NEW REALITIES IN COLLABORATIVE BUSINESSNEW REALITIES IN COLLABORATIVE Rethinking the Value Chain RETHINKING THE VALUE CHAIN NEW REALITIES IN COLLABORATIVE BUSINESS Acknowledgements CO-CHAIRS Robert Wilkinson Jerry Black The Consumer Goods Vice President, Strategic Industry Development Chief Digital Officer Forum thanks the following The Coca-Cola Company AEON executives for their time, support and valuable insight into the research CORE TEAM Tanja Kunz, The Consumer Goods Forum and development of the Nigel Bagley, Unilever Walt Lentz, Royal Ahold ‘Rethinking the Value Saliha Barlatey, Nestlé Miguel Lopera, GS1 Global Chain: New Realities in Diego Bevilacqua, Metro Peter Mackie, Brambles (CHEP) Collaborative Business’ Chrysanthi Bormpoli, The Coca-Cola Company João Nuno Magalhães, Jerónimo Martins, SGPS, S.A. report. Peter Freedman, The Consumer Goods Forum Caroline Mak, Dairy Farm Lee Green, The Consumer Goods Forum Andy Marrs, Facebook Ruediger Hagedorn, The Consumer Goods Forum Dr. Philip Marsden, Counsel to CGF Board Kees Jacobs, Capgemini John Mayer, J.M. Smucker Uma Kannappan, Capgemini Maureen McDonagh, Facebook Silvia Rindone, Capgemini Charlotte Mercer, Capgemini Maximilian Musselius, ECR Russia CONTRIBUTORS Jon Nordmark, iterate Studio Bruno Aceto, GS1 Italy, Indicod-Ecr David North, Pick n Pay Adam Agnew, Capgemini John Phillips, PepsiCo Jeff Arnold, Kellogg Alejandro Pintado, Grupo Bimbo Kamini Banga, Dimensions Consultancy Simon Potts, Boots Pete Blackshaw, Nestlé Jonathan Pridmore, Mondelēz Alan Bridges, McCain Foods (GB) Ltd. Thomas Pütter, Nagel-Group Greg Buckley, PepsiCo Marjolein Raes, The Consumer Goods Forum Maggie Buggie, Capgemini Katrin Recke, AIM–European Brands Association Rob Bullen, Mondelēz Gustavo Redondo, Danone Christophe Cambournac, Nielsen Tom Rose, SPAR International Andrew Clarke, Mars/Effem Akikazo Sato, Kao Mike Corbo, Colgate Palmolive Philipp Schukat, GIZ Carl Dempsey, Johnson & Johnson Ueyama Shigeru (上山 茂), Kao Jean-Noël Divet, L’Oréal Dave Stangis, Campbell Soup Company Jim Flannery, GMA Jon Stine, Intel Corporation Andre Fourie, SABMiller plc Lisa Sweet, World Economic Forum Angela Francolini, McCormick Marianne Timmons, GS1 Global Marty Gardner, Wegmans Enrico Toja, Johnson & Johnson August Harder, Coop Chris Tyas, Nestlé Michael Hodgson, Sainsbury’s Xavier Ury, Delhaize Group Dirk Holbach, Henkel Wim van Herwijnen, Metro Group Prof. Dan Jones, Lean Enterprise Academy Alex von-Behr, Unilever David Jones, Waitrose Tom Whisler, General Mills Nick Kaufman, Kroger Barron Witherspoon, The Procter & Gamble Company Joop Knulst, Heineken Jon Woolven, IGD Vladimir Krasojevic, Carlsberg Gary Wyborn, The Coca-Cola Company Ash Kumar, Capgemini © 2015 Capgemini and The Consumer Goods Forum. All Rights Reserved. Capgemini and The Consumer Goods Forum, and their respective marks and logos used herein, are trademarks or registered trademarks of their respective companies. All other company, product and service names mentioned are the trademarks of their respective owners and are used herein with no intention of trademark infringement. Rightshore® is a trademark belonging to Capgemini. No part of this document may be reproduced or copied in any form or by any means without written permission from Capgemini and The Consumer Goods Forum. COLLABORATIVE VISIONING Two-day Future Value Chain Design Shop in Capgemini’s Accelerated Solutions Environment in London, 17th-18th March 2015. Table of Contents 7 Foreword 9 Executive summary 11 Value chains reach their limits 13 Why change? 21 What will change look like? 31 What should we do? 41 How do we get there? 45 Conclusion RETHINKING THE VALUE CHAIN New realities in collaborative business FOREWORD FOREWORD As an organisation committed to 1.8 billion people worldwide will join ¡¡How will we address security and positive action in bringing about needed the consuming classes. In contrast, trust as information proliferates in a change in the industry, The Consumer rural populations will continue to world that is increasingly transparent Goods Forum (the CGF) Board initiated develop along different lines. Ageing and ubiquitously connected? the strategy and steps that led to the populations in Japan, China and much creation of this report. This paper of the West are creating a massive A smaller group in Paris, in April, held considers some of the essential ways of demographic shift. Can we serve follow-up sessions on the output anticipating and addressing profound these new markets at the same time from the intensive London workshop shifts in consumer behaviour and the and ahead of digital interlopers and that was further supported by industry landscape. We urge you to start-ups? additional analysis, expert interviews read on. and teleconferences. Resulting from These are among the questions this, the group put forward three Consumer behaviour has changed that The Consumer Goods Forum’s strategic thrusts. These address forever. The path to purchase is no End-to-End Value Chain & Standards consumer engagement, transparency longer linear and could involve social Pillar sought to answer with the and the last mile of distribution. media, an app, web-based research, an Future Value Chain study. The Pillar in-store visit and an online purchase, seeks to identify emerging trends This report argues that these thrusts will in any order. Consumers now have the and recommend concrete actions. benefit from future value networks. A power and the means to share their These trends are set to continue over departure from linear value chains, they concerns and opinions with a larger the next 20 years and will transform will be born from dynamic non-linear audience than ever, through a growing our industry. collaboration and will evolve alongside array of social and digital channels. In existing ways of working. The report this era of the empowered consumer, Gathering in London during March takes a closer look at each megatrend how do we evolve our business models 2015, executives from more than 40 and its implications for the industry, to deliver on consumers’ expectations? companies, together with Capgemini, and presents the initiatives and their formed a research group to ask: associated action plans. At the same time, the internet has ¡¡What has fundamentally changed accelerated innovative competition. since companies first came together As Board co-sponsors of this Established technology firms and to form collaborative industry bodies strategically relevant study, we an army of internet start-ups are in the nineties? appreciate the support of the Board, moving rapidly into consumer ¡¡How will changing demographics, the Core Team and all others who have markets and do not follow established increased urbanisation, digitisation contributed to this important work and go-to-market patterns. Emerging and new shopping landscapes are confident of the CGF’s commitment, markets are incubating new retail and change our value chains? with the backing of the CGF Board, manufacturing business models, based ¡¡How will this evolution progress to push forward with the continued on digital technologies. Can we re- in developing economies – and research and development of these engineer our business models rapidly can business leapfrog current areas of focus. Going forward, the CGF and efficiently enough to rise to these infrastructure constraints in the early will further explore these initiatives with growing challenges? stages of market development? a view to developing concrete action ¡¡What will be the role and impact plans. We invite you to help us ensure China and India are creating expanding of consumers, individually and that future value networks strengthen urban economies at the fastest pace collectively, as they increasingly drive our industry and benefit consumers in history. By 2025, an additional the value chain? through the challenges that lie ahead. Board Co-Sponsors of The Muhtar Kent Motoya Okada Consumer Goods Forum’s End-to- Chairman & CEO President & Group CEO End Value Chain & Standards Pillar The Coca-Cola Company AEON Co., Ltd. RETHINKING THE VALUE CHAIN 7 EXECUTIVE SUMMARY ‘Rethinking the Value Chain: New Realities in Collaborative Business’ on the Web More information about the report and programme can be found at www.futurevaluenetwork.com EXECUTIVE SUMMARY From value chains to their physical location and their place on trapped in silos and responding to value networks the path to purchase. And they are wary change can be agonisingly slow. This Understanding value chains has been of what may happen to the digital data fundamentally linear architecture central to growth in our industry for that they provide. makes it difficult for them to respond 30 years. Dramatic changes in consumer simultaneously to multiple demands. behaviour, business innovation, Consumers also demand accurate, demographics and economics mean accessible information about products, How to respond value chains will no longer meet their ingredients, their provenance and We will see value networks play business goals as they once did. As a their social and environmental impact important roles in many aspects of result, future success will increasingly wherever they see an item or a refer- business, with new collaboration models require a shift from traditional, linear ence to it online. as a crucial success factor. This report value chains towards more collaborative identifies three strategic thrusts where value networks. Business changed collaborative networks will underpin Businesses born