2020 future value chain webcast presentation

WEBCAST

23 FEBRUARY 2011

© 2011 The Consumer Goods Forum, Capgemini, HP. Microsoft . All rights reserved

THE EVOLUTION OF THE FUTURE VALUE CHAIN

2020 Future Value Chain Building Strategies for the New Decade2


2020 Future Value Chain: Objectives and Principles

3 2020 Future Value Chain Building Strategies for the New Decade

Objectives-‐ Bring a collective vision to the CP&R Industry-‐ Ensure the Industry is best prepared to continue to meet the needs of shoppers and consumers in a changing world

Principles-‐ New report every two years -‐ 10-‐year perspective-‐ (Executive) industry expertise via workshops-‐ Not a consultant project


2016: A Vision of the Future Value Chain

80 executive participantsTwo global workshops (Utrecht, NL & Chicago, USA)Follow-up:

2016 Future Supply ChainInformation Sharing reportNew Ways of Working Together

2018: Succeeding in a Volatile Market

130 executive participantsGlobal workshop (Utrecht, NL)Asian workshops:

Hong Kong (Asian region)Mumbai (Indian market)Tokyo (Japanese market)

Follow-up:Succeeding in a Volatile Market

2020 Future Value Chain: The Future Value Chain Genesis

2020: Building Strategies for the New Decade

200 executive participantsGlobal workshops (Chantilly, FR)Regional workshop

GS1 in Europe (Antwerp, BE)Country workshops:

Australia (Melbourne)France (Paris)Netherlands (Utrecht)US (Chicago)Mexico (Mexico City)



2020 Future Value Chain Framework: Trends, Objectives and Tactics



TRENDS:

WHAT IS DRIVING OUR OBJECTIVES



We see rapid changes in societies around the world


Increased urbanization


Example consequencesShift to smaller-footprint storesNo room for unproductive inventorySupply and logistical challengesNew infrastructures required

Today:Close to 180,000 people move into cities daily, adding roughly 60 million new urban dwellers each year

2015: Doubling of cities > 8 million 2020: 8 Megacities (>20 million)2050: 70% of world population lives in urban centers

Aging population


Older consumersHave substantial ecomomic powerDevote greater portion of total expenditure to necessitiesMay soon represent majority of voting public in many countries

Example consequencesChanges to business models to meet needs of different populationReview products and processes(e.g. wider aisles, largeprint labels)Shrinking workforce challenges

Middle class is rapidly expanding (mostly in developing regions)2000: 56 % of global middle class in developing countries2030: 93 % of global middle class in developing countries

Increasing spread of wealth


Example Consequencessource of growth for manufacturers and retailersImplications for availability and prices of commoditiesPotential protectionistic country policies

Economic powers like China, Brazil and India continue to rise

Volatile global economy will remain the norm for coming decade

Shifting of economic power



changes in consumer and shopper behaviour


Shoppers continue to become more empowered using technologyExplosive growth of mobile features and device convergence

2013: over 2 billion mobile users globally will have purchased via handsets

Crucial role of social media

Increased impact of consumer technology adoption


Example consequencesGrowth of mobile interaction and commerceConsumer technology used in storesAddressing social communitiesLeveraging huge amounts of dataDealing with privacyBecoming more transparent and collaborative towards shoppers

Example consequencesMore demanding consumersNew service models needed

Increase in consumer service demands


Exponential growth and adoption of consumer technologies drives new levels of service demandsRise of stronger web-based service economy

Consumers demand 24/7 serviceOnline sales will grow to 25 % to 30% of total retail sales (now: 4 % to 15%)

Growing consumer concern about sustainability


increases significantlyRegulation carbon footprint increase significantlyConsumers expect governments and companies to play major roleUS Green marketplace grows from $420 billion in 2010 to $845 billion by 2015Food, beverage and personal and household goods sectors particularly exposedWaste becomes key focus sustainability discussion

Shoppers want more healthy products and a healthier lifestyleEmerging consumjer segments like LOHAS(Lifestyles of Health and Sustainability)LOHAS In US are approximately 19% of adult population: 41 million consumersSales from LOHAS expected to quadruple in five years

Increased importance of health and wellbeing



other changes in our environment


Demand larger than supply2030: World population 8.3 billion

Demand for food +50%Demand for energy +50%Fresh water demand +30%

Scarcity of natural resources


Example consequencesEnergy revolutionNew Water policiesImpact on food pricesPressures on food quality & Safety

Regulatory pressure expected to increaseHot button areas:

EnvironmentSustainabilityfood safety

Increase in regulatory pressure


More synchronized value chain with greater visibility and traceabilityImproved collaborationNew supply chain / logistics technologiesInformation transparency

Rapid adoption of supply chain technology capabilities


Example consequencesNeed to improve visibility and traceabilityNeed to share information over company boundariesNeed to adopt right technologies

Information Technology shifts from indispensable support function to the way to become adaptive

New ways of business due to next generations of ITNew ways of managing business processesMajor new opportunities for innovationFreeing up from current IT constraints

Impact of next-generation information technologies



OBJECTIVES:

WHAT WE WANT TO ACHIEVE



Make Our Business More SustainableFrom Niche to Norm

2020 Future Value Chain: Four Strategic Objectives

Optimize a Shared Supply ChainCollaborate Differently, Compete Differently

Engage with Technology-Enabled ConsumersThe Consumer in the

Serve the Health and Wellbeing of ConsumersFocus on Quality of Life



Success means consumers trust our industryRetailers and brand manufacturers collaborate

Tackling big challenges (e.g., deforestation) Helping consumers understand their role in living an environmentally friendly lifestyle

Common measures, language and consistent messagingHelping consumers understand their roleHelping to make the right decisions, enabling a significant change in consumer behavior

Competitiveness delivered by Brand and store performanceBreakthrough innovations improving sustainability

Working with upstream suppliers to extend our influence over many other contiguous industries

1. Make Our Business More Sustainable: From Niche to Norm

Success will come when consumers begin

to trust our industry



The 2020 future supply chain reconsiders assumptions

New parameters include:Reduced CO2 emissionsEnergy consumption

Driven by consumers; they are the trigger for an optimized collaborative supply chain flow

2. Optimize a Shared Supply Chain: Collaborate Differently, Compete Differently

Success will come when supply chain optimization is treated from a total

value chain perspective rather than from individual company perspectives



Consumer technologyChanges lives of consumersChanges shopping journeyIncreases marketplace transparency

ConsumersDemand personalized dialogues and offerings anytime, anywhereEmbrace technology quicker than the industryDigital natives are increasingly big consumer baseDigital immigrants also heavily use consumer technologies

The industryNeeds to figure out how to effectively interactNeeds to be viewed as a trusted source for informationWill be more successful when companies engage consumers in new product and service development

3. Engage with Technology-Enabled Consumers: The Consumer in the

Success will come when we understand how to maintain a true dialogue with consumers via their preferred channels

and technologies



Health and wellbeing of consumers: physical, emotional, spiritual, intellectual and sustainable wellbeingPositive changes in consumer behavior

Healthy choices available for all budget levels Information/education to make informed choices

Improved availability and quality of water and hygieneReduce diseases and infant mortality rate

To be established via a new way of working together Governments, consumer goods companies, pharmaceutical companies and NGOsEnabling new business modelsEnabling a dialogue to collaboratively work on concrete solutions

4. Serve the Health and Wellbeing of Consumers: Focus on Quality of Life

Success will come when we focus



TACTICS:

HOW WE WILL ACHIEVE OUR OBJECTIVESAS AN INDUSTRY



2020 Future Value Chain:



HOW TO USE THE FUTURE VALUE CHAININ YOUR COMPANY



You can already be inspired by a lot of good example initiatives across the industry


Unilever Collaborates with Walmart (ASDA) to Create Awareness and Educate Customers on Sustainable Living

METRO Group Develops a Sustainable Aquaculture Program for Fish in the Mekong Delta in Vietnam

Many Consumer Product Companies are Committed Towards Sustainable Production of Palm Oil

Coca-Cola Hellenic Runs Energy-Efficient Plants that Reduce CO2 Emissions

Albert Heijn Uses Dynamic Pricing and Digital Signage to Reduce Waste on Fresh Produce

-and Track and Reduce Energy Usage for Its Products

Make Our BusinessMore Sustainable

Illustrative Examples

Optimize a Shared Supply Chain

Colgate-Palmolive (as many other Companies) Uses Global Data Synchronization to Standardize Business Processes, Drive Efficiency and Enable Faster Innovation

United Biscuits and Nestlé Collaborate to Generate Significant Environmental and Cost Savings

Mars and Kuehne + Nagel Measure and Visualize Order Placement Impact to Gain Environmental Benefits and Improve Efficiency

Danone Works with Carrefour to Improve On-Shelf Availability and to Leverage Supply-Driven Shopper Insights

http://www.google.co.in/imgres?imgurl=http://www.exoriens.com/images/globalgap_logo.jpg&imgrefurl=http://www.exoriens.com/ginger.html&usg=__ZSBi-JzIPJhJwWfwfZCzHafCqNM=&h=238&w=850&sz=25&hl=en&start=2&zoom=1&tbnid=EGa0_BIqAo21PM:&tbnh=41&tbnw=145&prev=/images?q=GlobalGAP+logo&um=1&hl=en&sa=N&tbs=isch:1&prmd=ivns&um=1&itbs=1

http://images.google.com/imgres?imgurl=http://www.dep.ufscar.br/ciclo/carrefour.jpg&imgrefurl=http://tamtam.apestaart.org/index.php?paged=2&h=475&w=612&sz=25&hl=en&start=8&tbnid=L2ckNzkNlwymUM:&tbnh=106&tbnw=136&prev=/images?q=Carrefour+logo&svnum=10&hl=en&lr=


You can already be inspired by a lot of good example initiatives across the industry


Engage with Technology-Enabled Consumers

Serve the Health and Wellbeing of Consumers

PepsiCo Successfully Engages a Large Customer Base to Interact in Product Development

Coca-Cola in Japan Uses Interactive Vending Machines to Increase Consumer Engagement

through an Innovative Mobile Marketing Solution Offered by O2 Mobile in UK

Unilever and Albert Heijn Jointly Work on Strategic Activation Platforms, Using Shopper Insights to Drive Joint Growth

CFBAI Initiative Seeks to Address the Problem of Childhood Obesity by Self-Regulating Advertising to Children under 12 Years

Product Recall Service of GS1 in U.S. and Canada Has Helped to Build an Efficient Process for Handling Product Recalls

Nestlé Helps Raise Awareness about the Importance of Proper Nutrition and Health and Wellness to Children through Its Healthy Kids Global Program

Hindustan Unilever Limited Educates Rural Women to Enter the Growing Consumer Market in Rural India

Walmart Collaborates to Make Technology More Accessible and Affordable for Small Health Practices

Illustrative Examples

http://www.google.co.in/imgres?imgurl=http://www.nestleusa.com/nirf/cm2/upload/21893A16-862F-4805-BFD5-74C437F16BF8/BBBLogo_HealthyWeight_Community.jpg&imgrefurl=http://www.nestleusa.com/PubCommunity/Health.aspx&usg=__XXfF45S4mjtkjs2udzlLnq7oz4Q=&h=158&w=196&sz=7&hl=en&start=11&zoom=1&tbnid=Q9zKqELwkTBbtM:&tbnh=84&tbnw=104&prev=/images?q=Children%E2%80%99s+Food+and+Beverage+Advertising+Initiative+logo&um=1&hl=en&sa=N&tbs=isch:1&um=1&itbs=1

http://www.nestle.com/


Make Your Business More SustainableWill you drop product lines that are fundamentally not sustainable?Do you have a contingency plan for an unexpected eco-disaster or climatic disruption?Do you have programs in place to address, for example, restrictions on truck emissions, access to urban zones and noise pollution?Are you prepared to transparently report the detail of your

How Robust Is Your Strategy?


Optimize a Shared Supply ChainDo you still see your supply chain as a source of competitive advantage?Would you share a truck or a warehouse with a competitor?Is your supply chain able to cope with the impact of oil returning to its 2008 historical high of $147 a barrel? Or even exceeding that, and hitting $200? Are you willing to share non-competitive information with trading partners including competitors about product movements along the supply chain?

Serve the Health and Wellbeing of ConsumersAre your products creating the health crisis rather than solving it?Are you prepared to meet the new demands of older consumers? Do you know where you will get your labor force once your current labor force retires?How will you efficiently serve the underserved customers in developing markets?

Engage with Technology-Enabled ConsumersDo you know how to survive a negative social network viral fan page?Is your company really differentiating between a

Do you know who else is providing information about your brands or stores to consumers or shoppers?How do you create transparency with consumers while maintaining control?


Three Ways Companies Can Leverage the Future Value Chain in their Own Business

1. Apply the Future Value Chain framework inside your company

What strategic objectives should we have inside our company?What tactics do we need to put into place to achieve the objectives?

2. Implement the relevant tactics and ideas from the Future Value Chain initiativeExisting company programs address strategic objectives

3. Challenge yourself to see how robust your strategy really is to:Make your business more sustainableOptimize a shared supply chainEngage with technology-enabled consumersServe the health and wellbeing of consumers



workshop that will lead you from Inspiration toward a concrete Roadmap

Future Value Chain Discovery-day

Inspiration by concrete business solutions and best-in-class reference examples Blending with company-specific issues and initiatives in an unconventional facilitated processResulting at the end of the day in a high level roadmap that fits your business context

Building Strategiesfor the New Decade


The Consumer Goods ForumSabine RitterThe Consumer Goods Forum+33 1 82 00 95 [email protected]

Marc van der LietThe Consumer Goods Forum+33 1 82 00 95 [email protected]

Contact details

CapgeminiKees JacobsCapgemini+31 653 292 [email protected]

Brian GirouardCapgemini+1 952 212 [email protected]

MicrosoftTed CombsMicrosoft+1 630 725 [email protected]

David BaileyMicrosoft+44 118 909 [email protected]

HPMario VollbrachtHP+1 404 551 [email protected]

www.hp.com/go/retailwww.hp.com/go/consumergoods
