Accenture Exclusive: How today’s technology can help meet tomorrow’s consumer demand
Mohammed Hajibashi, Managing Director and Supply Chain & Operations Global Consulting Lead at Accenture, discusses the best ways to leverage technology in order to meet consumer demand.
The expectations of today’s consumer have never been more demanding. They don’t just want convenient, personalized products and services—they want them immediately. There is little doubt that speed and flexibility are the most significant aspects of meeting this heightened sense of must-have-it-now.
Consumer packaged goods (CPG) companies stand at the threshold of nothing short of a global consumer revolution. There is a fierce and furious race to stay relevant and far out in front of the competition. This highly-charged competitive dynamic is leading to investment in new technology to help consumer goods companies sense, shape, respond - and in some cases, even predict - market trends. At the same time, companies are looking to develop products and services rapidly to satisfy consumers’ growing needs. In many cases, today’s advanced technology allows companies to offer goods that exceed expectations of convenience, responsiveness and personalisation.
Here’s a brief look at each of the pillars comprising today’s consumer construct:
Amazon’s two-day (sometimes two-hour) delivery model—has raised expectations to challenging levels and has now established a new consumer service expectation for the industry. Businesses are responding, seeking the technology and infrastructure to address slow response times and wasteful fulfillment models. Accenture research confirms this tendency, revealing that 64 percent of CPG executives are searching for technological methods to eliminate wasteful distribution models. Essentially, these companies are looking for new capabilities to improve their existing fulfillment capabilities and enabling new direct-to-consumer channels.
For example, in China, Danone Waters partnered with JD.com to build a modern tech-driven warehouse. Among other features, the water company’s new facility uses analytics to replenish inventory more quickly and efficiently to ensure the right inventory is available to maximize customer service levels. Danone’s goal is to streamline the entire production and fulfillment process.
Today, brand loyalty is at best short-lived—and in fact is all but non-existent. Staying relevant among the competing pressures of current market dynamics, forward-looking CPGs are rethinking their operating models to not only stay abreast of trends but even create new trends.
By investing in new technology, CPGs can reshape traditional linear value chains and functional silos, which historically hinder communication and decision making across the entire operational network. Our research shows that 68 percent of CPG executives are investing in this technology to better identify and shape demand, combining consumer insight with external demand signals and artificial intelligence. Again, by redesigning the flow of communication and decision making beyond just the traditional supply chains, companies can better identify, adapt, and shape new trends and opportunities in the market.
Take Voodoo’s recent renovation of its production processes. The French gaming company combined 3D printing, robotics and custom software to create an agile, iterative design and production system. Unshackled from the tyranny of traditional production lines, Voodoo was able to respond to the fidget spinner trend two months before Chinese manufacturers entered the market.
Consumer desire for personalized products and services is clearly on the rise. The advent of customized subscriptions and curated gift boxes demonstrates this growing trend. Today IT can play a critical role in helping companies develop smart, agile and service-oriented supply chains—completely digitized—to meet these consumer wants. Digitization allows companies to handle the individual requests of hundreds of thousands—even millions—of consumers. Again, our research shows that this is the way forward. More than 70 percent of CPG executives say they are investing in technology to capture and integrate consumer insights aimed toward improved product and personalisation development.
The traditional, legacy CPGs that are exploring ways to unlock the benefits of updating supply chain technology stand to reap great benefits. To be sure, addressing modern consumers’ urgent demands is complex and fraught with its own set of challenges. But adopting the right vision enabled through technology will help companies gain specific advantages in the pursuit to rise above consumer expectations of convenience, responsiveness and personalisation.
Relevance at Scale
Imagine a consumer goods brand with the data capabilities to understand an individual customer’s unique needs at every moment. Imagine having the agility to use that data to recommend a tailored solution that fits those needs perfectly. And imagine the brand possibilities that come from offering that personalized solution for billions of individuals, all at the same time.
That’s the promise of relevance at scale. But it won’t happen by itself. To make it a reality, brands need to assess their footprint carefully and comprehensively, remembering the “secret sauce” that made them great in the first place, but adapting and industrializing it for a new era, making a wise and considered pivot to new growth.
Upgrading RFID and Automated Track and Trace Solutions
During the COVID-19 pandemic, global supply chains faced the challenge of rapidly adjusting their business priorities to new customer preferences. Local supplier backlogs, winter storms, and the Suez Canal backup in March underscored the need for efficiency and visibility across the supply chain.
According to Christof Backhaus, Digital Lead Product Supply and Smart Label Project Lead at Bayer, companies must now place critical importance on tracking and tracing their products. “All large enterprises in the world dealing with finished goods,” he said, “seek functional and technical solutions to real-time channel inventory.”
Indeed, RFID’s real-time tracking data allows executives to make quick, well-informed decisions in moments of supply chain crisis - and rather than unfolding across days or weeks, it only takes a matter of minutes.
Why does RFID remain relevant despite digital disruption?
Essentially, RFID uses radio frequency waves to transfer data wirelessly between a scanner and a tag. In contrast to barcode technology, which requires a stationary scanner, RFID tags can be pinged from anywhere in the world, allowing companies to track real-time movement through the supply chain. RFID tags can also scan unique SKU numbers and distinguish between varying product sizes, colours, and styles: a critical feature for increasingly personalised end-user products.
Though the first patent for RFID tags appeared in 1973, higher accuracy rates, lower costs, and advances in sensor and data technology have made it newly accessible to a wide range of companies. Today, the technology is used in logistics networks, manufacturing and delivery networks in the pharmaceutical industry, and any business where efficiently tracking and monitoring product location is critical: raw materials, consumer products, cars, electronics, retail, and agriculture.
What are the key benefits?
Overall, automated track and trace solutions keep labour costs low, optimise operating costs, mitigate security risks, use capital effectively, and assist companies in adhering to regulatory requirements.
Below are three in-depth dives into how RFID benefits major industries:
- Pharmaceuticals: RFID tags help manufacturers safeguard sensitive products such as vaccines, tracking where they are and when they will arrive in real-time. Sensors closely monitor temperatures to ensure regulatory compliance. If anyone tampers with a shipment, the sensors alert the company.
- Logistics: RFID identifies process gaps and frequent anomalies by monitoring a product’s lifecycle from shipment to delivery. This data helps decision-makers predict the most efficient routes and therefore optimise their distribution schedules.
- Retail: Sensors help guard shipments against theft and provide critical intelligence when shipments go missing. Before adopting RFID technology in 2203, UK retailer Marks and Spencer relied on barcodes to scan inventory. When they made the switch, their productivity increased from a maximum of 400-600 items scanned per hour to up to 15,000 items scanned per hour. Building on their initial success, the retailer expanded the use of the technology and is still using it today.
Regardless of the industry, RFID promotes accuracy, immediacy, and efficiency. Companies reduce human error by automatically scanning products, keep track of inventory even in geographic locations with poor connectivity, and help streamline warehouse operations by identifying exact product locations.
Which recent innovations have changed the game?
With recent developments in cloud technology and IoT, a multitude of cloud-based alternatives have emerged to challenge traditional RFID technology. One of these cutting-edge solutions is Sony’s Smart Label - an intelligent shipping label that runs on AT&T’s global cellular network.
As with any good innovation, Sony’s proprietary technology started with a customer need ready to be solved: the Bayer Crop Science Division lacked an international IoT solution that could track seed products from start to finish throughout its distribution channel. Millions of dollars of revenue stood at stake, so Bayer turned to Sony to develop a smart label that would set the organisation up to manage its supply chain with end-to-end visibility.
Sony’s printable and disposable adhesive label allows companies to track the condition and location of their products worldwide and act upon the vast amounts of data it collects. The process is simple: the label activates when attached to the package, connects to AT&T’s secure LTE-M network, and sends data to the Smart Label Cloud in real time.
In sharp contrast to other smart label solutions that place trust in a patchwork combination of Wi-Fi, radio-frequency identification, and other limited coverage connections, the Sony Smart Label connects solely through a secure and universally-available cellular network. “Working with Sony,” says Robert Boyanovsky, the vice president of Mobility, IoT and 5G at AT&T, “we provide full visibility of every item shipped.”
Most importantly for companies on the edge, the Smart Label integrates with existing enterprise systems to achieve full visibility, thus adding value without disrupting supply chain process flow.
Why is this important now?
Companies that previously delayed introducing RFID and other automated track-and-trace technologies can capitalise on recent developments that lower costs, improve accuracy, and supercharge traceability.
Clearly the technology has value in today’s uncertain global marketplace, and can help decrease the costs of tracking goods. To quote Christof Backhaus, the Project Lead at Bayer, “the Smart Label indicates how much product is in the market, from the packaging line to the end customer.” Companies no longer have to spend a small fortune to take advantage of recent IoT developments. “Due to the technical composition [of the label],” Backhaus explains, “we don’t require additional infrastructure, manual scanning, or other expensive tools.”
Over the decades since RFID was first introduced, support for introducing it to company supply chains has also improved. AT&T’s IoT Professional Services Organisation, for example, supports companies through the end-to-end design and integration process--from installation to deployment and project management.
Companies that invest in traceable and visible supply chain solutions stand the best chance of survival, adjusting in real-time to natural disasters, shipping backups, and slowed-down supplier turnarounds as a result of the global pandemic. “Smart Label promises to help businesses like Bayer realise the full potential of the IoT,” says AT&T’s Boyanovsky. “[We can] deliver improvements in revenue and cost savings and make supply chains more efficient.”
Certainly, company executives will be hard-pressed to ignore recent innovations. In an age of uncertainty, RFID and its challengers herald a welcome sense of supply chain security. The next step? “Our sales team,” Boyanovsky adds, “is prepared to engage with prospective customers now.”