consumer products

Pretty Is as Pretty Does?

by Lora Cecere on December 17, 2012 · 2 comments

It is pretty on the shelf, but it can be a problem for the sustainable supply chain.  In fact, unsuspecting consumers would never guess at the issues that the package on the shelf represents for the sustainable supply chain.

The package in consumer products is designed to market the product. The package is designed, redesigned and tweaked over and over again throughout the launch process. So much so, that you would think companies are getting it right; but, there are inherent problems.  The package and the process of package development is a major source of corporate waste.  While companies may have zero waste as a goal, the reduction of waste in packaging artwork management is a stumbling block. It is an area, based on recent research, where we find companies are going backwards not forwards. Here we share the results.

While the development of a package sounds simple, it is not.  It is a major supply chain constraint, and the source of many product recalls. In 2012, 61% of consumer products companies want to improve packaging artwork management as a key initiative for global sustainability. This is both the minimization of packaging waste and the improvement in packaging materials to improve sustainability.  Interest is increasing. It has roughly doubled in the last five years. To compare, in 2009, shortly after the release of the Wal-Mart scorecards, in a similar study, it was 39%.

While increasing in importance, companies are treading water on performance. Despite a twofold increase in the deployment of Product Life-cycle Management (PLM) over the past five years, many organizations are going backwards not forwards. Artwork approval time has increased by 30% and over 20% of product recalls are due to packaging artwork problems. The root issue is complexity. The second issue is market discipline. The third  issue is regional/global governance. All are increasing in importance. Within the organization, the number of items has grown by 25% and the management of packaging in global networks is challenging. The answer has not been technology; despite the increase in the deployment of PLM, the amount of product recalled and destroyed due to packaging issues continues to rise.

So, what should a company do?  Organizations have the best results when they:

  • Focus on Fundamentals. The process is very cross-functional  To drive success have a clear process for understanding global requirements and governance for data fields in global roll-outs.  This tight governance process needs to be carefully managed by an artwork steward in either the marketing department or the product development team. Product marketing teams often turn over quickly, so there needs to be training and alignment on packaging artwork management and global sustainability initiatives to make the reduction of waste an ongoing reality.
  • Manage it as a Network. The processes need to be mapped outside-in, and managed as a horizontal cross-functional process. While many companies source suppliers based on cost, sourcing artwork management suppliers should be sourced based on capabilities. Today, only 35% of the development process is managed internally.  The design and management of packaging and artwork is spread across a complex network of designers and suppliers.  To reduce waste, suppliers should be selected based on proven collaborative capabilities and software integration.
  • Measure and Track Progress Cross-functionally. Packaging artwork and the associated waste is a dirty job. In many enterprises, over 150 people touch the process and the littlest mistake can result in costly recalls.  Training and process discipline is key.  It is only when it is consistently measured and tracked that cross-functional alignment against the goal can happen.

So, the next time that you pick up a package, give it a bit more respect. Consider that it is the product of months of cross-functional reviews and approvals by scores of people. And, that when companies make the approval process a priority that they make a huge step forward in reducing supply chain waste, improving time to market, and delivering on the brand promise. To read more on this topic, check out our report on slideshare.  What are your thoughts?  We look forward to hearing from you!

Convergence Is REAL. It Is NOW.

by Lora Cecere on June 23, 2012 · 2 comments

This morning I am sitting at my kitchen table, sipping coffee, writing a report. The coffee is good, the sunflowers are blooming on the deck and the words are flowing from my fingers.  The results of the Supply Chain Insights retail mobility study are compiled, and I am excited to report on the data.  I think that it is compelling.

Tomorrow, I will roll my suitcase onto yet another airplane to present the findings at the RetailConnections Mobile Impact Summit in Dallas (check out the PowerPoint presentation on SlideShare). For me, it is the last conference before I can take some time off for the summer.  I badly need a break.  Starting a new company, writing a book, and keeping up a frenetic pace on the road with clients has been grueling.

Marc Millstein’s events (@retailconnect on twitter) are always good ones.  At the event, I look forward to sharing the insights from the study with some of my favorite retailers. (Look for my tweets from the event using hashtag #RSSummit.) Here, in this blog post, I share my current thoughts on the study and the key points of my upcoming presentation:

Convergence.  The focus for retailers from the study is clearly convergence.  Mobility is important to retailers, but it is not mobility for the sake of mobility.  Instead, the focus is convergence of e-Commerce, mobility and social.  And despite the doomsayers on the concepts of social commerce, the study results show that the greatest increase in the intended use of mobile is to fuel efforts in social commerce. When I use the term social commerce, I am not speaking of slapping an e-Commerce presence on Facebook.  For me, and I hope for my readers, it is much more than the “F-WORD.”  Social commerce is the use of social technologies to drive commerce through brand engagement and improvement of the path to purchase.  Retailers have 1/3 more sites on Facebook than e-Commerce and they now have a strong presence on Twitter. The focus on mobile applications and mobility throughout the supply chain is a means to an end of serving customers better and driving brand differentiation.

In the study, the average retail company has 1.6 mobile applications, they have been working on a mobile strategy for a little over a year, and their biggest challenge is getting the right talent. It is a fundamental shift from a two years ago when the primary focus was mobile for the sake of mobile.  We are slowly starting to see the shift from social marketing to social business. For me this is EXCITING! I look forward to sharing my thoughts from the conference on this topic on twitter and on the blog.

My advice:  35% of retailers have a dedicated team focused on mobility.  Make sure that it is cross-functional.  Use this as an opportunity to be market-driven not marketing-driven.  Use it as an opportunity to redefine the organization outside-in from the shopper back.

Fundamental Shift.  So, you might be asking why an old supply chain gal like the Shaman is writing about mobility and social in retail. The answer is simple. I believe that these technologies offer the opportunity for us to build the extended supply chain from the customer’s customer to the supplier’s supplier for all industries. I also believe that the increased use of mobility in consumer interactions will change the fundamental rhythms and cycles of the supply chain.  The pace will change.  It will be quicker.  We will have new data sources, new forms of demand insights and increased expectations from consumers.  We will be forced to redefine old paradigms, and that is the stuff that gets the Shaman’s blood going!

I think that it is a new opportunity for ALL parties in the consumer value chain to drive differentiation.  I am currently working with several companies that are forging exciting new frontiers on the Digital Path to Purchase (Follow the action at #DP2P on twitter.)  Slowly, consumer products and retail leaders are redefining four moments of truth in the shopping experience –the list, the basket, the purchase, and usage–through digital insights. The list is becoming more automated, the basket is becoming the focus for retail/consumer products collaboration, and social technologies are allowing us to gain new insights about usage.

The shift from near real-time to real-time data is not trivial.  Downstream data and demand signal repositories will be the foundation and big data techniques will eclipse our traditional transactional thinking.  The building of outside-in processes will become increasingly important.  It is my hope that the supply chain will become less about US and more about the shopper.

My advice:  Take a piece of butcher paper and paste it on the wall. Using the principles of mobile, social and e-commerce convergence, facilitate a cross-functional group of leaders to map what an outside-in process could look like for your company.

Disintermediation.  This shift offers new horizons for the consumer value chain.  Let me explain.  Last week, as I flew back from a client, I placed an order from Amazon on my mobile application on an airplane somewhere over Ohio for delivery of pantry items to my apartment in Baltimore.  It was one click away. The package was waiting for me when I got home.  Whoever thought that we would be ordering flour, sugar and paper towels from Amazon?  And that the landed price would be less than Wal-Mart?

Retail grocers are under attack.  Amazon wants to own “the center of the store.”  This is happening at a time when retail grocers are struggling with store profitability and attempting to squeeze suppliers for every dollar.  Year-over-year consumer products companies have talked about “collaboration with retailers,” but the reality is that we have steadily moved costs backwards in the supply chain from the retailer to the supplier to the supplier’s supplier.  This is an opportunity to change the equation.  The power is shifting to the shopper. The traditional retailer is losing power.

This is the time to think about disintermediation.  Is Amazon the new Wal-Mart?  Does the store become a place for excitement and fresh items? And, as such, is there an opportunity to move traditional trade funds into digital programs to improve the shopper’s experience?  Is there an opportunity to drive new types of purchase through third-party applications (e.g. like recipe sites for food manufacturers) in social commerce? I believe that consumer products companies have a new opportunity to move trade funds into digital demand shaping programs with Amazon and change grocery retailing forever. I also believe that Digital Path to Purchase programs are a form of the convergence that will permeate and permanently transform the supply chain.

As channels change, the supply chains behind them morph.  Bricks matter.  Behind every pretty application on a handheld device is a manufacturing plant, a distribution center and a truck.  They will all feel this impact.

Let’s face it.  Why do shoppers need to go to the traditional grocery store for a pantry-loading trip when they can order items through their mobile device and have free shipping?  Why do shoppers need a piece of paper anymore–or paper coupons –when they can go to a recipe site, plan their meals for the week, pull a digital list and place it on Amazon for delivery? Or, alternatively, cross-shop it digitally across retailers, combining mobile offers, for the best price?

So, in summary, I believe the time for convergence is now.  Few are ready, but all should be.  Slowly, day-by-day, power is shifting to the shopper.  The paradigm of what is a retailer and what is a supplier is changing.  New business models are opening up, but they will only be captured by those that are truly market driven.  It will not be seized by those that rely on marketing-driven initiatives.   I look forward to sharing more when I get back from the conference.  Please let me know your thoughts.

Supply Chain Insights Update

Lot’s happening at my new company.  I have five hard-working employees. We are busy working on research, serving clients and designing a community.  We feel that we are making progress on our goal to drive new and compelling research on supply chain management into the industry.  This week, we pulled the “Big Data” survey from the field.  Finishing it has been a struggle. The concepts are new ones for the industry.  After two months, we were able to get 50 completes.  Only one in four respondents was able to complete the survey.  As one participant in a strategy session said last week, “This is a new language, and a new way of thinking.  How do I retool my brain?”  I think that this will be a challenge for all.  I look forward to sharing the results with you next week on the blog and I will post the entire deck on SlideShare soon.

Our focus is cranking out new research on new topics. We will continue to publish research reports in front of the firewall to help all supply chain teams. We want to be known for leading edge research.  To this end, we placed a survey on packaging design for consumer products and the role of Product Lifecycle Management (PLM) into the field, and we have four new surveys going into the field this month.  The list includes: downstream data; trade promotion management; supply chain business process outsourcing; healthcare reform and transportation management. (The link for the packaging artwork study is

If you would like to be a part of one of these new surveys, just let us know.  We will be sharing the final reports of all the studies in a monthly newsletter.  Please let us know your feedback.  We want to redefine the analyst model to be a more caring, insightful and useful business model. With your help, we feel we will be successful. Have a great weekend.  I am going to go get another cup of coffee. I have more writing to do…  The Shaman’s day is just starting.