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Consumer Insights / Concept Development•Lack of definition•Disconnected from consumer needs•Sharpen brand positioning •Raise brand awareness in emerging markets
Product Development•Low hit rates & reusability; slow time to market •Lacking in private label penetration and overall assortment ownership •New agendas to drive with supplier brands
Distribution & Transportation•Offshore slow cycle time•Lack of visibility and flexibility•Excess inventory•Excess mark-downs & obsolescence
Post-Sale Service and Feedback•Typically ignored or not timely •Often disconnected
Category Strategy& Line Planning
•Lack of Process Rigor•Slow to Move to Next Generation•Disconnected plans
Sourcing•Inflexible Sourcing Strategy•Lack of Purchasing Power•Disconnected from Retail Strategy•Lack of supplier integration
Manufacturing•Fragmented supplier base•Disconnected planning from merchandising to space to supply •Slow response time
In-Store Merchandising•Costly last mile of supply chain•Not built for speed; built for efficiency•Difficult / costly to change in store set-up
Sourcing & Manufacturing
ProductDevelopment
Merchandizing
Manufacturer / Retailer Levers• Bringing the right
• With increasing focus on greater ownership or influence of their product portfolios, retailers need to develop actionable segmentation and identify the features and functions across their assortments (both private and branded) that drive the right value proposition that each segment is willing to pay for.
• Product development must be built on the premise of fast innovation to ensure being first to market with what customer will want to buy.
• Retailers should leverage their network of partners to continuously consolidate their product ideas and ensure viability based on their development cycles.
• Uses consumer insights to extend product usage into other parts of the home
• NPD strategy aims at consumer needs for convenient & time saving cleaning products
• Leverages local R&D centers to gather local ideas, demographic, social trends
• Launched innovative products like Dettol fast mop, Air Wick, etc ignored by competitors
Voice vs. Heart of customer : Del Monte
• Del Monte sent anthropologists to observe mothers at home, making meals in the kitchen.
• VoC - 'I really want to prepare healthy food for my family’
• HoC - Insights obtained from observation –Mothers face challenges like kids pulling on their legs, less time available to prepare meals than planned for.
• Conclusion – Del Monte develop healthy, convenient products, like easy-to-open packaged fruit and frozen fruit desserts to cater to the trade-offs & shortcuts adopted by Moms.
VoC for product extension: Heinz VoC for market extension: Danone
• Result – “The upside down ketchup bottle”
• A consumer survey found that 25% stick a "knife in the bottle to start the ketchup flow, and 15% actually store it upside down.” Heinz integrated this insight into product innovation.
• Launched its ‘affordability initiative’ to expand its market share to the low-income consumers in Asia, Latin America and the Africa/ Middle East region
• Used consumer insights to develop products with lower price points, enhanced nutritional value and larger SKU sizes, without on compromising high standards for quality and food safety.
• The combination of convenience and affordability has paid off, as now 33 percent of Danone’s sales are generated in developing countries.
Converting the right set of market and customer relevant ideas through a repeatable innovation process supported by the right operating model, people and tools
Open Innovation programs allow you to accelerate the commercialization of new products/services by incorporating the capabilities of external resources
• P&G’s “Connect + Develop” enables them to share R&D with worldwide partners and bring great ideas to market.
• P&G has established 1000+ active agreements with innovation partners
• 50% of product initiatives at P&G involve significant collaborationwith outside innovators.
• Identification of strategic partners• Program governance model• Determine levels of access to network
for security• Identification of key innovation metrics• Legal considerations/IP control• Cloud based networking• Technology infrastructure and training• Effective framing of challenges• Participation incentives and
mechanics• Change management to help embed
open innovation in company culture
… to Open Innovation & Value Delivery System
From TraditionalInnovation R&D Model…
… to Open Innovation & Value Delivery System
Key Considerations
In the next generation of Collaboration, companies will engage in Product Innovation but also in faster product introduction, shortening process cycles and time-to-market
Widening the innovation funnel, and accelerating products through the funnel more quickly (succeed or fail quickly)
Greater volume of better targeted new products, faster in consumer’s hands
Collaborative Customer Insights / PromotionsDriving a “single view of the consumer” and leveraging the power of analytics via detailed customer segmentation to drive assortment and promotion decisions
Cross-Enterprise Integrated PlanningReducing operating and working capital expense through a “virtually vertical” mindset with regard to base and promo forecasting of POS and time phased replenishment
In-stock with just the right inventory levels and reduced markdowns
In-Store Compliance / Demand SensingGrowing the business efficiently through last mile in-store execution driven through demand signal sensing and digital merchandising technology
Store and shelf accurately reflects joint retailer-supplier plans, with lowest labor costs
From Sequential …Linear process steps, typically executed once per season
… To Iterative & Dynamic Process linkages throughout the value chain to respond dynamically to changing
customer needs
Examples:
•Trending colors are added to the assortment next season
•Customer feedback leads to next season adjustments to an accessory or how a collection is displayed
•Slow moving products leave the store only in the arms of customers after being heavily marked down
Examples:
•Trending colors are added to the assortment in the current season •Customer feedback leads to in-season adjustments to an accessory or how a collection is displayed•Slow moving products are cost-effectively transferred to other stores / regions or channels / dot-com and sold at a higher margin
Customer
Post-Sales Service and Feedback
Category Strategy/Line Plan
Concept Development
Product Development
SourcingManufacturing
Distribution and
Transport
In-StoreMerchandising
Integrated Demand and Supply Chain Planning
Segmented SC Planning
Tailored demand planning & replenishment models by category (eg. For fashion short-lifecycles, vs. stable long lifecycles, vs. one-time products,…)
Segmented SC in Fulfillment
Tailored product flows (eg. Direct to store, stocked in supplier DC, in RDC, vs. flow through vs. cross dock,...)
• Minimizing approval layers, accelerating decision-making, avoiding too many meetings, ensuring true decision making power is not aggregated at too few and too high of levels.
• Awareness and understanding of end-to-end implications of key decisions which may lead to inefficiencies across the value chain
• Avoiding poorly connected processes, information gaps, and operational silos which create waste and re-work and contribute to sub-optimal cost structures.
Results Oriented Culture
Operational Effectiveness
Lean Execution
PerformanceManagement
Performance Management is a critical success factor in creating an Efficient Enterprise. It is the “link” between improvement activities and business performance
Efficient Enterprise has to be Results Oriented and supported byrigorous Performance Management to align leadership and employees on “what really matters”
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Constantly review and enhance the performance
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Cascade value-focused drivers throughout the organization
After many years of success in manufacturing industries, Lean Six Sigma is finally catching on within the retail and consumer goods industries
Lean Six Sigma (LSS) is a continuous improvement methodology that combines two of the most powerful improvement engines available to business today.
Examples of Lean at Leading Retailers
Excessive Inventory•A large retailer operated a group of stores in urban areas with high sales volume per square foot but little backroom space to hold inventory. The excess inventory squeezed into these space-constrained stores led to multiple
•handling of product, difficult inventory management, inefficient use of labor, frustrated associates and managers as well as negative impact on the customer experience.
•Without negatively impacting in-stock products or sales, the implemented Lean Six Sigma solutions reduced inventory by 8,800 units per store and weeks of inventory supply from 10.7 to 7.8
Kaizen: New Store Cost Reduction•Over the course of a 1-week Kaizen event, a Lean Six Sigma team discovered more than 30unnecessary components of the original design. They created a new construction process and timeline resulting in more than $5 million in annual savings and increased margin from earlier store upgrade openings.
Accelerated improvement: Weekly insert process•A large US retailer determined the advertising portion of the weekly insert took 14 work days to create. The defect rate with its current process exceeded 90 percent resulting in extensive rework.
•The team implemented solutions that reduced the cycle time from the first touch by advertising was reduced to four days, and the defect rate decreased to less than 5 percent.