

Nona Cusick Capgemini

Radha R Mindtree

Kimberly Knickle IDC

Steve Rosenstock Clarkston Consulting

Consumer Goods Technology (USPS 0011-255, ISSN 1530-8421) is published 7 times per year: January/February, March, May, June, August, 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. Reprints, permissions and licensing, please contact Wright’s Media at or (877) 652-5295. POSTMASTER: send address changes to: Consumer Goods Technology, PO Box 261, Lowell, MA 01853.




Join Us in Building

EDITORIAL Editor-in-Chief: Peter Breen Editor: Alarice Rajagopal Contributing Editors: Tim Binder, Jamie Grill-Goodman, Nidhi Madhavan, Patrycja Malinowska, Charlie Menchaca, Samantha Nelson

a Smarter Community

EVENTS SVP, Events & Conferences: Maureen Macke Director, Event Planning: Patricia Benkner Director, Event Content: John Hall

leadership in our journey. We recently increased the size of the EC, which is now stacked with thought leaders and business practitioners who are committed to transformational business gains. (See the masthead on page 2 for the list of members.)

MARKETING VP, Marketing & Communications: Bruce Hendrickson MARKETING DIRECTOR: Kim Sterling CIRCULATION Director of Audience Development: Gail Reboletti Audience Development Manager: Jeffrey Zabe ONLINE MEDIA Director Product Development: Jason Ward Web Development Manager: Scott Ernst Online Project Manager: Whitney Ryerson ART AND PRODUCTION Corporate Director of Production: Kathryn Homenick Creative Director: Colette Magliaro Production Manager: Pat Wisser Subscriptions: 978-671-0449 Reprints:, 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 President of Enterprise Solutions/Chief Customer Officer 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. MEMBER

The EC’s renewed energy and commitment to profound business improvements place it at an inflection point to have material influence in the marketplace. We sincerely seek your contributions, questions and input to help us respond to the vast opportunities available at the intersection of consumer goods and technology. Here’s the landscape as we see it: A Smart Community Makes the Difference. Our community thrives when we have smart, open, transparent collaboration. Today’s business environment reflects increasing technology complexity and clutter. Our individual operating settings and our retail partners’ requirements for insights/data are ever expanding. Bold, unfettered dialogue on what is and isn’t working can make all the difference. CGT’s publications and events are among the few distinct information sources and communities that can foster this dialogue. Through an expanded, intentional effort to contribute and leverage this community, the business and professional impact can be significant. Conversely, not tapping into available resources for insights will impede even the bestcoordinated efforts at business development.

In this unique space, we can work together to create a dynamic alignment of industry “know how” and technology deployment that can be an extraordinary accelerant to business growth and profitability. The question isn’t whether we need to align to understand technology innovation, but how we can better align? Embrace Necessary Change.The CG industry is gearing up for changes and adaptations in distribution strategies and evaluation of key measures. Our retailers’ focus on comp-store performance and sales per square foot, while still important, is now measured side-by-side with total traffic, omnichannel gains, inventory productivity, and reduction in vendor turn times. The best CG, technology and consulting firms will equip their teams to capture insights and quickly respond. The EC is on the front line of these efforts to understand effective approaches and learn from failures. Many changes will be taking place, but we will be there to capture the results, identify the trends, and uncover the “voice of the shopper” to fully understand future business priorities and opportunities. Strategy Matters. Sound strategic direction stems from thoughtful attention to the business horizon. The technology horizon is where CGT and the EC will seek to exceed. CGT’s foundational core of understanding technology innovation, effectively applying that technology, recognizing competitive strategies and identifying emerging trends can be a tremendous resource in the development of your own strategic guideposts. Our aim is to pool resources, experiences and our passion for practical innovation to strengthen the community’s strategic capabilities. We’re confident that, with your help, we can build an even stronger environment of collaboration and thought leadership. Steve Sigrist Newell Brands

John Rossi Capgemini

PICTURED ABOVE: Julia Anderson, Michael Forhez, Constance Howlett, Steve Sigrist, Tony Bender, Kevin Puppe, Albert Guffanti, John Phillips, Justin Honaman, John Rossi, Mike Gorshe



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SALES Associate Brand Director: Diana Masurack Mann Director of Business Development: Mike Johnson Assistant to Brand Director: Jen Johnson

As co-chairs of CGT’s Executive Council, we seek your active participation and


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By definition, a “visionary” is someone who “thinks about or plans the future with imagination or wisdom.” Although the executives presented here are chock full of imagination and wisdom, the biggest challenge they often face is getting others to jump on the bandwagon and get behind a new way of thinking, a new technology solution or a revolutionary process change. Whether new to their roles or well entrenched at their organizations, there is one recurring theme in all of their efforts: change. The rate at which technology is transforming the business, digital capabilities are changing how consumers shop, and new and better sources of data are arising, has been staggering recently. Fact of the matter is that anyone can have a vision. But it’s how the following individuals are driving change in their own unique ways that truly makes them Visionaries.


Julia Anderson Chief Information Officer SMITHFIELD FOODS

21 months with company and in current role

Vision in Action: Anderson has helped align Smithfield’s business and technology investments into a process with governance, communication and change leadership that has “simplified how we make decisions and deliver against program and company goals,” she says. “We have buy-in on our priorities, and when we need to address a new competing program, such as an acquisition or change of partner or service provider, we’re able to quickly assess the impact and make a recommendation … to gain alignment on the best course of action.” On the Horizon: As Smithfield completes its IT transformation to align with key business areas and move all applications to the cloud, the company can now be more agile. With this newfound agility comes better data, insights and analytics to help drive smarter business decisions. “As we complete the rollout of our ERP, we will move to digitize our front office as well as further automate our internal processes and expand our use of information to drive efficiency and simplification,” says Anderson. Favorite App: The camera. “What a great thing to have the ability to snap a picture and then share it immediately,” she says. “A picture is worth a million words.” Leadership Philosophy: Anderson’s strategy is to contribute to overall business objectives and know where stakeholders and associates are on the journey toward realizing the company’s goals. “Being able to articulate and communicate the reasons for change, and to take the time to listen to all levels in the organization as well as external partners, is the critical path to growth.” Finding Inspiration: “If we don’t change, we will be passed by. The rate at which technology is emerging and becoming affordable and available is something I stay focused on.” Advice for the Next Gen: “Put yourself in the shoes of others. Doing this allows many things to become clear, and a little empathy can go a long way in any situation involving change.”


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Tony Anzovino

5 years with company and in current role

Vision in Action: As VP of global sourcing for apparel maker Haggar, Anzovino is focused on “aligning the goals and strategies of our team, consolidating our vendor base and making huge improvements to our overall garment quality.” Among his proudest accomplishments at Haggar has been continuing to increase the sourcing team’s “Apparel Intelligence Quotient.” “This allows us to make better decisions and understand the needs of both our customers and our factories,” he explains. Elsewhere, “We’ve saved 125 million water bottles from recycling by converting them to a yarn” that is woven into the fabric used for Haggar’s Eclo Stria — which currently is the No. 1 selling dress pant in the U.S. “He has been able to build and reshape a stronger and more driven team than ever before,” noted the Haggar colleague who nominated Anzovino for recognition. On the Horizon: Anzovino is looking toward “new product launches that capitalize on our fabric and garment construction development, as well as finding a way to use more sustainable yarns.” Both efforts will seek to deliver incremental sales and increased brand awareness. Favorite App: “It’s probably my Formula 1 app, which allows me to follow the races in real time!” Leadership Philosophy: “I never ask the team to do something I wouldn’t do, and I’m always pushing them to be better,” he explains. “We’ve read Sun Tzu’s ‘The Art of War’ together several times and have dissected each verse. It’s really interesting to hear everyone’s take on each one.” Finding Inspiration: “There are so many quotes. Don’t get attached. Don’t screw up. Those are the ones my friends give me. The one I give the team is that there are only two things we control: our effort and our attitude.” Advice for the Next Gen: “Understand how competitive the field is, and how quickly technology is changing things. The industry is changing daily.”

Leadership Philosophy: Early in his life, Belcastro was heavily influenced by the game of baseball, which promotes building individual skills but also relying on the team. “My philosophy is grounded in the fundamental themes of servant leadership and the development of people as well as the overall team,” he says. Finding Inspiration: “A quote by legendary college basketball coach Jim Valvano states, ‘If you laugh, you think and you cry, that’s a heck of a day!’” Belcastro always looks for opportunities to apply this motto to key situations. Advice for the Next Gen: “With the advent of technology, the next generation of industry leaders will learn and develop at a much faster pace, spending shorter periods of time in roles than my generation did.” Therefore, Belcastro recommends gaining experience in different disciplines, like finance, marketing and supply chain. “Even if it’s not a promotion, grab it. Seek out both mentors and sponsors for guidance and direction.”

Alan Boehme Dennis (Denny) Belcastro

6 years with company; 4 years in current role

2 years with company and in current role

Vision in Action: Belcastro is no stranger to the CG industry: He has 40+ years of experience with Nabisco/Kraft Foods and Hillshire Brands/Tyson Foods, and even a couple of years with the nonprofit GMA in Washington, DC. Belcastro’s current role is a new position created to help Kimberly-Clark raise its level of collaboration with trading partners and industry associations, engaging in key issues and opportunities that ultimately will better serve the consumer. On the Horizon: Everything that Kimberly-Clark does — from helping parents care for their families to watching out for the planet — is part of the company’s vision to provide essentials for a better life. “For our business to succeed, we must continue to care about the future of our communities and our planet on sustainability. We’re focused on building a variety of new skills and capabilities within the organization,” he says. Favorite App: Belcastro cites iTunes as his most-used app. “However, I’ve gained a high level of appreciation for Evernote, a virtual notebook.”

Vision in Action: Boehme was instrumental in fast-tracking “The Bridge,” Coca-Cola’s commercialization program for start-up technology companies that provide solutions for consumer engagement, retail, supply chain, marketing innovation or health & wellness. (The program went from concept




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to reality in just 90 days.) Now a partnership with Turner Broadcasting System and Mercedes-Benz, The Bridge is “a win-win scenario for everyone in the ecosystem: corporations, start-ups, investors, incubators, accelerators and local communities,” Boehme says. Since joining the company (from ING) in 2011, Boehme has also served as CIO for global customer and commercial activities and IT, and has been responsible for global enterprise architecture for both Coke and the Coca-Cola Global Bottling System. He also has been helping Coca-Cola move to the cloud globally, working to overcome the many legal, regulatory and security issues that make the technology implementation even more complex. “He has that rare combination of business acumen, creativity, discipline and ability to complete complex initiatives. That makes him a scarce commodity in the business world today,” according to one LinkedIn colleague. On the Horizon: Boehme will be further expanding The Bridge program to find new and more engaging ways to connect with customers and consumers, and to scale the capabilities of start-ups to Coca-Cola’s global ecosystem. Favorite App: “I have two., which is from the Bridge program, is a fun fan engagement app. The other is Accompany, which offers a new way to manage your business relationships.” Leadership Philosophy: “I think listening is a forgotten art. But it’s something we all need to do more of to be better leaders.” Finding Inspiration: “Innovation is an engine, a journey toward something new that can be frightening. It must be pursued and fought for,” Boehme told Forbes last winter. “The things you achieve through perseverance and by taking risks are worth all of the obstacles that you are facing.”


18 years with company and in current role

Vision in Action: WX brands is a successful business today, but that didn’t happen without a few bumps along the way. The company started out as two businesses: a business-to-business exchange auctioning grapes and selling bulk wine and industry supplies online; and a wine industry information portal (as a traffic-driving strategy). When the exchange business proved unsuccessful, Byck and his team went back to the drawing board and recreated the company as a private label wine maker. That business took off, but WX again faced adversity when top-client Albertsons deemphasized private label after being acquired. To reduce dependence on any one customer, Byck led the charge to diversify and begin sourcing beer and spirits, too. Today, the successful private label business has been merged with acquired national brands and wineries, leading to even greater growth. On the Horizon: Selling the information services portal earlier this year “allowed us to increase our investment and focus on the growth of our private and national brands businesses.” Since the divestiture, “We have made significant investments in the national brands area” by acquiring the Bread and Butter brand and Jamieson Ranch Vineyards, Byck explains. WX has also increased its sales and marketing staff to better execute on both sides of the business. Favorite App: Google photos “organizes all your photos in an easy-to-use fashion. It also backs up all your pictures in the cloud — and it’s free.” Leadership Philosophy: “You need to lead by example, be honest, have integrity and communicate directly.” I have an open-door policy, which I think is effective in improving communication. I also try to surround myself with smart, savvy people who I empower to run their business areas. It’s all about the team.” Finding Inspiration: “Live life to the fullest and make a difference,” says Byck. Advice for the Next Gen: Byck’s advice for the next generation is to “work hard and have strong ethics. Good things will happen.”

Darren Carlat

30 years with company; 5 years in current role

Vision in Action: A few years ago, Frito-Lay “transitioned our demand replenishment maintenance activities from a distributed model to a centralized model,” explains Carlat, whose 30-plus years of supply chain experience have all been spent at Frito-Lay. The transition led to the implementation of standard operating procedures where a wide range of loose activities had previously existed. “We also implemented a ‘pull’ replenishment strategy, which enabled a significant reduction in system-wide inventory while enhancing fill-rate performance. The central planners were a key enabler to the replenishment change.” Carlat “is considered a visionary not only at Frito-Lay, but also in the entire consumer goods industry,” said his Visionary nominator. “He recognized that incorporating real-time retailer data in the company’s demand forecast would provide better insight and help Frito-Lay achieve its goal of


David Dittmann improved on-shelf availability.” In addition, “[Carlat] and his team are considered thought leaders within Frito-Lay for making an important step toward the transformation to a digital supply chain.” On the Horizon: Frito-Lay is currently deploying a new process that lets sourcing changes be made six to eight weeks prior to production. “This enables expected capacity shortages to be resolved prior to raw material deployment, and also allows increased leverage of our lowest-cost manufacturing and distribution facilities,” Carlat explains. “This project is a key enabler for future initiatives.” Favorite App: “I love the ability to deposit checks without making a trip to the bank.” Leadership Philosophy: “When it comes to managing people, I like to set up a cadence of interactions that allows me to remain informed and provide guidance, but also gives my people the space to make their own decisions.” Finding Inspiration: “I’ve learned to place a higher value on collaboration. Early on, I was able to be successful while doing most everything on my own. As my responsibilities have increased, working with others has become dramatically more important.”

Emily Culp

2 years with company and in current role

Vision in Action: As chief marketing officer of a retail and consumer goods brand, Culp’s attention to e-commerce and omnichannel initiatives are a major undertaking. In that regard, getting board approval to be the first brand CMO in the Wolverine Worldwide portfolio of brands to oversee both marketing and e-commerce is Culp’s greatest accomplishment of late. The assignment was necessary “so we could truly deliver a global omnichannel experience for our consumer,” she says. This forward-thinking focus has led Culp to earn several industry accolades, including being recognized as one of Business Insider’s “50 Most Innovative CMOs in the World,” as one of Adweek’s 50 “indispensable executives,” and as a “Rising Star” at the 2015 CMO Awards. On the Horizon: “Ensuring that Keds and our amazing products resonate with our consumer,” is ever on Culp’s radar. She also strives to foster authentic female empowerment: “We have been creating shoes for women since 1916, so we fundamentally have been empowering women to be who they want to be and go where they want to go for over 100 years,” she explains. Among Culp’s goals is to continue to “walk the walk” internally at Keds, where four out of the top five senior positions are filled by women. “We champion female entrepreneurs with our ‘ladies for ladies’ footwear collaborations, and we focus on key events that celebrate women (like Women’s Equality Day and International Women’s Day).” Favorite App: Culp picks Waze. “I am still learning the Boston metro area, and Waze has literally made it stress-free and entertaining,” she says. Finding Inspiration: Culp believes in the Golden Rule. “Treat people how you would want to be treated.” Advice for the Next Gen: “Be courageous, embrace smart risk and understand that you will need to fail — optimally, quickly and cheaply — in order to succeed and really grow,” Culp says.

Director, Business Intelligence & Analytics PROCTER & GAMBLE

20 years with company; 2 years in current role

Vision in Action: Tasked with leveraging analytics capabilities into Procter & Gamble’s marketing, product supply and customer business development operations, Dittmann goes above and beyond the call of duty by employing his passion for analytics to make unconventional connections across the business functions. His team currently is working on restructuring and repositioning business intelligence and analytics from a back-office operation into a front-office organization by moving from ad-hoc projects to scaled, repeatable, analytical algorithms and solutions that positively impact P&G’s business on a daily basis. On the Horizon: Dittmann and the team are also working to “digitize and operationalize analytic algorithms across our daily decision-making processes that will drive superior shareholder returns and improve the lives of P&G consumers,” he says. Favorite App: Considering his professional background, it’s not surprising that Dittmann’s favorite app is Google’s Waze. “The ability to integrate dynamic, real-time data such as traffic or hazards into a GPS is an example of the future of analytically led decision-making.” Leadership Philosophy: The P&G business intelligence and analytics organization is filled with world-class professionals, according to Dittmann. “My role is to make sure each person is working on the most challenging, game-changing opportunities for P&G in an environment




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that is highly collaborative, with access to create and use state-of-the-art tools and techniques.” Finding Inspiration: “Henry Ford said, ‘Vision without execution is hallucination.’” Advice for the Next Gen: Dittmann cautions the next generation of business professionals to “be relentless in continuing to build your personal capability, especially technical skills. The field of analytics has transformed drastically over the last five years with big data and machine learning concepts. The future will be even more disruptive as analytical algorithms will be recognized as a fundamental building block to the success of every company.”

John Gallucci

“One of the most pressing challenges in the CPG industry is the creation of an accurate, unbiased forecast for new items.”


3 years with company; 1 year in current role

7 months with company and in current role

Vision in Action: Gallucci is architecting a new vision for demand planning at Bayer, where “we are fortunate to have a management team that understands the value created by this critical function,” he says. One key accomplishment so far has been “linking the demand plan as the baseline of our financial forecasting process. This has allowed us to accurately identify ‘where we are’ versus ‘where we want to be,’” Gallucci explains. “We are leveraging the expertise of each cross-functional partner, which leads to healthy debates and better results.” On the Horizon: “One of the most pressing challenges in the consumer packaged goods industry is the creation of an accurate, unbiased forecast for new items. I’m currently launching a project that will redefine our approach,” he says. “This will allow the functional experts to provide inputs for each critical assumption, where they can then be refined in a team environment. We’ll also work closely with our colleagues in supply chain to ensure we’re making the best production and procurement decisions, breaking the traditional siloed approach that leads to higher costs.” Favorite App: “I played lacrosse in school, and I currently use the Laxpower app to stay up-todate with my favorite teams.” Leadership Philosophy: “I like to implement a methodology — or a ‘way of working’ — instead of a set of directives. Teach the leaders on your team to be adaptive so they create innovative solutions that are sustainable.” Finding Inspiration: Paul “Bear” Bryant said, “It’s not the will to win that matters — everyone has that. It’s the will to prepare to win that matters.” Advice for the Next Gen: “Diversify your experience early in your career so you gain many perspectives on what it takes to win in business. People who put the business’ needs before their own are often the most successful.”


Director of Finance and Commercial Excellence GEORGIA-PACIFIC

Vision in Action: Heslep joined GeorgiaPacific by way of finance at EY. But he was able to add analytics to his portfolio of expertise by initially leading a team at GP to focus on identifying, prioritizing and delivering valuable projects for internal constituents through data, analytics and advisory services. Heslep’s current role combines both aspects of his professional background, making him responsible for finance, strategy and commercial excellence for the global nonwovens business while focusing on applying market-based management. The MBM philosophy includes 10 guiding principles that, when put into action, “combine to create a dynamic and positive culture,” Heslep says. On the Horizon: With Heslep’s analytical background, it’s logical that next up on the radar is to “improve the way we leverage information to make better and faster business decisions.” Favorite App: Heslep names two: “BBC News, which I usually read on the train, and Apple Podcasts.” Leadership Philosophy: “Leadership is not a title, but rather a set of actions that inspire others to accomplish great things,” says Heslep, who notes that he always “liked the Morehouse edict of well-read, well-traveled, well-spoken, well-dressed, and well-balanced.” He also believes that “diversity increases team cohesion.” Heslep once wrote that when hiring, focus “much less on the technical skills and more on the values of a person.” Once hired, “let

Mukund Kaushik Vice President, IT Capabilities, Sales, Supply Chain & Marketing KIMBERLY-CLARK CORP.

them operate.” He notes that when you have a clear vision and get out of the way, you’ll find that your employees are self-motivated and amazing things happen. Finding Inspiration: Gandhi said, “Be the change you wish to see in the world.” Advice for the Next Gen: Heslep believes that being an avid reader and learner is crucial for success. “Contrary to consensus, the young generation that just graduated is really, really talented and is challenging some of the stale practices we’ve developed over the years — even if some of them have never heard of ‘The Big Lebowski,’” he says.

Laura Wallace Houghton

6 years with company; 2 years in current role

Vision in Action: Demystifying the digital path to purchase is Houghton’s greatest accomplishment to date. “Through innovative, custom research, I was able to glean game-changing insights for how to best connect with shoppers through digital touch points,” she explains. On the Horizon: Houghton is next focused on building a custom, digital navigation solution that 97,000 independent retailers can utilize to drive traffic and transactions. “Connecting to shoppers through mobile proximity and giving them a reason to turn right to the store is a critical marketing tool in the digital age if you are to drive sales,” she says. Favorite App: Houghton also picks Waze. “Living in Atlanta, you have to know how to efficiently navigate traffic. Waze provides the best solutions to get me where I want to go as quickly as possible.” Leadership Philosophy: “I try to lead through clarity, collaboration, and humility,” says Houghton. “You can’t lead if others are unclear about where you want them to go or don’t understand your desired endgame.” She also finds that a collaborative leader is much more successful than one who doesn’t understand the value of giving others a stake in the game. “Lastly, humility ensures you always remember that you are but one voice and one source of ideas. I believe that we are always stronger together than apart.” Finding Inspiration: Robert Woodruff, the legend who guided Coca-Cola from 1923 until 1985, had a life creed that Houghton has also tried to live by: “There is no limit to what a man can do or where he can go if he doesn’t mind who gets the credit.” Too often, getting credit is the focus of doing the work; by not caring who gets the credit, “I believe you end up doing what is right for the business over yourself.”

“By not caring who gets the credit, I believe you end up doing what is right for the business over yourself.”

4 years with company; 5 months in current role

Vision in Action: Kaushik built the IT team that supports Kimberly-Clark’s marketing technology group worldwide. In addition, he led efforts to establish and deploy marketing capabilities globally in the areas of digital shelf, CRM, content, e-commerce, media and social media while also “connecting these capabilities with a data backbone to enable data-driven marketing to our consumers,” he explains. On the Horizon: Kaushik and his team are re-imagining the digital capabilities needed to keep up in an ever-changing marketplace. “By building talent, sharing best practices, and strengthening our digital capability across the value chain, we’re able to meet our consumers’ needs better,” he says. Favorite App: Professionally, Kaushik uses various apps to stay connected with his teams and stakeholders. “My personal productivity apps are Evernote and Asana, which help me stay organized; LinkedIn, Flipboard and Twitter to be social; American, Delta, Concur and TripIt to help me with my travel needs; Golf Channel App, which satisfies my passion for golf; and FaceTime for connecting with my family.” Leadership Philosophy: Kaushik seeks to leave things in a better place than when he inherited them and “to achieve this in a way that creates a lasting value and makes a significant contribution.” Finding Inspiration: “Oftentimes, we wait around for someone else to solve the problem that we’re facing,” says Kaushik. “Lean in and don’t be afraid to offer solu-




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tions. The worst thing that can happen is people will say no. [But] you may learn the reason or context for the current solution, or you may lead to breakthrough thinking.” Advice for the Next Gen: Kaushik offers this advice for the next wave of packaged goods professionals: “Be curious and learn to work in cross-functional teams. The best innovative thinking comes when people from different experience sets and backgrounds come together to solve problems.”

Ali Kefeli, PhD Head of Data and Decision Sciences GEORGIA-PACIFIC

1 year with company and in current role

Vision in Action: Kefeli considers himself “a staunch proponent of the democratization of big data, along with the demystification and socialization of sophisticated mathematical techniques across large organizations.” Over the last 10 years, he’s led teams that undertook multi-million dollar initiatives in product supply, working capital, pricing, revenue management and trade promotion optimization around the world. The common denominator has been a focus on “the oftenmissing link between business knowledge and advanced analytics.” His latest work involves “building a machine learning platform to help identify and quantify business drivers.” On the Horizon: “E-commerce will become a double-digit contributor to most P&Ls in the very near future,” he predicts. GP’s plan is to use a “data-driven, decision-


making framework” to drive profitable growth through such initiatives as omnichannel assortment optimization and shipment-efficient product bundles. “There is a lot of opportunity to apply data science principles in this exciting new space.” Favorite App: “I recommend Quora for those with lots of intellectual curiosity. You will find amazing personal anecdotes for questions like, ‘What can I learn right now in 10 minutes that will be useful for the rest of my life?’” Leadership Philosophy: “To be successful, I believe leaders should use the ‘3Ps’ as their foundation: ‘Passion,’ which provides the fuel; ‘Purpose,’ which provides the meaning and a sense of belonging; and most importantly, ‘People,’ who actually make it all become reality. In my personal and professional life, I strive to seek and provide those 3Ps for others.” Finding Inspiration: Carl Sagan said, “Science is not perfect. It’s often misused. It’s only a tool, but it’s the best tool we have. Self-correcting, ever-changing, applicable to everything; with this tool, we vanquish the impossible.” Advice for the Next Gen: “Learn to effectively influence others without having any authority over them. That’s a perfect exercise in thinking customer first and is the best test of how much value you create for your organization.”

David King

2.5 years with company and in current role

Vision in Action: While King acknowledges that he loves the work he’s done with artificial intelligence and photo recognition, “my biggest accomplishment has been creating a data-driven culture” at new-age hair-color company Madison Reed. Building a strong analytics capability was one of his first initiatives, and it’s had a lasting impact throughout the organization. “We rely heavily on data to inform every aspect of our business, from product development to the digital experience,” says King. For example, the company has more than two million customer profiles. “We match those ‘hair profiles’ to our products, then factor in customer satisfaction scores. These insights inform the development of new products and result in better color recommendations.” On the Horizon: Cutting-edge technology will continue to play a major role in the future for Madison Reed. King is currently working on a machine learning solution to enhance the customer journey along every touch point. “This means increased personalization, as well as an improved prediction of outcomes. We believe this will provide step-function improvement to many fundamentals in our business,” he says. Favorite App: “Slack has truly transformed how we collaborate, both internally and with many of our partners,” says King. “With new ‘Slackbots’ constantly being added, plus Slackbots we’ve developed in-house, we can turn conversations into action in a single, topical, real-time interface.” Leadership Philosophy: King believes that the leadership role of “player-coach” is highly effective. “My team knows I support them, plus I’m willing to actually do the work. This helps me stay in touch with technology in a meaningful way, which improves my ability to coach.” Finding Inspiration: King is known for quoting French writer Antoine de Saint-Exupéry. “In the tech world, there is no better quote than this: ‘Perfection is achieved not when there is nothing more to add, but when there is nothing left to take away.’”


Michael Martiny

25 years with company; 9 years as CIO, 5 years as VP, Global Business Solutions

Vision in Action: Martiny and his team are enabling 150-yearold General Mills to embrace the many changes taking place in the food industry while maintaining the fiscal fitness needed to reward shareholders. The Global Business Solutions group’s blend of technology, business process simplification, real estate, and employee services provides multiple levers to accelerate change. But the real accomplishment is “the quality of the team: talented, driven, global leaders who understand the competitive environment and their role in making General Mills successful,” Martiny explains. On the Horizon: “Food is a critical component of happiness, and our purpose to ‘serve the world by making food people love’ is a rapidly moving target,” he says. “Our data, tools, techniques and priorities all reflect the speed of change we’re seeing. We’re not a technology company; we’re a food company. But the way we decide ‘what’s next’ needs to look a lot more agile to remain successful.” Favorite App: Martiny chooses Sonos. “I love how it makes the transition from solo listening to ‘Everyone listen to this’ easy and fast.” Leadership Philosophy: Martiny has four tenets that he talks about regularly: Be present (“If you want to keep the meeting the most important thing, keep your phone off the table”); Know your stuff (“Share what you believe to be true often, while listening for new information”); Ask for help (“You can’t do it alone, and asking for help enables others to grow and develop”); and Be a good person (“Competition doesn’t work here”). Finding Inspiration: One of Martiny’s favorite quotes is, “Everyone you meet is fighting a battle you know nothing about. Be kind — always.” Advice for the Next Gen: “Pay attention on the days when time flies by, and make a note of it. Being clear with yourself about what you’re motivated by, and linking it to the needs of the organization you’re part of, will lead to more great days.”

Josué Muñoz

26 years with company; 6 years in current role

Vision in Action: Muñoz’s exemplary work at Colgate has included spearheading a transformation of the customer service organization. Leveraging the Colgate Shared Business Services structure globally “allowed our teams on the ground to engage with customers and support the commercial teams in achieving our objectives while optimizing cost structure,” he explains. “We transformed our planning processes to be end to end … and are implementing the tools to be exception-driven and have shelf-to-supplier visibility into our supply chain.” “We’ve also created a truly global organization that leverages technology to stay connected, share best practices and assure that our processes and tools are standard and best in class worldwide.” On the Horizon: Muñoz and his team currently are working on expanding Colgate’s supply chain analytics capabilities, a project with two key elements. “The first is the expan-

“We’ve also created a truly global organization that leverages technology to stay connected.”

sion of our Center of Excellence for supply chain design to model the outbound customer fulfillment network and the manufacturing and supplier network to globally optimize our costs and capital investment. The second is the deployment of an enhanced analytics solution that will allow us to leverage all plant floor information to do predictive analytics and global benchmarking.” Favorite App: “Since I travel a large percentage of the time, it’s TripIt, which allows me to have my whole travel itinerary in my phone and provides updates on flight status.” Leadership Philosophy: “I believe in surrounding myself with the best people, making sure we all know where we want to go, then ensuring that we have the resources and motivation to achieve those goals. I want whoever takes my role in the future to find a high-performing organization of talented people fully aligned behind our shared goals.” Advice for the Next Gen: “Always be inquisitive. The world is moving so fast that you have to keep learning and asking questions to stay abreast of technology and understand the consumer.”




Cover Story


Allison Radecki

3.5 years with company and in current role

Vision in Action: With Radecki at the helm, Beam Suntory has pulled all IT resources into one high-performing, interdependent global team. “Our team’s goal is to ‘create exceptional experiences, forge new connections, drive untapped possibilities,’” she says. Radecki has also helped expand services across Beam Suntory with a commitment to increasing revenues through the creation of digital sales, marketing and analytics capabilities and “continuing to fuel our growth through productivity initiatives. The ability to work across every function and geography to advance our ways of working and employee productivity has been a challenge, a source of professional growth and a thrill for me personally,” she says. On the Horizon: The next task at hand is sponsorship of a commercial analytics platform with her sales and finance teams that’s been appropriately branded “The BAR” (for “business analysis reporting”). “We’re incorporating external data sources with internal information to create new dashboards and query capabilities that measure brand performance in-market and develop insights for new growth opportunities,” she says. The platform has launched in the U.S., Germany and India, providing new capabilities and ways of working across organizations. “With this success, we are now looking to expand The Bar to include analytics centered on revenue management and consumer analytics.” Favorite App: Radecki loves using Waze and Google Maps to help navigate the “crazy Chicago traffic and find my way when traveling,” she says. “With my poor sense of direction, I don’t know how I managed in life before!” Leadership Philosophy: Radecki’s goal is to unlock potential in each of her team members and across the entire organization to “help our staff find the right opportunities to lead and grow, introducing new processes and tools to make our employees most productive, or launching business capabilities that create incremental sources of revenue.”

Swan Sit

2 years with company and in current role

Vision in Action: Sit has spent the past 10 years of her career accelerating digital transformation within large companies. “Two years ago, I joined Elizabeth Arden and built a global digital platform from the ground up to drive e-commerce, online retailer sales, digital marketing, social media and digital innovation,” she notes. Breaking traditional models of digital content creation, paid media performance and influencer marketing helped drive a financial turnaround at Elizabeth Arden and modernized the 100-year-old brand’s voice via influencers like Chelsea Handler and Iris Apfel. On the Horizon: Revlon acquired Elizabeth Arden earlier this year, thereby creating a powerhouse portfolio of global beauty brands. Sit was asked to transition to Revlon to recreate Arden’s digital platform, as well as to turn traditional offline events and experiences into immersive 360-degree activations with digital at their



“I’m excited to … take storytelling and consumer engagement to the next level.”

core. “I’m excited to innovate with the latest tools and technologies to take storytelling and consumer engagement to the next level for this iconic brand.” Favorite App: With a jam-packed calendar, Sit tries to make every minute count, so one of her favorite apps is Starbucks. “I order ahead and waltz past the 15-minute line of impatient faces.” She also loves anything that democratizes: “Turo allows me to rent cars from owners with excess capacity. I can get luxury sports cars … for far less than a boring sedan from the major car rental companies.” Leadership Philosophy: “I manage everyone individually by their Myers Briggs type. Whether I have group brainstorms or give someone space to think, or communicate answer-first vs. answer-last, my style completely flexes to the person I’m managing. When they tell me I’m the best boss they’ve ever had, I know I’ve done my job right.” Finding Inspiration: Hanging in Sit’s office is this quote from Nelson Mandela: “It always seems impossible until it’s done.” She notes that who said it is just as important as what it says. CGT

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EDITOR’S NOTE Welcome to CGT and IDC’s Sales & Marketing Report 2017.

CGT has been publishing this report annually since 2005 (minus a break in 2008). That has allowed us to keep a close eye on these critical industry functions, which have always had their fair share of change from year to year — but which now are undergoing a level of transformation that may very well be unprecedented. If nothing else, the change is happening a lot faster these days. It may seem a little odd to say, as we do in the headline on page 16, that “consumers” are the driving force in the consumer goods industry. Hasn’t that always been the case? Truth be told, the industry as a whole has often distanced itself from the end users over the decades as it grew, matured, and started worrying more about operational efficiencies, economies of scale and trading partner negotiations than it did whether or not consumers were really getting the products and services that they needed. Although basic consumer needs haven’t changed very much since 2005, the ways in which consumers solve their needs have become dramatically different. So have their expectations about products, retailers and the shopping experience. Everyone knows that we have digital communication and e-commerce to thank (or blame). Any consumer goods company that did take its eye off the ball is now scrambling to re-engage with millions of consumers who may already have moved on to someone else, another product that responded to their evolving expectations in better — or at least faster — ways. It’s all relative, of course. In 2005, the “transformation” that we discussed in the report was the shift “from product-centric to customercentric strategies.” That was a pretty big deal, too, as CGs undertook the necessary step of developing stronger joint business strategies with key retail partners. In comparison, that was an operational cakewalk compared with the current need to re-examine


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most back-office functions to accommodate new sales and fulfillment methods and rewrite the marketing playbook. So there’s plenty of new ground to cover in an annual report. As usual, we owe a tremendous debt of gratitude to Simon Ellis and the team at IDC Manufacturing Insights, who’ve been helping us with this report for the last eight years and who again this time took on the lion’s share of editorial work. We greatly appreciate their willingness to help us provide the industry with a concise, cogent view of the consumer goods landscape. Their contributions — not to mention their research — are invaluable to this report. We’d also like to thank the technology and services vendors who stepped forward to sponsor this year’s report, thereby illustrating their commitment to helping the industry move forward through bestpractice learning and thought leadership. Their support is vital as well. Of course, not everything in this report represents new thinking. If you read that inaugural Sales & Marketing Report 2005, you may or may not be surprised to see that an important topic back then was the need to find more effective methods of measuring the impact of sales and marketing activity. Despite all the technological advancements that have taken place in the last 12 years, that’s still a key issue. Then again, maybe the industry’s standards have improved. Maybe the benchmarks for effective measurement that consumer goods companies were aiming for back then have already been surpassed — and were replaced by even more ambitious goals for accurate, actionable metrics. (That theory was discussed in the Retail and Consumer Goods Analytics Study we published in May, by the way.) Either way, what’s most important is that the industry continues moving forward toward more effective, more measurable sales and marketing strategies that can drive engagement and influence behavior with those increasingly empowered consumers. We’re confident that this is exactly what’s happening.

Peter Breen

Editor-in-Chief, CGT

“Although basic consumer needs haven’t changed very much since 2005, the ways in which consumers solve their needs have become dramatically different.”


Editor’s Note


The Progress Report


The Evolving Role of TPM


What to Do with Data


Is DTC the Future — or the Present?


Taking the Risk Out of Digitization


Building a Smart Digital Enterprise


Yesterday is Over, Tomorrow is Over There!

By Michael Forhez Senior Director, Oracle Consumer Markets Michael Forhez – As a Senior Director at Oracle, Michael brings 20 plus years of diversified sales, marketing and management consulting experience. Frequently called upon to write and speak on subjects germane to the consumer products and retail sectors, Michael serves as an evangelist within the Consumer Markets, and has committed his career to engaging with various stakeholders to better understand and reflect their collective requirements.

Of the 13 firms that have outperformed the S&P, five years in a row, only one of them is a consumer brand, Under Armour. Historically, the Consumer Markets have invested huge amounts of capital in manufacturing processing, packaging design, logistics and distribution, advertising and promotion, merchandising and physical retail space. Technology enabled E-commerce has demonstrably changed consumer expectations, and with it our industry forever. Capital investments are shifting to knowledge tools, hardware, software, and systems –all supported in the Cloud– that generate and distribute both information and insights at the speed of thought. Whether a brick and mortar or digital store front a brand or retailer must be where its customers are. A brand or retailer can no longer just sell what they make or buy; today they must make or sell what its customers want to buy. That means Philip Kotler’s 4Ps’ –Price, Product, Promotion, Place– must now include a 5th P – People. Why? Because people, AKA the consumer, now decide every day to stay or go somewhere else, buying or never buying again. Consumers are now receiving daily entreaties from competing retailers –old and new age– coaxing them to terminate existing relationships and start new ones. What can retailers and brands do to create and sustain loyalty? They need to know their current and future customers better than anyone else. They need to know their customers better than they know themselves. And, to serve, they need deep customer knowledge at every point in the path-to-purchase. Retailers and brands have traditionally man-

aged how the consumer engages with products in physical stores by developing specific product variants and shelf-friendly packaging while collaborating through the four pillars of supply chain intelligence, efficient new product introduction, category and trade promotion management, to optimize sales and profits. Still useful in the main, yet so yesterday. As brand practitioners are quickly learning –or fading away– the advantages once held in a massmarket no longer exist. The extraordinary power of information gathering, advanced analytics and data visualization, coupled with digital marketing and real-time delivery capabilities, have spawned an entirely new and ever evolving cadre of fierce, fail-fast competitors who’ve changed the rules of the game. And, not just in the US of A. Chinese consumers spent $750 billion on-line in 2016 –more than the US and UK combined– buying everything from groceries to luxury cars. Alibaba has identified 8,000 customer descriptors for 500 million monthly active users. Shopping habits, digital media consumption, delivery, payment and credit history, search preferences, social networks and internet interests are all collected, scrutinized and analyzed to understand their customers better than anyone else. Alibaba has truly, not just in theory, found a way to make ‘Big Data’ Big. Where we go is where we take ourselves. Make or sell, the future –including the near future– will belong to those players who better understand, harmonize, simplify, and are able to make more interesting, a customer shopping experience that brings shoppers in, and keeps them coming back. Hail the Consumer!

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Simon Ellis

IDC Manufacturing Insights


ver the eight years that CGT and IDC have presented this report, we’ve done our best to cover a similar set of topics from year to year. That not only lets us make year-to-year comparisons about how the industry is progressing toward universally accepted goals, it also lets us maintain a running narrative on the overall “state of sales and marketing” in the consumer goods arena. That’s getting a little harder to these days, however. Dramatic shifts in both consumer behavior and technological capabilities have changed those industry goals from, “How do we improve the way we do business today?” to the more alarming, “How do we transform the business for the future?” Most of this transformation is, of course, taking place in the digital realm. It isn’t an exaggeration to say that digital technology has the potential to help businesses operate in fundamentally different ways, or to say that it can bring product manufacturers far closer to their customers and consumers than had previously even been imaginable. As consumer goods companies continue to “become digital,” we are witnessing a transformational shift in the industry. IDC articulated this trend recently in a set of predictions that we believe will underpin the future of consumer goods:


Over the next decade, 90% of industry growth will be captured by companies that successfully engage directly with consumers. Consumers rule the world; they are ubiquitously connected, crave individuality/ personalization, and are intolerant of complexity and latency. They are a consumer goods company’s worst nightmare — and its greatest opportunity. It seems intuitively obvious that the companies that figure out how to best engage with these consumers will get more than their fair share of growth. And, by the way, as 16

Most Important Element for Business Success 64.8% 16.7% 18.5%

Product quality

(performance, meeting customer needs, endurance)


(gross margin, profit, supply chain at cost center)


(on-time, in-full, issue resolution) SOURCE: IDC 2016 CONSUMER GOODS SURVEY

older consumers give way en masse to millennials, the “problem” just gets worse.


As barriers to entry fall over the next five years, smaller “lateral” competitors will wrest 10 to 15 share points from traditional and established large enterprise players. Industry estimates find that, of the $35 billion in net growth over the past three years, only $1 billion has come from traditional, large enterprise players. Although small entrants historically have tended to contribute significantly to industry growth, I don’t recall the estimated share to ever be this high. That’s an anomaly perhaps, but if you look at the ranks of new competitors to traditional businesses, they are appearing in record numbers. Part of the reason for this is that the historical barriers to entry (technology, manufacturing facilities, etc.) have fallen — they’re now either “commodities” or available via the cloud. At an industry event a few years ago, I noted that anybody with “an idea and a garage” could launch a new venture; now, I don’t think you even need the garage. Another part is that, as consumers look for

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either personalized products or ones that appeal to their generation, smaller competitors are better positioned to be flexible and take risks. By 2019, one-third of consumer goods companies will have benefited from digital transformation (DX), with the remainder held back by inflexible/outdated business models, processes or functional structures. IDC research finds that one of the biggest current gaps between digital “thrivers” and survivors is in the area of leadership. Only 29.6% of manufacturers have achieved a level of maturity in digital transformation leadership to reach the top two levels of “transformer” and “disruptor.” Leadership holds responsibility for creating a vision of where their companies are headed in the next decade, but most are not ready to change direction by adopting new business models or functional structures.



Not every company with a vision will be able to fully leverage its DX investments in the supply chain, since there are many dimensions to DX. But in the market, we can already see which supply chain leaders are lay-

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ing out a roadmap for their companies to evolve in the next decade. Look at Bayer’s move to join forces with Monsanto to increase its innovation in agriculture, or Under Armour’s investments in technology-enabled products and health information. These moves required executive leadership to recognize how both their business models and enabling processes must change — and not just incrementally, but fundamentally. As we move rapidly into a world where the consumer is the primary moving force in the industry, consumer goods companies are going to have to answer some tricky questions. For example, what happens to trade promotion funding in an omnichannel world? That’s not a big deal when direct-to-consumer sales are in the small, single digits, but what happens when they become 20% of total sales — or more? For a company that manages an annual trade promotion budget of $500 million, what happens to the $100 million that no longer supports tradional retail sales? Does it get converted to consumer promotion vehicles, taken to the bottom line as “savings,” or something else? In our

discussions with consumer goods manufacturers, not many have a good answer. The other implication for consumer-centricity is that the focus of many businesses has shifted. While cost and service remain important, of course, the majority of companies now place the greatest importance on product quality (see Figure 1). This shift has been happening for a few years but, as illustrated in Figure 1, almost two-thirds of consumer goods companies now cite product quality as most important. The last two profound implications from our discussions with consumer goods companies are the nature of competition and the role of digital. If we accept the prediction above that, as barriers to entry fall, “lateral” competitors will wrest up to 15 share points from traditional players over the next five years, that will require those larger companies to change the ways in which they compete. We’re already seeing growth in the industry accrue to small, nimble and often new competitors in the marketplace. Many of these competitors have been digitally enabled, with business models built on competencies that would not have


Business Priorities



Reduce costs/eliminate waste



Become more customer-centric/improve service performance



Improve product compliance, quality, safety, or environmental sustainability



Improve supply chain visibility/traceability



Respond more quickly to supply disruptions/changes (upstream agility)





Product innovation (improve the NPDI process)



Move supply capabilities closer to demand



Improve collaboration with suppliers and customers (B2B networks)



Support omnichannel fulfillment through DTC or postponement capabilities



Improve trade promotion capabilities



Continue to modernize/update IT-related supply chain infrastructure




Respond more quickly to demand volatility/changes (downstream agility)



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“It’s interesting that customercentricity and product innovation are less important beyond 12 months.” been possible in an “analog” world. Companies like Mink, for example, which use 3D printing as the basis for their product assortment and fulfilment, are able to meet the personalized needs of their consumers in ways that more traditional processes could not. We’re not saying that merely being digitally enabled ensures business success — in fact, it does not. But digital transformation is clearly a key element in being prepared for success. As we close this overview, it’s useful to check in with consumer goods company priorities for 2016 through 2019. As illustrated in Figure 2, we see something of a mixed bag of priorities. It’s true that in 2016, and continuing through 2017, cost reduction remains a top priority — although the presumption appears to be that opportunities for waste elimination will decline over time. It’s interesting that things like customercentricity and product innovation are listed as less important beyond 12 months. Perhaps companies believe they’ll solve these issues sooner, thus making them less of a future issue. If so, that is probably naïve. There’s a clear future focus on collaboration (something that never seems to get “solved”), support for omnichannel fulfillment, and improving business and supply chain visibility. We’ll touch on these in the specific topic sections that follow. CGT

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e’ve been discussing trade promotion management in the pages of this report for almost a decade — can there really be anything new to discuss? It’s an established space, certainly, with a number of competent vendor tools available to consumer goods companies. Yet it seems increasingly clear that successful consumer goods businesses must adopt and adapt capabilities to capitalize on the growing “front edge” of the consumer products industry while ensuring that the traditional base business is properly supported. The challenge for the large, traditional players is to balance protecting their base business with finding ways to capture their fair share of new growth. While most of the air is consumed with talk of digital transformation or disruption, most current business is still conducted via conventional products through traditional retail and supported through conventional trade promotion funding. Finding ways to appeal to younger consumers through new and novel ways is important, but so is making sure that the existing business is properly served (even as it shrinks). The companies able to do this well will be the ones that thrive. With regard to trade promotion, it still strikes me as curious how many companies don’t have a purpose-built tool or are still limping along with a homegrown, often spreadsheet-based application. We certainly see improvements based on better data and information, along with more insightful and faster analytics. TPM remains among the more frequent inquiry topics by consumer goods companies to IDC — although over the last year or so we’ve seen an interesting shift in what they’re inquiring about. Companies that ask us about TPM are increasingly looking for effectiveness and

optimization tools. Some years ago, we were often asked the whether you needed TPM before embarking on optimization. At the time my answer was “Yes,” and that seems borne out in practice. The vast majority of consumer goods companies have trade promotion management capabilities, but they often don’t have the more advanced effectiveness of optimization tools. Before going any further, let’s define the terms broadly: • Trade promotion management is the basic “infrastructure,” the ability to track promotions (both completed and planned) against the available promotional budget and ensure compliance. • Trade promotion effectiveness is the backward-looking capability to evaluate promotions and promotional vehicles for efficiency, effectiveness and performance. It’s the ability to do “post-audits,” if you will. • Trade promotion optimization is the for-

Trade Promotion Competencies Trade Promotion Effectiveness

Trade Promotion Management Best in Class Performance

Trade Promotion Optimization



Role of New Technologies in Facilitating the TPM Process Field Mobility IoT

9% 2% 11%

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33% 50%

Analytics Social Business





29% 26%





22% 24%

13% 4% 7%




Digitizing trade investment with advanced analytics and predictive planning as the catalyst for sustainable


Post-Event Analysis

Event Optimization

Predictive Planning

Calendar Optimization 614-394-8100

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ward-looking capability to design and implement the best possible promotions to drive business outcomes for both the consumer goods manufacturer and the retailer. This may seem intuitively obvious, but only a few best-in-class companies actually do all three. It’s also important to note that some vendor tools do all three, or some subset of the three. Companies increasingly are unwilling to rip out existing IT tools, and TPM seems poised to join that trend. One manufacturer we spoke with earlier this year was quite happy with its foundational TPM tools but wanted to find optimization capabilities it could put on top of what it already had. That relates back to another prediction we made for the industry, that within five years the majority of large consumer goods companies will have reached the point of trade promotion maturity and will be able to leverage sophisticated optimization tools. The notion of trade promotion is going to change in the coming years as directto-consumer and private brand growth inevitably happens. But as we noted earlier, traditional trade will persist for many years. Trade promotion has been problematic for many companies that have less than full visibility into performance and lift, but this is changing — and has to change. The tools are available, the data is available, and within a few years we expect true optimization to be a reality (for promotion planning, execution and analytics) for all large players, as well many small and medium-sized ones. As we noted last year, most consumer goods companies are now largely focused on driving promotion efficiency rather than simple cost savings (though they are quite happy if there are savings), and they’re increasingly using technology to facilitate promotion analysis and performance. One thing that is new (or new-ish) that we increasingly hear about is the issue of analytics capabilities. While consumer goods companies don’t have 100% of the data they need for comprehensive analysis, the amounts and quality of what they do get are much better and the analytics, therefore, play a larger role.



New Technologies Applied to Existing TPM Competencies TPM COMPETENCIES



Advanced Analytics, Mobility, 3D printing, ERP


Advanced Analytics, Mobility, Internet of Things, Cognitive Computing


Advanced Analytics, Social Business, Cognitive Computing


Given this concern about data and analytics, we specifically asked a question last year about the role that a few “new” technologies might play in driving better promotional performance and, perhaps, as harbingers of things to come. The results of that question are presented in Figure 4. In conversations we’ve had this year, analytics remains the clear leader in terms of impact on the trade promotion process. Field mobility is critical for retail merchandising and promotional sets, and we’re seeing it become even more important for the actual trade promotion process. As we move forward toward a greater role for consumer interactions, this may change. But, for now, it’s still early days. We are fielding many more questions this year about the role for the internet of things, or sensors primarily, and its potential impact on the trade promotion process. While that impact is clearly more on the physical execution of promotions rather than the planning or financial aspects, the reality is that it ultimately becomes just another source of data available to the analytics engine — thus, emphasizing the importance of those analytics. Turning to the future, we reiterate a question from last year: If we are on the verge of a completely new model of consumer engagement, what does that mean for trade promotion? It’s important to “ground” this comment at the outset. While growth may be through omnichannel, direct-to-consumer and highly personalized interactions, the majority of the purchase base still happens through traditional retail and will for some time. But the writing is on the wall, particu-

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larly as younger generations of consumers come into the marketplace; they’ll have no patience for “old-fashioned” forms of commerce. In the near term, we’re going to see new technologies increasingly applied to existing TPM process competency, giving way in the longer term to effectiveness and optimization. Figure 5 is an illustration of what this might look like. But the more interesting discussion is about what the longer term looks like, where new technologies and consumer behaviors will dramatically affect the way that consumer goods companies manage and offer trade promotions. What happens to funding in an omnichannel world? As we said in the introduction, it’s not a big deal when direct-to-consumer sales are in small single digits, but what happens when they become a significant percentage of total sales and a significant portion of the annual trade promotion budget no longer supports traditional retail sales? Here’s one possibility: As products and the shopping experience become more personalized for specific consumers, the promotional process also becomes more personalized. The notion of a hyper-refined promotion — while not possible today — may become the way in which companies engage with consumers — at least in part. Another implication for TPM/TPO is the reality of “always on.” The ubiquity of smart devices and digitally enabled consumers means that commerce is 24/365. The promotional process will have to adapt, either in terms of how offers are presented, or in how demand fluctuations drive hyper-refined promotions. CGT

$780 M



Annual Revenue

Mindtree Minds

Active Clients

Banking, Financial Services & Insurance

CPG, Retail & Manufacturing

Technology & Media


Engineering R&D

Data-warehouse & Analytics

Independent Testing


Infrastructure Managenemt

43 Offices

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The Central Role of Data and Analytics

Visibility ERP Social (internal and external) IoT (sensors)




Data Collection and Analytics

Cloud On-Premise Mobile




Volume: Quality, Moore’s Law+


Velocity: Speed (both in and out)

The Analytics Gap Internet of Things



he topic of downstream data is one we’ve covered in this report from the beginning, and we’ll continue to do so because it’s critical to the way that consumer goods manufacturers calibrate their business to demand. This year, though, we’d like to broaden the discussion to include all types of data. In a control tower report published earlier this year, IDC proposed an approach by which new technologies might “interact.” We present that here in Figure 6. The idea is that data is collected from multiple sources (ERP, social and IoT), analyzed quickly, and then made available to the business via on-premise, cloud or mobile. The reality is that, regardless of the source or type, the data must be quickly analyzed and disseminated to the decision-makers within the business for it to be useful. For example, many of the people I speak with think of the IoT as an “instrumentation problem” and while that may be true to a degree in 2017, the reality is that it’s really a “data and analytics problem.” You can capture all the sensor data in the world, but if accurate data quality and comprehensive analytics are absent, it’s not going to be useful. The reality is that the improved collection and analysis of disparate data sources is likely to be the single largest driver of differential performance among consumer goods companies across all functional areas. Whether it’s input into or sources of innovation or demand data to drive supply chain forecast or responsiveness capabilities, the enterprise that consumes data more efficiently and effectively has a leg up on the competition. But it’s not just about the data, it’s also about the analytics capabilities. When we speak with consumer goods companies, the growth in data volume and velocity is not lost on them — they get it. The challenge that they articulate is how to ensure that the analytics

Variety: Structured, Unstructured Uncertain Value: Relative, Specific, Case-by-Case

Analytics ‘gap’





2020 SOURCE: IDC, 2016


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capabilities keep pace. Turning “data into insights” is the trick, so an “analytics gap” is the real problem, as illustrated in Figure 7. Yes, consumer goods companies are investing in analytics, and they are getting value from these analytics. But are the analytics keeping up with the growth in data? In Figure 7, we also illustrate three main sources of data: the more traditional source, which is ERP, and then two emerging areas of social media/ sentiment and the IoT (sensors). While ERP data is projected to increase modestly over time, social

“In the data age, it will be very easy to go from ‘garbage in, garbage out’ to ‘BIG garbage in, BIG garbage out.’” and particularly sensor data is projected to grow exponentially. Whether the conference-favorite “smart” refrigerator ever comes to be in a material way remains to be seen, but the instrumentation of the supply chain, for example, is moving forward full bore. Some potential sensor application examples are listed in Figure 8. The examples listed in Figure 8 are all supply chain-centric, but that is where we see most IoT applications initially. However, it can be transformative in the sense that data is now (or is about to be) available to the supply chain and broader business where it was only speculation before. In last year’s report, we presented results from our 2016 supply chain survey identifying where companies are finding value from analytics capabilities. We represent that information in Figure 9. Overwhelmingly, demand planning & forecasting is the top answer when it comes to getting value from analytics. So having comprehensive


data, analyzed in real or near-real time, drives significant value for both the supply chain and the overall consumer goods enterprise. Yet not all data is available in real time — nor needs to be, frankly. It is our estimate that about half of all consumer goods companies get 50% of their data in real time, with about one-fifth getting 75% or more in real time. This number will go up dramatically in the next few years as sensor data begins to contribute to overall data volume.

Lastly, we’d like to comment on data quality. As consumer goods companies move into the “data age,” the necessity for data quality grows. It will be very easy to go from “garbage in, garbage out” to “BIG garbage in, BIG garbage out.” Since many companies have struggled for years with data accuracy and quality, it suggests that this is something to be wary of lest CGs find themselves making bad data-driven decisions. CGT


Sensor Application Examples FUNCTIONAL AREA/ CONSTITUENT



Sensor-enabled VMI; smart vending lockers; location/condition monitoring


Asset monitoring and maintenance; ingredient location; smart inventory


Delivery status/monitoring; extend inventory to include incoming shipments


Sensor-enabled VMI; location/status monitoring; end-aisle display monitoring; smart shelf; POS



Business Value from Analytics Demand Planning & Forecasting


Order Management




Demand Sensing


Supply Planning


Production Planning


Inventory Management





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Is DTC the Future — or the Present? MANUFACTURERS CONTINUE TO CONSIDER THE CHANNEL’S POTENTIAL ast year, we focused on fulfillment as the primary problem for product manufacturers aspiring to sell directly to the consumer. We looked not only at whether manufacturers should do DTC, but also how they would do it. In our 2016 IDC survey, when asked about the top areas driving change in their business, the number one response from consumer goods companies was “selling directly to the consumer.” It has arrived as a game-changer, both from a consumer interaction perspective and from a capabilities perspective. IDC conducts that survey every two years, so we’ll ask that question again in 2018. For now, we must rely on the 2016 response — but to be fair, very little seems to have changed from last year. Companies are still exploring DTC as a potential channel of significance, but we’ve not seen any major overhauling of the supply chain — at least, not yet. What we are starting to see are established consumer goods companies looking to acquire their smaller, online competition. If you can’t build it, buy it. A good example of this was Unilever’s purchase of Dollar Shave Club (at $200 million, not a small company per se). For Unilever, this move certainly was about diversifying into new consumer segments, but it was also about the ability to get hands-on experience with a direct-to-consumer model. While the eventuality of DTC seems like a foregone conclusion (as we also noted last year), the timing and mechanics are not. Three things seem universally true:


Retailers will not “go quietly into that good night” (nor should they), and the dynamics of DTC and private label will bring them into



Drivers of Change



Selling directly to the consumer




New markets


Retaining customers




Demand variability


Lack of innovation



ever more direct competition with manufacturers. Manufacturers, at least the vast majority of them, are not set up to go DTC. Most have optimized their businesses to sell large quantities of goods to large customers, not small quantities to consumers, and this is true for both the selling (think the sales force) and the fulfillment functions.



Product innovation is increasingly decentralized, meaning that the national-brand manufacturer no longer has a stranglehold on new products. The initial data certainly supports the contention that emerging, digitally enabled competi-

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tors are better suited for overcoming direct-toconsumer challenges. Repeating the point made in the overview, it has been the long-held view of IDC that falling entry barriers will let smaller “lateral” competitors steal 10 to 15 share points from traditional players over the next five years. Historical barriers to entry (such as technology and manufacturing facilities) are now either “commodities” or available via the cloud. But the major driver is that, as younger consumers look either for personalized products or items that appeal to their generation, smaller competitors are better positioned to be flexible, take risks and deliver those products directly to consumers’ homes.

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The broader question is whether DTC is going to be a major channel for consumer goods manufacturers or not — and if so, how quickly. Retailers certainly have a head start in terms of managing DTC, with the potential to use ‘dark’ stores as fulfillment nodes — although a seamless cross-channel experience still appears aspirational for many. Unless consumer goods manufacturers (particularly in categories that more naturally lend themselves to DTC) wish to concede the online channel to retail, they’ll need to be more proactive. For the supply chain organization, DTC is viewed as a priority. In our 2016 survey, when manufacturers were asked about the things driving change in their business, selling directly to the consumer was the number one overall driver, as seen in Figure 10. Interestingly, growth was a close second — and new channels and markets are the best way to drive said growth. Furthermore, this was a survey of supply chain people, so it’s certainly reasonable to assume that a survey of sales or marketing people would have yielded an even higher number for DTC. Engagements we’ve had with consumer goods companies support the contention that they are wrestling with DTC, although anytime that competition and developments are viewed as being on the fringe, the urgency for action is muted. One interesting thing here is the Amazon factor. At IDC, we tend to view Amazon more as a cloud and logistics firm — or at least that’s where we see its differentiating capabilities. Should Amazon, for example, ever decide to get into the private label/brand business in a big way, its logistical prowess would instantly make them everybody’s competition — and an unbeatable one at that. One company we’ve talked with believes that, by 2020, Amazon’s business will be split equally across online, DTC and traditional retail. If we table the “how” for a moment and consider the “should,” the discussion becomes a bit clearer. As traditional retailers continue to struggle and close stores, the momentum behind direct-to-consumer becomes stronger.


“Unless consumer goods manufacturers (particularly in categories that more naturally lend themselves to DTC) wish to concede the online channel to retail, they’ll need to be more proactive.” Once the pinnacle of the department store juggernaut, Sears recently announced concern over its ability to survive. Countless other retailers have either disappeared or are a shell of their former selves — Sports Authority, Staples, RadioShack, Kmart. All of them were once dominant retail brands. Consumers haven’t stopped buying, they’ve just moved much of their buying online, with attendant expectations for fast, even sameday, delivery. There are some product categories that favor physical retail, like grocery, but it’s an ever-dwindling number. Sure, as we already noted, a significant amount of business is done through traditional retail, but it’s shrinking fast. So, what do the manufacturers do? They continue to support retail, certainly, but the online channel must be the future priority — through e-tailers like Amazon of course, but also through DTC. There are other potential challenges as well. Whether it’s B-to-B or B-to-C, the essential role of logistics and fulfillment will remain the same: to deliver products and orders to customers on time and in full. But the business expectations that inform this role will change. At IDC, we’ve been talking for a few years now about the expectations of speed and timeline compression for manufacturers in terms of order lead times and delivery speed. Fortyeight hours from order placement to shipment delivery is now the business norm in many con-

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sumer product categories, with many instances where customers and, increasingly, consumers even ask for 24 hours or less. That most distribution networks are set up with warehouse locations enabling 18- to 24-hour “drive times” suggests that expectations for speed will have a profound effect on warehouse locations and proliferation. Furthermore, there is a strong linkage between direct-to-consumer selling and the notion of personalization that we talked about in the overview (although the latter is not exclusive to DTC). Absent a significant increase in SKU numbers and the associated challenges to the forecasting process, this suggests far more postponement requirements and a likely broadening of the key role of the warehouse. Consumer goods manufacturers that are not yet at least thinking about modernizing their supply chains to support omnichannel fulfillment requirements should begin doing so as soon as possible. If not, they run the risk of losing market share and competitive positioning to firms that are better equipped to meet the needs of a more demanding customer. This does not necessarily mean immediate and wholesale changes to their fulfillment networks (although it might for some consumer goods companies). It does mean evaluating and exploring the changes that may be necessary over time, and taking steps today to prepare for that future. CGT

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Taking the Risk Out of Digitization CYBER SECURITY BECOMES A KEY CONCERN he inherent complexity and “length” of global supply chains, along with a dramatic increase in the volume and variety of data exchanged between suppliers, manufacturers and customers, is raising the profile and importance of securing this data. Furthermore, as cloud, or hosted, business applications grow in usage, the potential to “expose” data to non-authorized users also grows. Indeed, within the consumer goods supply chain, cyber security has now passed physical security as the major concern for many companies. This does not mean, of course, that physical security issues are not still important, just that the number of cyber attacks have increased to the point where companies must focus more on them. How consumer goods manufacturers approach security, and the tools they use in combatting both physical and virtual breaches, is a huge IT focus as we move through 2017. Indeed, cyber security is a key element in two of the main drivers of change for the industry:

Information as an Asset: Increasing the use, analysis, and security of Information. IDC estimates that the digital universe is growing at 40% per year and will reach 44ZB, or 44 trillion gigabytes, by 2020. The challenge is to exploit information as an asset that can fuel digital transformation — to create new efficiencies or generate new revenue streams. Consumer goods manufacturers are recognizing that their information must be usable for analysis and, in turn, analyzed. This will allow them to better understand their products and processes with visibility into the actual performance, as well as to create a foundation for continuous improvement and new products and services. Ensuring that data is gathered and analyzed in a cost-effective manner, and protecting this information as it’s collected, stored and analyzed, is critical.



Areas of Potential Risk

New Product Innovation

Quality leaks; theft of IP; proactive competitive moves

Supply Chain Equipment hacking; privacy violations; public exposure of private information


Business-Relevant Security: Connecting cyber and physical security across IT and OT. Although the IT organizations of consumer goods manufacturers can usually identify what they need for a complete cyber security strategy, the increasing overlap of IT and OT (operations technology) is redefining their security requirements in terms of tools, technologies, policies and governance. In addition to securing data centers, networks, transactional systems, customer data, and engineering designs, the convergence of IT and OT, and the addition of sensor data on connected assets, products, and supply chains, are changing the security roadmap. An integrated

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Sales & Marketing

Cost/performance tradeoffs; product recall insights; product sales and profitability

approach to security will also account for sensors, supervisory control and data acquisition (SCADA), GIS, GPS, and data historians. These may seem like overly technical points, but they are highly relevant to the sales and marketing functions because data and insights are increasingly becoming part of what these businesses sell. Under Armour, for example, is increasingly viewing itself as a health data company that happens to sell clothing. The ability for Under Armour to sell consumer “experiences” based on the data collected from sensor-enabled apparel is related absolutely to the accuracy and security of their data. Figure 11 illustrates areas of potential risk. CGT

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Pricing Guidance Pricing Guidance delivers sellers the pricing they need, when they need it • Replace gut feel with data-science driven guidance • Streamline approval process • Reduce quoting errors

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Price Management Control makes it easy to implement pricing strategies that optimize revenue & profit potential • Improve slow, error-prone and complex price management processes • Accelerate and streamline price changes that may take weeks of manual effort • React quickly to cost changes and competitive moves

Quoting Smart CPQ allows users to quickly create quotes that are optimized to WIN • Integrate quoting process within CRM • Accelerate quote turnaround time • Improve discount discipline

For More Information:

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he digital mission of consumer goods companies is to create and deliver engaging experiences at scale for consumers (the end-user) and customers (mainly retail). It’s not enough to meet the needs of consumer segments; companies must meet and exceed the needs of individual consumers, both in ways they expect and ways they have not yet imagined. Innovation excellence needs to be emphasized in terms of the success of new products and the number of items that will be required; the ability of the supply chain to manage different engagement models; and the ways in which both consumers and customers are engaged (and how that engagement gets funded). Consumer and customer expectations will make this strategy mandatory, but implementation

success and efficacy will determine profitability and competitive differentiation. Engaging successfully, and repeatedly, with the consumer is the central imperative for the consumer goods company — one that becomes much more complex and nuanced when dealing with digitally savvy consumers. Engaging with the ultimate user of a product with varied experiences and services over the usage life is not a trivial undertaking, and substantial investment is required to achieve that goal. In conjunction with that effort, it must be recognized that consumer goods companies engage with extensive retail customer networks that serve both geographic areas and consumer segments (grocery, drug, club and mass market). These traditional partners, as well as new digital partners, will have to be connected (see Figure 12).


Engaged Consumer/Connected Customer

Consumer Commerce at Scale Personalized product/ service

Advanced Channel Management Real-time assortment monitoring

Omnichannel Promotion Seamless trade & consumer

Location-agnostic access

Personalized marketing/ price/retail loyalty

Digital marketing

Immersive experience

Omni-experience transparency



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Cognitive funding/ opportunity database

Each of the three domains within the Engaged Consumer/Connected Customer model has further granularity, but broadly speaking:


Engaging successfully with consumers will be what distinguishes winners from losers in the digital marketplace. Offering digital or digitally enabled experiences to individual consumers at scale is the challenge. In part, it’s about the ability to deliver personalized products and shopping experiences, but it’s also about creating that experience when and where the consumer wants it, and in an immersive way that meets or even exceeds expectations. Having the right technologies in place to profitably deliver these capabilities will be a key to successful programs.


The role of the retailer has been largely defined as making the original sale, working with the consumer goods manufacturer on promotions, and being the place for occasional returns. Although this is changing, the retailer is often the “face” of the brand owner to the consumer. In light of the strategic priority to directly engage with consumers, consumer goods companies need to change how they interact with their retail customers.


. An important component of engaging with consumers and connecting with retail customers is the way consumer goods companies handle promotions as the marketplace transitions from “analog” interactions to digital ones. Whether they are consumer promotions like coupons, or trade promotions like temporary price reductions, the ability to manage them in the context of omnichannel commerce becomes critical. This is particularly

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noteworthy as direct-to-consumer commerce looms on the horizon. Thus, the ability to seamlessly move funds across promotional vehicles, and the ability to engage digitally and be smarter about fund allocations, are key capabilities. Additionally, the digital mission will rely on a steady supply of new products. Indeed, the ability to both introduce new products that meet new or unmet consumer needs, or the necessity to “beat the fade” by offering changing flavors or fragrances for existing products, is at the heart of the success. Implementing a coherent, extended process innovation platform is the first step, but it’s not enough. In the digitally enabled marketplace, the ability to source new ideas from all quarters will be essential, as will the ability to transparently manage all products through the full lifecycle (see Figure 13). Each of the three domains within Innovation Acceleration also has further granularity, but again speaking broadly:


One key objective for consumer goods companies is to take more input from, and collaborate with, the entire ecosystem — customers, suppliers, and partners — on product and service offerings in order to both improve success rates for new products and generate greater numbers of net new ideas. Organizations must also create realistic digital models of the product and packaging components to support process engineering and logistics requirements, while also enabling faster development cycles as well as the ongoing improvement of quality, function and performance. These requirements will dictate the investment in a new generation of design and product lifecycle capabilities that IDC collectively refers to as the “product innovation platform.” The inability of many consumer goods companies to develop and bring to market new products of acceptable quality or frequency is a sizable problem. By 2020, many categories will earn as much as 70% of revenue from products less than three years old. In the


“The ability to source new ideas from all quarters will be essential, and the old ways of understanding appeal and purchase intent will become archaic and ineffective.” digitally enabled marketplace, the ability to source new ideas from all quarters will be essential, and the old ways of understanding appeal and purchase intent will become archaic and ineffective.


Although they’ve come more recently to product lifecycle management, consumer goods companies have become fervent advocates. This is mainly due to the rapidity with which innovation churns through many categories, and companies often are not as

good at retiring products as they are at introducing them. The management of products (stock keeping units), quality maintenance, and an eye toward lifetime profitability are part of this effort. There are other elements of the digital enterprise, including the digital supply chain and smart manufacturing, but our focus here has been sales and marketing so we’ll leave those be for now. Suffice it to say, the digital enterprise is the top priority for consumer goods manufacturers in 2017. CGT


Innovation Acceleration

Innovation Platform Vitality/stability (horizon 1 & 2) Collaborative functional integration Advanced digital Simulation

Omni-Source Innovation Open-sourced/digital focus group Product portfolio management Digitally enabled, experience-based

Lifecycle Analytics Cognitive SKU management Quality, safety and compliance Lifetime (profitability) product performance


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On Place in the One Cloud loud to Run Y Your ur Supply Chain



Profile for ensembleiq

CGT - June 2017  

CGT - June 2017