This blog was co-authored by David Egée and Ariane Divetain.
Change is challenging. It’s inevitable. But it doesn’t have to be painful.
In fact, in the business world, change sets the stage for innovation. Any company that resists it risks becoming irrelevant. Large enterprise companies, in particular, must adapt to changing times. They may be market leaders today, but they’re nonetheless subject to shifting trends in technology, regulation, and consumer expectations.
These forces and more have pushed some of the world’s most established consumer packaged goods (CPG) companies in new directions. It is interesting to see how, for example, a simple UK tax on plastic packaging forced companies to rapidly reassess their business models and enact swift changes to their packaging strategies to comply.
Whether due to a pandemic, new regulations, or international instability, disruption seems to be the new normal. This has made achieving greater business resilience and agility an enterprise-wide priority. Consider these words from Michael Burness, global head of sustainability and quality at Arxada: “We thought we were resilient, we thought we were nimble, we thought we were agile, and we were all kidding ourselves because in reality, those three words got redefined over the last couple of years.”
Recent events have validated that many enterprise CPG companies have a long way to go to achieve sufficient levels of agility or resilience to stay competitive. Although companies have made massive investments to digitize areas like innovation and customer relationships, other functions have been left out.
To keep up with the modern pace of change—and to do so in a sustainable way—CPG companies cannot afford to have some areas that are less agile than others. They must embrace a unified vision for digital transformation that spans their full organization and their value chains.
The CPG status quo is shifting
Large enterprise CPG companies enjoy the benefits of owning significant market share. Their stature provides outsize visibility and influence and often dictates the pace of change in the market. Normally, everyone else strives to keep up with the businesses at the top. For a long time, larger companies’ ability to dominate physical shelf space in retail helped preserve their market share. But the traditional hierarchy is changing.
In today’s market, smaller, more agile companies can outmaneuver larger ones, especially in customer engagement. Smaller brands are subject to less regulatory and media scrutiny and can get to market faster. They employ digital channels to reach consumers directly, diminishing the power of physical retail dominance that once protected bigger brands. Enterprise companies are being pushed to streamline operations and speed innovation to keep up. They realize there’s no point in entering a category a year late unless you bring a truly blockbuster product.
Based on our experience, the typical time from R&D to market is 18 months to two years for large CPG companies. A lot can change in that time. To match strengths with new and more agile competitors, enterprise companies now need to develop and release new products seamlessly and transparently multiple times a year. Failing to meet this accelerated pace can be fatal for the business.
Consumers are the new regulators
Along with the shift in the market landscape has come a shift in consumer expectations. Increasingly, consumers are putting pressure on CPG manufacturers to live up to higher standards. Consumers are more focused than ever on sustainability, sourcing, and other specific metrics—and they’re considering these metrics when making purchasing choices. Customers, in fact, are a new kind of regulator.
To better understand customer expectations, CPG companies need to be in constant communication with the public. Social media is the contemporary forum for company–consumer interaction, offering a dynamic platform for observing and measuring consumer concerns, particularly around value and sustainability.
There’s a disconnect, however, between the idea of sustainability on the consumer side and the reality of it on the manufacturing side. Advertising and product claims about sustainability can give consumers a general impression of sustainability practices, and many consumers say this is now one of their most important buying criteria. But consumers often lack knowledge of the practical aspects of sustainable manufacturing, transport, etc to evaluate the truth behind these claims.
Digital transformation accelerates innovation
Take a moment to consider the term “digital transformation.” For companies to transform, they must invest in strategic solutions that will not just ‘digitize’ what they are already doing, but leverage new digital capabilities to transform how they work to become more efficient and effective.
Many CPG companies already utilize information technology solutions to address specific problems. But integration of legacy IT systems can be a challenge. At Veeva, we sometimes see up to 30 different systems at work in a single company, some housed in the cloud, others on-premise. This leaves employees constantly toggling between systems, wasting time and denying them a unified view of any process or functional area.
Reliance on siloed tracking methods, including Excel spreadsheets, creates inefficiencies. Duplication of data rather than real-time updating leads to human error. Lack of a single source of truth creates confusion. Tools that were useful in the past aren’t built to handle the speed of business today.
Regulatory compliance and quality management are two often overlooked but important areas where business operations can be streamlined by digital transformation. The goal is to help employees make better decisions faster; the way for companies to do it is by giving their people the right tool to do the right task at the right time.
The key to updating complex, multi-stakeholder processes is investing in unified, purpose-built solutions. This establishes a single source of truth in which data content, processes, and people operate seamlessly within the same secure digital workspace. Rather than stacks of paper on desks awaiting approval and distribution, instead of endless unlinked Excel spreadsheets, a unified system aggregates all data from disparate locations. As soon as one person makes a change in the system, their colleagues upstream and downstream can be alerted immediately that new information is available.
This approach makes it easier to trace materials and ingredients so companies can be consistent in their quality management and transparent in their consumer communications, building trust and loyalty.
Alberto Prado, global head of R&D digital partnerships at Unilever, shared at the 2022 Veeva Summit that building trust over time is a must for CPG organizations. He reflected, “Trust is the single most valuable equity that you can have to ensure long-term success. I tend to say trust comes in on a donkey and leaves in a Ferrari. It takes ages to build trust and a trusted brand, but you can break that trust very easily by doing something you shouldn’t.”
Getting it right the first time
Given today’s accelerated timelines and immense amounts of product data, taking the time to modernize processes like regulatory and quality management can seem like moving targets. To make the process of digital transformation as seamless as possible, a few important factors must come into play.
First, to respond to today’s customer expectations around sustainability, R&D teams should incorporate it as a core value from the outset. This requires companies to integrate many points of information from their suppliers across the entire supply chain into their internal metrics. A unified system helps keep track of these areas of complex data management and communication.
Second, for employees to fully embrace the resiliencies and efficiencies that digital transformation brings, the tools they work with must be intuitive and user-friendly. Choosing an industry-proven solution, designed following the consumer web principles we are all familiar with, makes an immense difference in this regard.
Third, digitization brings security requirements for external and internal stakeholders. Companies with legacy management systems are limited in the information they can safely share with external stakeholders, reducing collaboration opportunities. With a multi-tenant cloud-based solution, robust security protocols are fully customizable to your organization’s unique needs. This way, a company can go outside its four walls and include suppliers at every stage of product manufacturing and distribution.
Technology to help you get the right products to market faster
In today’s turbulent business environment, investing in digital transformation is table stakes for enterprise CPG organizations. Veeva is helping CPG market leaders modernize critical business functions like quality, product safety, and regulatory compliance to increase resilience, agility, and speed to market.
Are you ready to explore how cloud-based solutions could enable more streamlined operations and drive better business outcomes in your organization?
We encourage you to contact us to set up a brief exploratory conversation and hear how CPG market leaders are using technology to make progress towards their enterprise-wide digital transformation. Learn more about Veeva’s solutions for the CPG industry.