Consumer Packaged Goods companies have been struggling to grow for the past 10 years after being the leaders of growth and outperformance. For the top 30 CPG’s, margin expansion contributed twice as much value as growth. 50% versus 26% and Bottom 30 CPGs marked dramatically -71% margin versus -48% Growth (McKinsey). The pandemic has accelerated this crisis, however, in some cases it has triggered an unexpected sales increase due to the changes in consumer’s purchase habits. Multiple studies on COVID-19’s impact on demand and costs in the CPG industry support that statement. Below, let’s deep dive on Food Industry as an example.
Therefore, transformation isn’t a new concept for the industry. Most CPGs started transformation by regionalizing and globalizing some processes within their Shared Service Centers. Although, they mostly started with back-office processes, recently there has been a shift to Front office activities and IT being centralized to keep gaining efficiencies and optimizing costs.
These functional changes within organizations imply low-mid project management effort. But the most critical functional change inside companies takes place when a “Digital Operating Model” is implemented. So, not only when the company decides to start selling online, but also when the Digital channel becomes one of the highest in the revenue source and multiple sales models need to be managed at the same time; everything changes significantly and becomes more complex.
Agility, flexibility but most importantly experience is required to Master these type of transformation processes in such a big organization.
Route to market evolution, customer centricity, satisfaction, loyalty, trade marketing capabilities in a changing retail Industry, Omnichannel Sales challenges, Revenue Management, Logistic support, Collections, Financial topics integrated to customer needs and most recently new consumer demands (Direct to consumer Approach) and lead generation are some of the needs and challenges CPGs face nowadays.
In addition to that, it is imperative to consider the macro-economic impact in Labor COVID left in most of the countries which directly impact the day-to-day operation.
In summary, to face all these challenges, a vertically integrated organization is required now more than ever to successfully navigate the complexities of B2B, B2C and B2B2C in the current environment. To achieve real customer centricity, all areas need to be truly integrated.
Sales, Marketing and Logistics should be working now like one single area. And the Middle and Back office are more synchronized than ever. Internal ways of working were never that exposed than now with eCommerce, marketplaces, social media, apps, websites etc. It’s like publishing the old ERP out there for everyone to talk about it.
We know that above all those operational needs, CPGs tend to view cost optimization as top strategic priority because that is the fundamental to maintain and increase EBITDA, meaning that any processes within the enterprise structure subject to outsourcing can rely to a strategic partner and choosing the right one is not an easy task either.
To add more complexity to the CPG world, leaders have to deal with giant structures, complex process, multiple cultures and multiple technologies across the globe. Therefore, it is key to save time and money in such a big implementation.
It is key to have a partner that knows the business as well as they do, that’s knows multiple Industries to share practices, that can guide strategic definitions based on that also, that have the best technology with them. So, the less parties involved, the simpler, faster, better, safer and more cost effective.
We feel very proud of being part of such a long transformation journey of the biggest worldwide in Personal Care, Manufacturing, Food and Beverages operating in more than 29 countries with more than 23 thousand FTEs. Here are some of the processes Teleperformance supports in CPG Industry with best in class use cases:
Mastering transformation means understanding the customer and consumer end to end journey completely. It means understanding how each area interacts with them without looking like independent silos, without having different speech and not being aware of what others do.
Mastering Digital transformation means, no matter what channel I use and for what purpose, I would get my need resolved in the best way possible. It can be either a purchase, a payment, a query, it is important to understand, engage and resolve right the way.