The Future of Standards in the Consumer Goods & Retail Industry

Cut costs and meet new consumer needs: A view from the industry The Future of Standards in the Consumer Goods & Retail Industry

Acknowledgments Capgemini would like to thank the interviewees who participated in this research for their insights. Capgemini would also like to thank GS1 and The Consumer Goods Forum for their support.

Aeon Alliance Boots Campbell’s Colgate-Palmolive Groupe Soparind Bongrain DHL Delhaize Jerónimo Martins Johnson & Johnson Kimberly-Clark Kroger Li & Fung Nestlé Procter & Gamble Retail Systems Research Safeway SC Johnson SUPERVALU Tesco Unilever Walmart

2 The Future of Standards in the Consumer Goods & Retail Industry

Table of Contents Acknowledgments 2

Introduction 5

Executive Summary 6

The Current State of Standards 9

Market Trends and Business Challenges 11 Changes in Consumer Behavior 12 Shifts in Buying Power 13 Availability of New and Advanced Technologies 13 Scarcity of Natural Resources 15

Exploring the Future of Standards 17 Introduce Standards to a Wider Range of Trading Partners 17 Embed Standards in New Business Processes 17 Develop New Standards Based on Industry Needs 18 Improve the Guidelines and Services that Surround Standards 18

Recommendations 21 Develop Marketing Programs 21 Introduce Simplifi ed Standards Programs 21 Leverage Existing Standards to Meet Consumer Communication Expectations 21 Collect Suffi cient Information about Product Origin 22 Design a Common Set of Sustainability Metrics 22 Develop Solutions to Ensure Data Quality 22 Expand GS1’s Role 22

Conclusions 23

3 3 The Future of Standards in the Consumer Goods & Retail Industry

4 The Future of Standards in the Consumer Goods & Retail Industry

Introduction

Since the fi rst barcode was scanned in 1974, GS1 standards have led to signifi cant savings for the consumer goods industry, primarily through improved supply chain visibility. For example, research conducted by GS1 UK and the Cranfi eld School of Management revealed that barcode adoption in the UK saved the UK retail industry £10.5 billion in 2011.1

The 2020 Future Value Chain report2 published by The Consumer Goods Forum and Capgemini has identifi ed a number of emerging trends that will affect the consumer goods sector in the coming years. These conditions make it necessary for trading partners to once again collaborate around standards to advance their mutual interests.

In mid-2012 GS1 and The Consumer Goods Forum initiated research to identify the industry’s priorities for future standards and services. This included in-depth interviews with more than 20 consumer goods and retail companies conducted by Capgemini Consulting. Participants included C-level executives, vice presidents, other senior executives, as well as analysts from top manufacturers, retailers and service providers across all regions of the world. They represented functional areas including supply chain, information technology and data management, and business process improvement.

Have current industry standards fully lived up to their promise? How will standards need to evolve in response to the trends shaping the industry? These are the key questions that this report seeks to answer.

1 GS1 UK and Cranfield School of Management, 2011 2 2020 Future Value Chain, The Consumer Goods Forum and Capgemini, 2011

5 The Future of Standards in the Consumer Goods & Retail Industry

Executive Summary

Historically, GS1 standards have supply chain at an unprecedented established a common language pace. These trends are challenging among manufacturers and retailers in manufacturers and retailers to redefi ne the consumer goods industry. This has how they collaborate with each other enabled a more effi cient fl ow of goods and with other trading partners. As and information, generating signifi cant industry collaboration models change, savings. But what is the future must standards also evolve? of standards? Given these complex dynamics, Today’s marketplace continues to GS1 and The Consumer Goods be highly competitive. Consumers Forum asked Capgemini Consulting in mature markets are struggling in to investigate the current and future the tough economic climate. Excess role of the industry’s standards. inventory throughout the supply Several key messages emerged from chain remains a problem. Pressures interviews with a representative sample to reduce costs remain high. Could of consumer goods manufacturers, there be untapped potential in retailers, service providers and industry standards to address these analysts: challenges? The current portfolio of standards is considered fit for purpose. Where In parallel, the consumer goods standards are presently deployed, industry is undergoing enormous no opportunities were identified transformation. Changes in consumer for improvement to the standards behavior, the availability of new and themselves. advanced technologies, shifts in buying A wider range of trading partners power and scarcity of natural resources need to embrace standards to are expected to reshape the industry’s increase supply chain efficiency.

6 The Future of Standards in the Consumer Goods & Retail Industry

Standards must be embedded 2. Introduce simplifi ed standards into new process areas to meet programs for ease of adoption The challenge consumer expectations, manage corporate risk and improve supply 3. Use existing standards to is adoption chain planning. communicate product information to consumers […]. There’s no New standards are needed to enable consumers to compare sustainability 4. Collect suffi cient information about consistency across performance between products if product origin and route to market to the board. We desired. minimize risk Improving the guidelines and 5. Design a common set of cannot standardize services that surround standards will sustainability metrics for the industry generate more value through greater our operations until consistency in implementation. 6. Develop solutions to ensure data quality we get to a high- In light of a clear mandate to advance 7. Expand GS1’s role from a standards the industry’s standards framework, volume critical mass defi ning body to a center of it is recommended that stakeholders excellence in standards deployment from across the industry undertake the following high-priority actions: - Chief Information This report explores the needs and Officer of a Retailer 1. Develop marketing programs expectations for standards in the targeted toward companies not future in greater detail, and provides making full use of standards recommendations to guide their evolution.

Future of Standards: Expand breadth and scope

The industry acknowledges that the current system of standards has successfully laid the foundation for clear and understandable exchanges between companies. It is now time to multiply this Comprehensive

capability by extending the reach Standards New

of standards to a wider range of ProcessesNew New ServicesNew trading partners and a wider set of business processes beyond supply

chain, while acknowledging the Current Wider Range of Trading Partners role that smarter consumers play in Focused State new standards and the requirement for improving the guidelines and Scopeof Standards Programs TargetedT d Expansive services that support standards deployment. Breadth of User Base

7 The Future of Standards in the Consumer Goods & Retail Industry

88 The Future of Standards in the Consumer Goods & Retail Industry

The Current State of Standards

To determine how standards will need and The Consumer Goods Forum, increasing need for visibility further to evolve, we must fi rst understand if found that only two of the measured upstream into the supply chain, both the current portfolio of standards is standards have adoption rates greater retailers and manufacturers will meeting expectations. Although we than 90%. As a result, the positive increasingly ask for upstream suppliers expected to learn principally about the network effect of mass adoption is not to voluntarily adopt standards. need for enhancements to existing fully realized. standards or the desire to supplement Finally, in the absence of detailed existing standards programs, we heard Interviewees also noted lower rates guidelines and recommendations on a very different message. of standards use by small to medium- how to put a standard into practice, it sized companies and fresh food is left to the implementing company Overall, today’s standards are producers. These organizations to create its own interpretations. considered fi t for purpose. Where typically have fewer resources available Sometimes, even when guidelines are standards are presently deployed, for implementation and are often less provided, market conditions make no opportunities were identifi ed familiar with the benefi ts of standards applying those guidelines costly or for improvement to the standards adoption. diffi cult. In addition, local versus global themselves. Instead, there was a implementations of standards creates universal call for greater adoption To date, the industry’s focus has variation in deployments. of current standards across the primarily been on implementing industry, as well as more consistent standards among manufacturers and implementation of these standards. retailers, usually driven solely by the retailers. This has left component and Even among the industry’s largest raw material suppliers without a clear manufacturers and retailers, typically mandate for adopting standards. With the heaviest users of standards, the the use of standards well-established full portfolio of standards is under- across the industry’s core, and an used. While the use of Global Trade Identifi cation Numbers (GTIN) and Electronic Data Interchange (EDI) were most frequently mentioned by the interviewees, other standards were less widely cited. The 2011 Make your supply chain more efﬁ cient by using GS1 Global Standards report3, by IBM

3 Make your supply chain more efficient by using GS1 Global Standards, IBM and The Consumer Goods Forum, 2011

99 The Future of Standards in the Consumer Goods & Retail Industry

10 The Future of Standards in the Consumer Goods & Retail Industry

Market Trends and Business Challenges

BuilDing stRAtEgiEs FOR thE nEW DEcADE The consumer goods industry standards. The ranking resulted in VALUe FUtURe CHAIn: 2020 BUILDInG DeCADe stRAteGIes neW tHe FoR has undergone dramatic change four specifi c trends being highlighted through the last few decades. (see chart below). Interestingly, the Challenging economic conditions, signifi cance of these four trends for FUTURE VALUE CHAIN evolving technology and a more the industry was reaffi rmed in recent empowered consumer continue to work by the Emerging Trends Pillar of

drive transformation in participants’ The Consumer Goods Forum where Additional sponsorship from operating models. The 2020 Future emerging industry trends are explored The 2020 Future Value Chain report Value Chain report (see box on right) by committee members. was published by The Consumer identifi ed 12 trends that are expected Goods Forum and Capgemini. It to defi ne the industry over the next We explore each of these in greater details the trends that will have 10 years. This study validated that depth in the following sections. the most impact on the consumer these are the major infl uencing factors goods and retail industry in the next shaping the industry. 1. Changes in consumer behavior 10 years. This report also provides a framework to help companies 2. Shifts in buying power As part of the research for this report, identify strategic objectives and build industry executives ranked several of 3. Availability of new and action plans for 2020. the trends covered in the Future Value advanced technologies Chain report based on their expected http://www.futurevaluechain.com/ impact on their businesses and on 4. Scarcity of natural resources

Top Industry Trends Ranked by Senior Executives

5 Number of Interviewees

0 Changes in Shifts in Buying Availability of Scarcity of Consumer Power New and Natural Behavior Advanced Resources Technologies

11 The Future of Standards in the Consumer Goods & Retail Industry

Changes in Consumer provide enough information to satiate information needs were closely Behavior the consumer’s appetite, consumers correlated with the consumer’s will turn to other sources, which growing focus on health and well- Overwhelmingly, executives view could be inaccurate or misleading. being. Most companies, particularly consumers’ changing approach Research conducted by GS1 UK, in the food category, highlighted to shopping as the dominant force shows that 91% of mobile barcode the need to ensure product safety. shaping the industry over the next scans returned incorrect or missing Equally important is the need to decade. The nature of manufacturers’ product descriptions.5 Research by respond to product failures within and retailers’ interactions with Clavis Technologies shows that 67% hours through effective recall, driven consumers has changed drastically of products were missing essential by both government regulations and and will continue to evolve. information such as brand name, consumer sentiment. ingredients or nutritional information on Internet access, smartphone major eCommerce websites.6 Ensuring the quality of business- ownership and social media usage are to-business (B2B) and consumer- becoming pervasive globally. These Consumers also demand efficiency facing data technologies enable people to access in post-purchase services such as information when and where they want Some brand owners are particularly product recall notifications, real-time it. Consumers now demand readily focused on the need for data quality information updates and around-the- available product information with real- for B2B data shared between trading clock customer service, and expect a time updates and the ability to scan partners, while others are very aware response in hours, not days. barcodes or take a photo of a product of the impact of low-quality data to obtain information such as brand, on information made available to price and stores where it is available. Executives participating in this research consumers. The concept of “trusted Many seek information beyond the say their companies face several sources of data” was top of mind label, including the stories behind challenges in responding to these for these companies. The challenge the products, product origin and developments: is for the industry to agree on an manufacturing working conditions.4 Providing product information entity or entities in which the trusted across channels sources and their governance will reside. As a result, it is critical to have All of the industry executives consistent information available via all interviewed expressed concerns channels: in store, online and mobile. If regarding effective and accurate the brand owner or the retailer cannot communications of product and company information to consumers There’s a push to across channels. Interviewees have traceability acknowledged the potential of consumer scanning of product from field to store Consumers are barcodes and Quick Response (QR) codes today, and in the future, image to consumer – becoming more recognition technology. All agreed especially in the the challenge lies in ensuring data demanding, and is accurate, timely and provided in fresh produce area. a standardized way via whichever want access to more technologies consumers prefer. Today, this process information is mostly manual Increasing consumer focus on product safety and recall - VP of Supply Chain Several specific categories of - Supply Chain SVP of a Manufacturer information were called out of a Retailer repeatedly: ingredients, allergens, price and origin. In many cases,

4 For more information on this topic, see Beyond the Label: Providing Digital Information Consumers Can Trust, GS1 and Capgemini, 2011 5 Mobile-Savvy Shopper Report, GS1 UK and Cranfield School of Management, 2011 6 Digital Product Information Benchmarks, Clavis Technologies, 2012 12 The Future of Standards in the Consumer Goods & Retail Industry

Shifts in Buying Power Different distribution channels promotional strategies. As a result, due to infrastructure capabilities they are challenged to forecast Developing and emerging markets demand accurately and neither Another challenge for companies are anticipated to fare better than manufacturer nor retailer can manage to expand overseas is local recession-weary US and European inventory optimally. markets. Brookings Institution has infrastructure, from physical roads projected significant middle-class and bridges, to IT systems and consumption growth in developing local trade regulations, especially Availability of New and countries, especially China and India.7 in emerging markets. Additionally, Advanced Technologies Their increased buying power is companies are challenged to find Technology has already helped expected to drive manufacturers and new distribution channels that are the supply chain to become more retailers to look for growth in these adapted to local market conditions. efficient. As technology advances, regions. For example, one manufacturer spoke about a network of women new opportunities arise. RFID (Radio in rural India who operate direct- Frequency Identification), GPS (Global Reaching consumers in both Positioning System) and mobile developing and mature markets raises selling businesses in their villages. These women collect orders, technologies enable goods to be the following challenges for many of the located anywhere while in-transit. New respondents: communicate these orders to the manufacturer and subsequently technologies that operate at an even Product innovation for diverse retrieve the shipped product from a more granular level, such as sensors markets nearby collection point for fulfillment. that capture temperature variations A second manufacturer spoke about during transport, will provide even A wider array of markets means street vendors and newsstands as richer data for process improvement, manufacturers and retailers are distribution mechanisms. product safety monitoring and encountering significant variations consumer communications. in consumers’ cultural influences, decision factors and shopping As a result, the top question senior habits. Business challenges can be supply chain executives seek as basic as the language used on to answer is how to construct the e-commerce website. Further, standardized global supply chain the difference in availability of local processes that are flexible enough resources requires manufacturers to to address local requirements be innovative in product design and and limitations. Being able to use production to reduce cost and meet foundational product identification Promotion-based local consumer needs. and data exchange standards would be a huge step forward. sales have moved to

Promotions: necessary for sales 60-70% of all sales, growth but problematic for up from about 40% Growth will come demand forecast Most of the retailers see promotions from Latin America as a critical strategy to attract - SVP of Supply Chain and Asia price-sensitive value-hunters. of a Global Retailer With digital couponing and the ability for consumers to look up prices on mobile devices, retailers - SVP of the Global feel the pressure to stand out in Consumer Sector of a such a crowded, fast-moving and Service Provider competitive environment. Manufacturers noted that retailers are often unwilling to share their

7 The Emerging Middle Class in Developing Countries, OECD Development Center and Brookings Institution, 2011

13 The Future of Standards in the Consumer Goods & Retail Industry

Other advances such as applications sharing data, interviewees stressed in the cloud, and the use of mobility the fine line between enabling in business-to-business processes, collaborative processes and harming were not specifically called out by the competitive advantage. There’s little executives we interviewed, yet are sophistication being also expected to impact the industry’s Growing number of data supply chain. employed around attributes Consumer goods companies are Many retailers and manufacturers supply chain visibility challenged with keeping up with are shifting to a demand-driven value an expanding volume of data. chain mindset. By getting closer to For example, a typical national the demand side of the value chain grocery retailer must manage more - Chief Supply Chain and understanding the drivers of than 2,000 product attributes for consumer demand, many companies Officer of a Retailer each product. When a product feel they can improve innovation and manufacturer changes a few gain significant competitive advantage. ingredients, it is costly and time- The demand chain concept is gaining consuming for the retailer to update further traction due to the increasingly this information. As a result, retailers savvy and well-informed shoppers and find it difficult to respect standards the empowering technology they use. that require barcode numbers to change every time a product is This vision calls for a technology- slightly altered. enabled, integrated value chain where demand is accurately forecasted and Manufacturers cite the need to updated in real-time, while the suppliers provide different sets of data to produce the right amount of products different trading partners as an and distribute them at the right time additional challenge. Some data sets and in the right place. Here are some are requested by only one company. of the top challenges in attaining that As a result, the data exchange scenario: between each manufacturer/retailer pair is nearly always unique. At the Obstacles to supply chain same time, new technologies are visibility capturing even more information, While end-to-end supply chain driving up the number of attributes, visibility continues to be a goal and further increasing maintenance for some of the companies in this burdens. study, the majority of the industry executives called out specific Finally, companies are only starting gaps in the supply chain that to develop big data capabilities to get create blind spots. In particular, the most out of very large data sets, promotions, inventory positions, such as point-of-sale data. Business visibility in “the last 50 yards” and value can only be generated when transportation are considered key analytics provide useful insights that areas for improvement. There is little drive positive changes in business knowledge of existing standards that processes. support supply chain visibility. Ensuring data quality Increasing visibility in these Many executives voiced their areas requires increasing data frustration with ongoing efforts transparency. When talking about to revise and cleanse data on a regular basis, especially as data sets

14 The Future of Standards in the Consumer Goods & Retail Industry

expand exponentially in the face conditions in their product innovation Standardizing sustainability of consumers’ increasing appetite pipelines to save costs and meet metrics and measurements for information and increasing regulatory standards. While some industry players were government regulations. Interviewees big proponents of the need for a also agreed that the growing risk As consumers awaken to the common language to assess and of getting data wrong makes data environmental damage of communicate sustainability of quality of even greater strategic manufacturing, their interest in more products, others did not see it as a importance. sustainable business practices has priority at the moment. However, all gained traction. The industry is divided agreed that there are currently no There was no agreement on the root on how impactful the sustainability standards to support sustainability cause of data inaccuracy. Some trend will be on consumer behavior reporting. This lack of standards to pointed to the lack of accountability in the near term. Most believe that measure, compare and communicate of those entering the data; others consumers’ sustainability sentiment such efforts poses challenges suggested the limited capability for does not yet translate at the point for companies that are typical systems to communicate with one of a purchase decision. However, it proponents and forerunners. another was to blame. However, all is still crucial to brand owners that if agreed that data quality was a barrier a consumer is looking to compare Reverse supply chain process for to achieving an integrated value sustainability results across companies recycling and disposal chain. or products, they are working from accurate and consistent information. A small number of companies Exploring emerging technologies Carbon footprint, water usage and mentioned opportunities in reverse energy consumption are most often logistics as challenges in the next Executives were keen to explore the highlighted as important areas of decade. When products reach the possibilities of emerging technologies sustainability to be measured. end of their lifecycles, how do we to support supply chain processes. properly recycle or dispose of such They raised a range of divergent These developments present several items with the least environmental questions: challenges for manufacturers and impact? RFID is maturing, but when is the retailers: right time to deploy in the consumer goods industry? Promoting product innovation How can mobile technologies such due to scarcity as GPS be leveraged? The scarcity of resources and government regulations make What is the value of smart tags, which capture information about non-sustainable business practices what is happening to products while more costly. Some manufacturers they are in transit (e.g., temperature, see this as an opportunity to humidity, etc.)? innovate by changing products and manufacturing processes to To what extent can information be reduce raw material, energy and stored “in the cloud” so that multiple transportation costs. For example, actors in the supply chain can access one detergent manufacturer cut it, eliminating the need for point-to- costs by reducing the usage of point transmission of information? water, a scarce resource where the manufacturing plant is located, as a Scarcity of Natural main ingredient in its detergents. This Resources innovation was rapidly adopted by other manufacturers and is expected The scarcity of natural resources to expand into other product represents a threat to many companies categories in the coming years. as the cost of raw materials, energy and transportation rises. Manufacturers are beginning to adapt to these

15 The Future of Standards in the Consumer Goods & Retail Industry

16 The Future of Standards in the Consumer Goods & Retail Industry

Exploring the Future of Standards

product categories require return untapped opportunity for savings 70% of Senior Executives Cited or recycling. Other target groups for through the use of standards even for Standards Adoption as the Main further standards adoption mentioned well-established processes such as Improvement Opportunity are as follows: order-to-cash.

New Standards, Standard Adoption, Small/Medium Companies Share Consumer-Facing Product 30% 70% Information Expanding the use of current standards by small and medium-sized As the industry increases its focus on companies is seen as an important the consumer-facing, sell-side of its step to achieve further supply chain operations, companies are scrambling related benefi ts for the industry. to provide consumers with an ever- Increased usage of standards by expanding set of information that these entities is necessary to eliminate enhances the selling experience. This manual processing and to facilitate requires collecting and sharing a the collection of the additional product broad set of attributes about an item Standard Adoption New Standard attributes data they possess. and ensuring the accuracy of this information. In light of the current state, market New Retail Channels trends and related business challenges, Although many product information Developing markets are dominated the senior executives in our study standards already exist, companies by small retailers and other micro explored the future of standards. One stressed the dynamic nature of mobile distribution channels, while strong theme emerged: Existing and e-commerce and the need for e-commerce is becoming increasingly standards still have huge untapped standards to keep up. Product images important in developed markets. potential both to increase supply chain are one example. Although one image Standards are important to move effi ciency and to support new areas of per product may be suffi cient for goods effi ciently through all of these collaboration beyond the supply chain. simple applications, many now require distribution channels. multiple product images, which allow Companies identifi ed four ways this consumers to compare products as if potential can be realized: Logistics/Transportation they are holding them in their hands. 1. Introduce standards to a wider The majority of industry executives range of trading partners agreed that ensuring no truck returns empty is one of the crucial ways to 2. Embed standards in new business cut costs and carbon footprint. Many processes use third-party logistics partners to consolidate transportation. Extending 3. Develop new standards based on standards adoption requirements to The biggest industry needs transportation and logistics partners 4. Improve the guidelines and services is essential to maximize the benefi ts missing area is that surround standards of collaboration. how we connect

Introduce Standards to a Embed Standards in New with consumers, Wider Range of Trading Business Processes specifically around Partners Today there is a relatively narrow trusted data from range of business processes in which Most interviewees strongly supported standards are fully embedded. Industry taking a holistic view of the supply the manufacturer executives repeatedly pointed out the chain and expanding the use of potential to use standards in a wider standards by trading partners range of processes (for example, currently on the edges. Upstream of - VP of Supply Chain of a supply chain planning) and were often manufacturers, standards already Global Manufacturer unaware that standards already existed exist for packaging and raw materials in some of these areas. Studies have suppliers that could be adopted more shown that there is an enormous widely. Downstream of retailers, certain

17 The Future of Standards in the Consumer Goods & Retail Industry

communicate effectively with each Improve the Guidelines other to execute the recall process. and Services that Consumers and government agencies Surround Standards The industry works often demand transparency and real- within a framework, time updates on the recall process, Executives identified three enablers making standards adoption a necessity. that they consider essential for the full but loosely interprets potential of standards to be realized. Support Demand Planning that framework Consistency in Implementation Inventory planning accuracy is a top priority for many consumer goods Interviewees stated that differences - SVP, Retail Supply Chain companies. Manufacturers and in how trading partners implement retailers alike are looking to obtain real- standards, within the universally time visibility of the last 50 yards from accepted framework, often undermine point-of-sale data to properly replenish each organization’s ability to achieve Interviewees see the barcode as shelves while keeping inventories benefits associated with standards an important mechanism for giving optimized. Information communication adoption. Minimizing these differences consumers access to product standards should be fully embedded to would reduce variation, and thus information. However, they were provide more transparency into retailer significantly reduce complexity for undecided as to whether well- promotions. Additionally, companies manufacturers. To eliminate this friction, established product barcodes, the need to integrate e-commerce, mobile definitions for those standards that can emerging data bar solution or new commerce and brick-and-mortar be loosely interpreted when put into QR-type codes could be most supply chain processes to ensure everyday practice should be expanded effective. Some suggested merging the product and service consistency. to spell out exactly how the standard barcode with the QR code to create a should be implemented. Setting code that satisfies both supply chain Develop New Standards effective incentives, instead of financial fines, should positively reinforce and consumer needs and debated Based on Industry Needs whether storing more information in adoption. Adoption metrics and the code would make it more powerful. Measuring Sustainability measurements would also increase Clearly the consumer goods industry accountability of all stakeholders, Sustainability has become one of the needs a roadmap for the evolution of making it easier to identify and address top corporate core values for many data carriers. adoption gaps. consumer goods companies. The ability to measure environmental impact Developing use cases that describe Minimize Product/Food Safety and communicate sustainability metrics leading practices in standards Risks is considered particularly important to implementation would complement The need to collect and manage data those who want to enable consumers the proposed expansion of standards to support traceability and product to accurately compare the sustainability definitions. Illustrations of how to utilize safety throughout the value chain attributes of similar products. While a standard in different scenarios will was also frequently mentioned by the there are many sustainability efforts help trading partners align on a single interviewees. It has become imperative underway, a standard set of metrics interpretation of a standard. for consumer goods companies to get has yet to be defined and adopted ahead of this trend. Existing standards by the industry. Clearly defined should be used to help companies key performance indicators and collect, measure and communicate measurements are needed, and such information. standards can ensure consistency in definitions across the industry. Once sustainability is measured, the next Furthermore, when product safety question is how to communicate efforts fail and a recall is required, them. The industry needs a green retailers and manufacturers need to scorecard to share performance data via common metrics.

18 The Future of Standards in the Consumer Goods & Retail Industry

Data Quality A “service-on-demand” model could serve as a translation mechanism Since data exchange standards serve between trading partners. Under this as the foundation for collaborative If I were to pick type of arrangement, a supplier could processes and increased supply chain provide data or information in the one area for GS1 to integration, it is essential that the data format they currently use, and have that is actually exchanged is of as high make a difference, it converted to meet any retailer’s a quality as possible. Internal data requirements without signifi cant upfront cleansing, monitoring and external it would be focusing investment or substantial change to the auditing processes need to be put in way they currently do business. on one source to place within most of the companies participating in this study. Only when generate trusted the foundation is solid can the industry As consumers access more and more diagnose whether the real needs lie in information via multiple channels, data increased adoption or new standards. manufacturers are increasing their focus on the sources and quality of information, especially data on product Services - VP of Supply Chain of a ingredients and health. Services giving Global Manufacturer Frequently, interviewees expressed access to “trusted sources” need to be the view that standards alone are established to validate and monitor all not suffi cient. Sometimes standards the information related to the product. are too complex for all parties to These sources should guarantee implement, and sometimes standards information accuracy, timeliness and require common infrastructure as an accessibility for all consumers. enabling mechanism. Therefore many support the development services that enable standards to be used more widely.

A Framework for Standards Implementation

The industry feels that enhancing the current system of standards by ernan introducing a framework related to ov ce their deployment and implementation G would remove ambiguity.

Guidelines would spell out how

rvice e s S exactly how to implement a

standard, in addition to providing a

definition of the standard

Services such as providing

delin ui es assistance to companies during G

implementation, methodologies

for ensuring data quality, and tools

to simplify translation between

companies Standards Governance programs, such as adoption metrics, would allow the industry to measure progress toward more consistent implementation

19 The Future of Standards in the Consumer Goods & Retail Industry

20 The Future of Standards in the Consumer Goods & Retail Industry

Recommendations

The research makes it clear that the should include industry partners such a manufacturer to send one set of industry’s standards programs must as logistics service providers. product information directly from their expand and evolve to keep up with the source system to the service provider; marketplace. Specifi cally, the industry, Historically, it has predominately been the service provider would stage this led by GS1, will need to: left to retailers to recruit their suppliers information and reformat it to comply to standards programs, but it may be with the requirements established by a 1. Develop marketing programs time for the others in the industry to receiving retailer. targeted toward companies not actively promote usage. For example, making full use of standards manufacturers increasingly have incentives to actively adopt standards 2. Introduce simplifi ed standards and to promote their use among other programs for ease of adoption stakeholders. In addition, the industry’s [The foundational service providers will need to become 3. Use existing standards to vocal and visible advocates for the use standards] may not communicate product information of critical standards across the globe. to consumers be sexy, but they do

4. Collect suffi cient information about Introduce Simplifi ed produce value product origin and route to market Standards Programs to minimize risk Adoption of complicated standards - Senior Supply Chain 5. Design a common set of or large-scale standards programs sustainability metrics for the Executive of a Global can be a daunting undertaking for Manufacturer industry smaller companies. The fi nancial costs and resource commitments 6. Develop solutions to ensure data are often too high, compared to any quality Leverage Existing potential benefi ts, for such players 7. Expand GS1’s role from standards to proceed with adoption even Standards to Meet defi ning body to center of if they are aware of the pertinent Consumer Communication excellence in standards deployment standards. A simplifi ed version of Expectations the standards may help to overcome Consumer demand for information Develop Marketing these obstacles. Development of a “basic” version would focus on the was top of mind for most of the Programs most valuable standards fi rst, resulting interviewees. Supply chain data and non-supply chain data will need Marketing and education are the in easier implementation procedures. to come together to satisfy this two main avenues for increasing For example, at the entry level, the need. This will require collaboration awareness about and understanding framework might specify use of a with entities outside the traditional of the existing standards. Marketing GTIN, a barcode and select EDI supply chain, such as the marketing efforts should convincingly explain transactions as the basic elements department. To meet these growing the business case by focusing on the of the GS1 system of standards that needs effectively companies expect benefi ts of standards while leveraging should be initially implemented. to be able to combine existing real fi nancial numbers and testimonials standards for product data with from industry case studies. Educational While full and consistent adoption emerging trusted-source services. programs should not only explain what upstream and downstream is the the standards are, but also describe ultimate goal, we recognize that this Given the signifi cant increase in the how to identify and implement best is a nearly impossible task. As an scope and scale of information to practices based on real-life case alternative, a “service-on-demand” be communicated to consumers studies. offering could provide a translation going forward and the need to merge mechanism for converting information information coming from multiple Target audiences for these awareness from one organization into formats sources, it is time to rethink the and education programs include new that can be interpreted by another communication channels through GS1 members or fi rst-time users of organization, with no change in which consumer-facing information standards, as well as existing GS1 procedure on the part of either the is distributed. Developing a roadmap members who need to expand their originating or receiving organization. for next-generation data carriers usage of standards. Other audiences This type of solution could enable is an essential part of this.

21 The Future of Standards in the Consumer Goods & Retail Industry

Collect Sufficient results. Companies often know that Information about their data quality needs improvement. Product Origin However, senior executives are GS1 will need uncertain about how bad the data to focus on the As government regulations around really is compared to others in the traceability increase and consumer industry. A third party needs to create practical application attention to food allergens and a scorecard to measure, compare and ingredients become a top issue for track data quality in order to hold all of standards the industry, adherence to established parties accountable and responsible guidelines for traceability and product for adhering to the correct procedures recall will mitigate potential risks. when sharing and entering data into a - Senior Executive of a system. National Retailer A large number of interviewees called for standards for additional product Expand GS1’s Role attributes and traceability, indicating that the industry may not be aware of The majority of the senior executives existing standards already developed in the study pointed out that one by GS1. Putting these lesser-known of the barriers to adoption was the standards to use will make it possible loose interpretation of standards for partners all along the supply chain during implementation. Therefore, it to collect and share critical information. is important that guidelines for using standards on a day-to-day basis Design a Common Set of become more precise, and are defined at more granular levels. Best Sustainability Metrics practices and case studies would The development of new standards to also be helpful in illustrating how to enable the industry to communicate follow the guidelines and the negative [We] need an sustainability metrics to consumers, impact of inconsistent adoption. NGOs and government agencies is efficient, fair and important for the industry. The first A third-party entity, such as GS1, step is agreeing upon the scope of that can advise stakeholders on transparent agent [to the standards needed for a “green standards implementation processes ensure data quality] scorecard.” and provide monitoring systems to ensure consistent adoption would be Develop Solutions to valuable to the industry. This governing - VP of Supply Chain of a Ensure Data Quality body could serve as the owner of the implementation guidelines and offer Global Manufacturer A majority of the industry executives advisory services to aid companies raised concerns about data quality, in aligning to these guidelines during and the ongoing efforts to maintain implementation. More than half of the integrity and accuracy of data the executives interviewed urged collected and shared. Without a GS1 to play a leading role through set of measurements around data global governance of implementation quality, there is no accountability for processes.

22 The Future of Standards in the Consumer Goods & Retail Industry

Conclusions

The consumer goods industry has always been an extremely dynamic space. With today’s changing consumer, advanced technologies, shifting world economy and depletion of natural resources, the industry is facing more challenges than ever before. The future of standards, according to the senior executives interviewed in this study, will mainly focus on going back to the basics to leverage the existing standards and improve data quality, with the ultimate goal of providing enhanced service to consumers in a more complex world. Additionally, in the arena of new standards development, the emphasis should be on consumer information and sustainability.

23 Authors

Susan Wood Connie Wang Capgemini Consulting North America Capgemini Consulting North America [email protected] [email protected] +1 (404) 806 2587 +1 (212) 314 8000

About Capgemini

Capgemini Consulting is the global strategy and transformation With around 120,000 people in 40 countries, Capgemini is one consulting organization of the Capgemini Group, specializing of the world’s foremost providers of consulting, technology and in advising and supporting enterprises in significant outsourcing services. The Group reported 2011 global revenues transformation, from innovative strategy to execution and with of EUR 9.7 billion. Together with its clients, Capgemini creates an unstinting focus on results. With the new digital economy and delivers business and technology solutions that fit their creating significant disruptions and opportunities, our global needs and drive the results they want. A deeply multicultural team of over 3,600 talented individuals work with leading organization, Capgemini has developed its own way of working, companies and governments to master Digital Transformation, the Collaborative Business ExperienceTM, and draws on drawing on our understanding of the digital economy and our Rightshore®, its worldwide delivery model. leadership in business transformation and organizational change. More information at: www.capgemini.com More information at: Kees Jacobs www.capgemini-consulting.com [email protected] +31 306896361

Rightshore® is a trademark belonging to Capgemini

About The Consumer About GS1 Goods Forum

The Consumer Goods Forum (CGF) is a global, parity-based GS1 is a not-for-profit, neutral organisation that is driven and industry network, driven by its members. It brings together governed by its members. It manages and develops the most the CEOs and senior management of over 650 retailers, widely used system of supply chain standards in the world used manufacturers, service providers and other stakeholders by over 1 million organisations in multiple sectors and in close to across 70 countries and reflects the diversity of the industry in 150 countries. geography, size, product category and format. Forum member companies have combined sales of EUR 2.1 trillion. GS1 is most well-known for the bar codes that companies put on their products and that are scanned by retailers at point-of-sale. The Forum’s vision is: “Better lives through better business”. However, GS1 standards are much more than the barcodes. To fulfil this, its members have given the Forum a mandate to They provide a framework for companies to identify, capture and develop common positions on key strategic and operational share information which drives supply chain visibility. This allows issues affecting the consumer goods business, with a strong companies to improve efficiency, safety and sustainability focus on non-competitive process improvements. The Forum’s and to better collaborate with suppliers, customers and end- success is driven by the active participation of the key players in consumers. the sector, who together develop and lead the implementation of best practices along the value chain. More information at: www.gs1.org More information at: www.theconsumergoodsforum.com Lynda Costa [email protected] +1 (609) 557 4584