RESEARCH REPORT
Reinventing the consumer goods value chain
It’s time to move from thinking functionally to developing end-to-end mega processes.
5-MINUTE READ
May 30, 2024
In brief
- Consumer goods companies face extreme change. We expect to see companies reinvent the entire value chain within the next five years.
- Successful reinvention—enabled by generative AI—marries tech and new ways of working to reimagine siloes as outcome-based, end-to-end value streams.
- There are five imperatives for value chain reinvention, which companies should embrace to outperform the competition in a rapidly developing landscape.
Change is coming
The consumer goods industry is on the brink of profound change. We expect to see companies reinvent every part of the value chain within the next five years.
Consumer goods companies are facing cost pressures and high inflation. Enabled by generative AI, reinvention offers the ability to deliver 3-5% improvements in operating margin over the next three to five years, while also driving growth and disruptive innovation.
Reinventors expect to outperform the rest with boundaryless ways of working that reframe the enterprise around end-to-end mega processes.
A tech development like no other
The scale of generative AI’s impact is more profound than any other technology we’ve seen. Reinventing with generative AI affects every part of the company and every person in the organization.
Those who seek to reinvent with generative AI expect the benefits from revenue and innovation growth to exceed those of cost savings.
From client experiences, we’re seeing
15-25%
increase in consumer conversion
35%
rise in customer net promoter score
20%
rise in employee satisfaction
What are mega processes?
Reinventors radically redesign processes with the possibilities of emerging technology and new ways of working, and reimagine siloed functions as outcome-based, end-to-end value streams—in other words, mega processes.
We’ve defined four mega processes. Every consumer goods company should have a clear articulation of its purpose, which is managed through the first mega process, insight to plan. Ideate to scale realizes that purpose through the invention of products and services. Consumer and customer experiences are brought to life through engage to advocate, creating a promise that is fulfilled through plan to deliver. All this is enabled by a company’s people, technology and operations.
Four mega processes
Strategic planning can no longer be an annual activity. As the world continues changing, resilience and agility requires dynamic and continuous decision-making and resource allocation to translate strategy into action—changing as the market changes.
Consumers are looking for solutions—not just incremental improvements. AI and generative AI are making innovation cycles adaptive, generating insights that evolve as quickly as people do and helping innovators invent radical new offerings.
The combination of new technologies and ways of working will realize a long-promised dream: genuine relevance. Digital assistants will get ever closer to human-like performance, providing guidance that gets more relevant through interactions.
Consumer goods supply chains could soon be able to respond to market signals in real time, such that they can evaluate scenarios across functions and make decisions that ensure value and drive growth.
Five imperatives for end-to-end value chain reinvention
By and large, consumer goods companies believe in the opportunity generative AI represents but are increasingly frustrated with isolated experiments and siloed use cases. Instead, executives want to know how to reinvent, and are seeking to understand the pragmatic journey to realize holistic value.
Five imperatives for successful reinvention
For most, implementing wholesale reinvention all at once is not viable. The key is to focus on the greatest areas of value. For many consumer goods companies, this includes consumer and customer engagement, and the ability to fulfill this promise.
Leaders must set and guide a vision for reinventing work, reshaping the workforce and preparing workers for a generative AI world. Companies must prioritize upskilling and developing their talent to empower influential employees in various functions.
Leaders must commit to maintaining high standards of trust, transparency and sustainability in every AI-driven initiative. Responsible AI ensures that technology aligns with human values and protects people from negative impacts.
To get best value from generative AI, leaders must ensure that data and technology foundations are predicated on business value creation. For many, this includes understanding how to support new technologies with the right data in the right ways.
Change is constant, so reinvention never ends. Leaders must make the ability to change a core part of the organizational DNA. To support end-to-end process development, companies should appoint leaders with the influence to drive ongoing reinvention.
Reinventors embrace the boundaryless enterprise
Organizations that continue to be dominated by a “four walls” mentality that resists both internal and external collaboration will increasingly lose out to those that embrace more agile ways of working. Boundaryless enterprises outperform the rest. You need to embrace this shift—now.