3 CPG Leaders Share How to Transform Successfully
Learn the four pillars of digital transformation success from three consumer products leaders.
Good morning. Good evening. Good afternoon, everyone. Welcome to our today's webinar titled the anatomy of a successful CPG digital transformation.
We are all delighted to have you here today So my name is Makea. I serve as director industry solution for CPG Industries at o nine solution.
It is a privilege for me to host this webinar together with my colleague, John Klune.
And we are honored to be joined by a panel of experts, Chris Gustavo Michael, each bringing their wealth of experience and expertise to the discussion on this topic.
So now I will pass the floor to Chris to Stavo and Michael to introduce themselves and say in few words about your background.
So Chris, let's start with you. Okay. Thank you, Ricky, and good afternoon or good morning wherever you are in the world. So I'm Chris Tires.
I've had a something like a forty year career in the CPG industry initially with Mars and then with Nestle. Across procurement, manufacturing, and supply chain. I finished up with as the global supply chain head of Nestleine.
For the last few years, been working primarily following the things that interest me, particularly data, where I'm the chair of g s one UK and sustainability and particularly our friends here at o nine.
We can go with Gustavo.
Hi, everybody. Gustavo here. I'm very pleased to be here, by the way, this is amazing at an amazing gathering and an amazing topic of discussion.
Like Greece, I've been around for a a little while at I'm also forty plus years around in CPG specifically I serve in a P and G company for thirty five years or plus, and I also run at short period of time at Kimberly Clark's supply chain officer role, and I've been always related to to the topic matter that we are talking today. So it's exciting for me to just, you know, share some of the experiences and failures that I that I had in this scenario. Thank you for the invitation.
Thanks, Gustav. Michael.
Hi, Michael Chateau. Again, thank you for having me looking it to the discussion. I have the privilege of being the CEO for Genpact supply chain service line, which represents about ten thousand global team members to help companies run operations as well as support in the design and the execution of transformation with enabling technologies such as O9. I've had the privilege in my last twelve years focused specifically on the space of transformation in planning and supply chain execution.
And was able to start a partnership with O9 back in twenty sixteen and have since worked with seven of the ten largest CPG companies with their digital transformations and supply chain. So looking forward to the discussion and hope I can bring some insights alongside my too much senior in a in a steam palace. So Yes.
I always joke with mega that our resumes don't quite quite hold up to our our guest around.
Hey, everyone. My name is John Clooney, so I'm part of our industry solutions team here at o nine. Just logistically how this will go. We sort of have four key topics for Chris Gustavo and Michael Mega and I will sort of be moderating this.
But please feel free to ask any questions that you have on these topics and we'll present them back to the chat, but let's make this collaborative open q and a throughout, and we'll we'll sort of keep this moving. But I think with that. Thank you all for coming, and let's let's sort of dive in and get started with our first topic here. So I'll kick it back over to mega.
Yeah. So I'm pretty excited about this webinar. So the topic one for today is we have seen that multiple studies show that almost seventy percent of digital transformation fails. So digital transformation has been a buzzword, right, over recent years associated with failures or successes.
And numerous companies have done research on this area, And this is a research we have seen from a BCG company, which is explaining what are the, let's say, factors contributing to the failure digital transformation.
So Chris here, I would like to get your perspective on that based on your experience in this field, what are the common patterns you have seen or failure digital transformation.
I think very much that they tend to fall into into two main groups, either technology or people related.
And if you look at the span of different questions behind of different bits behind that, then they fall into they fall into those two main categories.
So we look at things like like leadership we'll look at things like change management, how the how those involved are omitted to that change, and then we'll go back and look at basic technical items very much around data quality.
Prepare this but a lot of the but all of them in my book come back to preparation.
And those that the failures that I've seen, most of the failure I've seen fall back to a lack of preparation in the first place.
And then they fall into those two main categories of people and then technical.
Alright, and so Michael have you have experience with different companies, right? You have helped them with the digital transformation journey. So do you see the same patterns in the industries?
Absolutely. I would echo Chris' comments. So, failure for preparation, I would say, is number one. And I break preparation into three key areas. So one is, do you have a redesigned target operating model? That is cognizant of the new audit possible that innovative technologies can provide.
If you don't, what ends up happening is engagement starts with kind of your SMEs who generally have been at the company for a long time and have that social capital on how the business works today, prescribing fixes for how they solve solutions today. And even then when you make the right technology solution, you are massaging the technology out of kind of what is innovative and excited about it to fit some of the challenges pain points or perceptions of the team today. So I think being future target rating model that is an area of companies underinvest in. A second big one is on the data front.
So a lot of times when technology fails, it's really the fuel that's going into the car, not necessarily the car itself, and companies significantly and woefully underestimate the data preparation stage. A lot of companies will say I'm on SAP APO, I'm on SAPIVP, I run local ASP, but leading tools that do true concurrent planning. Have a different data fit for purpose requirement than tools that a lot of planners are exporting, operating in Excel and plugging in results back in. So as you're going from bespoke systems and offline processes to truly in system concurrent, systemized planning execution, the level of data quality and integrity and availability to be honest has to step forward and that would say third on the people readiness side.
So most of these projects you'll see fail because of lack of adoption and we'll get to that through this panel.
But have what's the level of degree both in training and educating the users, not only maybe just on core supply chain concepts but also on the tool. You're asking them to help define future requirements, help define user stories with no awareness or knowledge of the technology platforms that are being implemented. And a lot of times you're asking them to do that in isolation of understanding how it impacts their future ways of working. So I think a lot of times people woefully under pay their team for the start of the engagement both from a domain content expertise as well as in the future technology fund.
So I would say that that whack of preparation is probably the biggest. The other one I would say complements summary is the approach to technology selection. Right? And I think a lot of times companies have already set themselves up for failure before they've even selected the technology just based on historical procurement processes that undervalue and underappreciate change management and business transformation needs in order to get the best of these technologies and we'll talk about some of those trends later in the panel.
Yeah. Thanks, Michael. So as you talked about data quality, lack of preparation, People readiness change management. Right? If that's not done well, that could be the factors for failure. So Gustavo would like to hear from you. What are the critical elements you see for a successful digital transformation?
I I I think they're not we the list of potential areas of failure are so big when we are transforming the way we operate in a corporation or instance, a lot of variables, a lot of factors. So in my in my more recent experience doing transformation for manufacturing digital operations and others, I have seen repeatedly the same pattern of of of potential make it or break it kind of of of aspects of it. And number one in my in my mind is education. Is an educational gap.
There's a big educational gap between understanding where we really wanna go. You know, what is the transformation look like? But it's also lack of understanding of how we operate today. So there is not in enough deep understanding on on on on how do we do things today and how we want them to happen in the future once we implement the the technology.
There's also gap of educational gap area of understanding the technology itself, which is which is huge.
And and that that is a major barrier because when you you don't know where to to go, you start having doubts, and and that creates some some level of disengagement.
From from from leadership standpoint, and, of course, it permeates down to the organization as a totality, and and it becomes a more interrupted process of trans transforming the the operation.
The second one which is connected to the first one is when when when leadership does really we don't know at how what we wanna get, then there is it creates a a a condition problem. We are not convinced enough in in-depth into into a change.
And and because of that, we we are we are not consistent in the purpose of driving the change. And we can be exposed to changes of priorities that because of lack of consistency or lack of conviction, we can we can trade off too quickly in some areas, and that create interruptions in the process of transforming that could really could enjoy probably the bigger the bigger picture.
And that and and if you add to that changes in management and rotation of roles, these transformations tend to be longer than many many assignments in the in the corporations, and that that becomes a real a real problem.
The last one I will mention is that sometimes because we don't know enough about technology, and we don't know enough about the market, the landscape of offering services offerings that that are there.
We we have difficulty selecting the right player to play with. You know, who who are those partners that would really create ecosystem to deliver the big bang for our organization and how to select them, which, again, I connected to number one. We don't we don't know So there's an education gap that that gets very emphasized a lot. I think education gap is number one. And that we we we try that one, and we we get a a positive effect on the others to solve the problem.
By the way, I'm sorry to add that add something else, but seventy percent of of failure especially considering the amount of money that the industry is throwing in transformation because we all wanna transform. It's cool to transform. No. It's cool to talk about. I'm transforming my operation.
And it's such a very strong pony, and and it's it's and and it's really such a relatively easy solution.
If we really get serious about understanding these things, we will be stronger. We will position stronger in in relationship to our business case or to deliver the transformation. That's so critical in my opinion.
I stop here.
Yeah. Thanks, Gustavo. We also see the similar patterns on our side that Education gap Yeah. Absolutely, I think with you.
So the next topic, which is making a good transition from this topic will be taken by John?
Yes. That's you know, we're a bunch of ex consultants over here at o nine, so we we obviously had to develop our own framework here of what we think the four pillars of success are for digital transformation. So if we go to the next slide, we sort of use a a body analogy to really describe these. Right? So the first pillar here that we've defined is really the technology.
Right? So it's about having a flexible technology that can transform data, take data, put it into knowledge, drive, decision making, also having a flexible enough technology to evolve with the CPG business. Right? Heavy M and A business, and also, you know, expanding supply chain networks, new DCs, new manufacturing lines, etcetera.
The second is really the heart. Right? The rhythm of the progress of the decision making. So organizations need a steady state of progress. Right? Where they can't get stuck in a never ending implementation.
The c suite executives want fast value, and the organization is asking for fast value drops to really drive momentum and drive change.
The third here is really the muscles, which we we call is we we translate to really the culture and the behavior.
So, you know, how do you drive the right behavior, the culture to drive change, how are you aligning your employees, right, for both the long term vision, but also the short term vision as well. And then the final pillar is what we call the bones.
Right? And these are really the processes that keep the transformation standing.
So, you know, how do you have processes to detect if something is going wrong, and how could you adjust accordingly. Right? Like, I grew up fighting fighters fighting fires in a lot of these implementations when I was a young analyst out there, and I and I loved it, but but you can't do that forever. Right?
So, you know, during deployments, do you have the right processes to monitor adoption, monitor, value realization.
And then after deployment, how do you have processes to sustain technology.
So, you know, is there DIY configurations?
How do we -- Mhmm. -- not rely on large teams to sustain these solutions. So these are sort of the four pillars of success that we've defined here in our framework. But, Chris, you you have a lot of experience as well.
So I would sort of I would sort of like to get your input on maybe hey, hey, what is missing? Right? There are a lot of there are a lot of good topics you guys mentioned earlier that are not quite clear in here. So So, Chris, I'd love to get your feedback on on this.
Okay. John, I think there's a couple that stand out for me.
The first is sounds boring topic, but he's vitally important. That's governance in that it's got to be clear how people go about my making changes. You know, you talked a little bit about fighting fires and you talked about dealing with with people who go offline, but there has to be a process clearly laid out in advance that all the stakeholders work too.
I think we've all seen the old problem of scope creep.
And and of that seventy percent that have failed in my experience, a good number always come down to scope creep. That's changing scope is is natural. It will. Business changes.
Regulations change, tax changes, all sorts of things change, but there has to be a process to manage things like that.
Equally, as I think, Gustavo was talking about earlier, people change, you know, people change their jobs, their companies, They join companies, they have to know where they fit in and they have to have a role, and that's all about governance.
So I think laying the governance rules out in advance is a part of that proper preparation.
The other one swinging back to which perhaps the missing but does come under proper preparation is good quality data in the first place.
You're having structured master data management, but also actually going through that master data in the bulk. Because so many of our digital transformations today put on put a great deal more pressure on the requirement of good quality data upfront.
And again, it's sometimes one of the boring topics that gets missed beforehand. Everybody wants to rush into the project without looking without really checking the data with beforehand.
So those are the only two additions I've put in there John, governance and quality data.
No. I I think those are data is one of the hottest topics that we've that we come up to when we're talking to customers and prospects as well.
I know I know Michael, maybe I'll kick it over to you you've been you mentioned a little bit around technology in your intro here. Right? And maybe you could dive into, you know, you probably seen customer select technology, get down to implementation path, and then have to pivot maybe elsewhere.
And just curious, you know, what has maybe led to some of the wrong technology select against? Yeah, I think a lot of times I would say there's two challenges, right? And completely agree with Chris on data.
You know, the challenge we always get asked by clients is like do I need to clean all my data before I start the transformation? It's like, well, the data you use today as muddy and dirty and as absent it might be, right? It can at least be the starting point of what you use in the future with the new technology. With some of the new technologies you have to understand that there's specific data elements that cause criticality in how the solvers are designed, or how the data model's structured, how the analytics are configured, and that does then lead to the repivot to your question John as you get down into individual use cases and you say, okay, now that winded in Nitty gritty, like it doesn't really fit what we've made from a technology standpoint.
A lot of companies have it's become very challenging out there, right? Marketing across almost every technology platform sounds very similar, right? Everyone talks about concurrency and in database analytics and AI and machine learning. And I think a lot of times in sales cycles, clients struggle to be able to tell the difference.
What we have found to be effective is when clients ask the vendors to actually load sample sets of their data and then provide them with a sandbox environment for their plan to physically touch and feel.
When you see the way that the ways of working can change particularly across business functions, so like revenue growth management, motion planning and CPG down into planning execution, the usual needs that kind of real time systematic response, thirty seconds a minute, minute and a half, And what we see is clients who don't do that in the onset of package selection, then find out when they get into the actual processing some of the technologies are out there that it simply can't achieve that degree of tone. And without it it completely impacts user experience and it forces them to go solve problems offline which leads to the decrease in adoption.
So I would say that that's an area to definitely stress test Another area stress test is a depth of the deployment network, right? Because you're not the only company out there trying to buy an advanced planning system It's obviously a very hot item nowadays, which means that the skill sets of the people who are helping to read the transformation, configuring the transformation cost people who process data and technology, but also the people who have their hands in the engine, right, or turning to benches, as well as in the people who can sit there with your business users and shepard them to be able to use the platform becomes at a premium, right?
And then I think a lot of times what we find is even if the technology might be feasibly able to do it, the plan that was put in place to go and execute it is not realistically feasible. And that could be based on the strength of the partners, that could be based on the timeline of execution that can be based on the level of prework to get the absorbing organization ready for the transformation.
But all those things will generally lead to a conclusion that the technology we selected isn't the right one. So I think there's a few steps you can do up front. I think the other thing you have to be cognizant of is there has to be a digestible amount of business functionality that you initially go live with. I think a lot of companies have been sober and that phase two becomes phase never, that the idea is everything absolutely has to go in for the first go live And I think when you do that, you have a lot of, a lot higher probability of saying, okay, this solution doesn't fit this exact corner case.
And I think companies that are more successful say we're gonna plug that for a future phase because I don't know if solving that use case is actually the right answer. That's how we do it today, right? But what we should actually do is live in a tool with something that's better than what we have today and then we continuously innovate and we imagine how we solve some of these things because some of those use cases wind up disappearing. You don't even need them.
So you get this false positive that the technology selection may have been incorrect.
And in reality, it's because the question you're asking is not the right question.
And I would like to ask Lita, we have seen this four pillars. Right, technology, decision making, culture process, or needs. So rangustava would like to is it possible to rank these pillars? Let's say, that technology is more important than culture or processes well defined processes and the data quality is more important than decision making, or you see this that all pillars has to be there and are equally important for a success for digital transformation?
It's a great question, Megan. Really, because let's it is like a balance act here.
And in the life of the project, you will have a a moment in which one would be the determining factor for that section or that period of the project, and another one will take over in another section of the project. But all all of these to say that I believe in keeping them in balance is what what is important here, and be aware of all of them potentially being the one that will make you succeed or the one that could make you pale.
I I tend to talk about it in three in three legs. That one one would be the the what we call here in this chart, the muscles is is the people part The other one would be the technology itself, and and I love the the the comment about how many of the use case will really are are really the one that will make it through because that repeats many times. And so So what is really what we wanna go for? So when we talk later in this session, we will be able to pinpoint a little bit of that situation and and why and why the selection of the right technology plays a big role, but we should not drive only one of them. The the third one I I I tend to talk about is what we call here the process of the bones. So so I see that the the three legs being always in in in balance.
Is a way is a way through driving a successful transformation, no one over the other. But if I will have to choose one, the one I will never let fail is a muscle.
Because even if we if we have a potential problem, a defect in implementation, or a process that doesn't work, the only most the only element of those four or the three that I use that will make it through is a culture and the behavior of the of the organization making it through happen even even when we have a little adjustment to be made. So it's important for us that the the culture, behavior, the leadership, alignment, the the the the caring of the organization within the transition period, which is difficult always that that that one is in check. That we pay enough attention to that element.
Because we can buy technologies, we can replace technology, we can change processes, we can re predefine them, we can re educate. We can do all of that. But the one thing that we we we if we don't do right, we are signing to failure is that if we don't get through our people understanding and doing their best effort to to to to help the transition to be successful every minute of the of the projects. And then ongoing, of course, creating the creating the ongoing processes to to sustain the gains and to deliver every day for the business.
Absolutely agreeing with you, Gustavo, because I had the same experience, like, during that transformation journey, you always have up and down. Right? It's never smooth or never, let's say, bad. But if people are motivated during that period, they take it through.
If there are difficult use cases and something but if there is leadership engagement, people are motivated they understand the technology is there to help them and not to scare them away, that transformation tends to success.
Yeah. It's absolutely. And and and and this is obviously the role of the leaders in the organization. We have the responsibility to make sure that that isn't checked. And that we adjust day in day out that aspect of the transformation, and we keep it we keep it clean from confusion, which will happen, what confusions will happen, questions, frustration, you know, desires to abort that all of that is gonna happen. So it's only if you are convinced and you can keep this purpose going.
And and you can keep people together with the with the major, the bigger objective that you can create a successful transformation And I and the technologies will work. They are designed for that. They are tested, they're vetted, they've been approved concept in many in many instances have been tested in many other implementations before at at at maybe the fit for use for the specific business case might be might be a challenge, but in in general, if we don't do the work of preparing our people for the transformation change and adoption process that we will fail for sure. So again, I would not choose one over the other But if I if I but I know that that that the only one that can really make things happen as any production system, any operational capability requires that the coach and the people are in the right place to make it happen.
Okay. Thanks, Gustavo, and I think it makes a perfect transition to our next topic, which is like how now we are talking about, right, success these four pillars are there for a successful digital transformation has to be in a balance. So how do organization define success and establish let's say metrics to track the progress and the outcomes of the initiatives they are doing, the digital initiatives.
So, like, for example, the KPI could be using adoption, the leadership engagement, the financial KPIs revenue growth, cost reduction, So let's continue with because I want and I would like to hear Chris and Michael view on that as well that how do you how organizations, let's say define success, and then have a framework to track it.
This is a a wonderful discussion topic because it it connects everything. Okay?
And in corporations, you might face a little bit of anxiety to see the results and especially at the beginning of every one of these transformational projects where you need to do a lot of preparation work.
Preparation work where you're mapping the processes where you are training people, where you are at at at selecting the right skill inventory that you need and etcetera, etcetera. Those are time consuming activities and and spending, heavy spending periods for the project that make people wait for results, because results are not yet there. We are we are not gonna get tangible results in the business outcomes at that stage. However, is a critical aspect. So I tend to think about about these, basically, in in three in three stages or or three areas but starting with the concept of defining success clearly for the transformation we are tackling.
We we tend to use the same boost work composed statements to define where we're going to and and I will invite every organization because I see the failure of being too generic on those visions that that that we that we clearly get into the specifics of what we are transforming and why we are transforming that. And so so we can really spell out to our people. To our management and stakeholders in general and to the project team, what what is success like? What is success like? And then what I see works better is if you you are able to spend that success in a descriptive way, but you can also talk about why is this right for the company's strategy or for the operations strategy at this point in time? So it checks its own strategy It checks because it's it's supportive or enhancement or acceleration of the business model, then you have two very important checkpoints that allows you to define and articulate that that that success in in a tangible way to your people.
Of course, you need to create your governance mechanisms. You need to create your funding mechanisms. And here is one that I was a little uncomfortable when I had to deal with it.
But but but it was the the best thing we did when we were transforming plan in in one of my my roles in in PNG that we had this amazing project transforming it, and and the funding came to me by Gates and I was so uncomfortable with Gates, but the case brought to me an amazing opportunity to pace the results and understand the adjustments and ask for the the next stage money that I require to keep the momentum of that cancellation happen.
That was so critical and important. It's kind of a pay as you go plan, but without the risk of stopping it because other priorities will come.
So, again, the three elements I will consider is there are some aspects that are technical. What are the technical aspects are, okay, how many process are being transformed?
Where is completion level of that?
The type of since there are project technicalities on delivery.
There is another one which is a people. Okay? Are people ready for that option and that the people understand where we're going at what are are we we understood the skill inventory required and the skill inventory that we have today, so we are we have a plan to close those gaps. And the third one is which I will try to put at the latest stage of the project is the business results.
Not because we're not doing it for the business resources, but because we need to get through all these processes to get to business results.
One more thing I would say that based on the speeding is that we still in in in in ours justified digital transformations in people reduction, which is a totally wrong way to measure transformation.
The productivity gains are not necessarily a reduction on head counts. It's a it's a an effective and productive use of the throughput in general of your operation even with the same, maybe less, but the but the the head count will be potentially secondary if you really are delivering a transformational change that will open the doors to the company to grow, enable the company to do new things to innovate and accelerate innovation.
The and that that's one of the major promise I've seen going on and so we need to learn how to talk and how to create a a a business plan and a justification of our investment based on factors arrived beyond the head count?
Yeah. Head count reduction is a good one because we also see that when we talk with some organization, there let's say, main aim for digital transformation is increasing productivity and how I can really use the headcount of my team. So Michael, I would like to understand from you when, like, when you talk with executives from different organizations, Do you see this as well? Sometimes that the main aim, like, not tangible, but more like headcount reduction, and how do you then like help them like is it the right way for the valid business case?
Yeah. I would say it's fifty fifty, So I'd say half companies like they will base business cases only on headcount. The other half of companies, particularly some European CPG companies because you have works councils and other things. We'll say that business case has to stand on its own independent of any headcount efficiencies.
Where I see clients being successful with regards to efficiency isn't necessary efficiency for costs sake, but it's efficiency in the operating model. So what we've seen a lot of CPG companies trend towards is the concept of a network planner. With the technology is able to concur and we peg demand and supply and any deviation in demand, promotion effectiveness, inventory, co men, co pack delivery, inbound schedule receipts, but anywhere in that window thread of the value chain. If you pull on it, you see the ripple effects across the rest of the network, that empowers a single user to be able to take action or to facilitate decision and executive action.
And in doing so you can collapse the organizational structure, not with the focus of driving efficiency but with the focus of driving agility and better allocation of resources across the network. So the KPIs really should be business impact KPIs the tangible unintended but inherent outcome of that is a significant reduction in the workforce.
Now what I would say is a lot of the companies who have done that path, they've reinvested that headcount where they didn't necessarily need to have cost savings in the growth side of the business, right? So there's activities that I would consider a growth, which is the customer development side, the customer experience side, and then there's the run, right, which is the planning, the operations, the managing of the O2 one, two, two, comand and Copax supply base, the order fulfillment, the direct allocation. That doesn't really necessarily help you grow the business.
It just kind of helps protect the business you have and then your growth from that stand is secondary with regards to reliable customer performance.
And your growth from that standpoint would be much and accretive with reduction of like OTIF fines and penalties. So if you can separate it out that way, I think you can clients have been very receptive to understanding they will get productivity gains, but the project isn't done for the sole objective of productivity. I think that goes back to the initial comments from Chris and Gustavava that these transformation projects require significant stamina, both from leadership as well as from the planning community.
In order to do that, you have to give them something that's inspiring. So whether that's we're gonna bring some of our strategic goals such as sustainability into the decision making process so they can understand it or you're translated directly into the impact it's having on your end consumers and division that you as a company were trying to go to market, right? So whether that's great experiences in times or building family memories, whatever the case might be with regards to this specific CPG company. If you don't bring that level of inspiration, it's hard to generate the stamina across the team you need to actually fully go through the transformation. So, that would be the way that we would kind of position it, and I think it's gained a lot of traction with with leading executives in the CPG space.
Thanks Michael. Chris, would you like to add any perspective from your side how to define success and keep KPIs relevance for the successful transcription?
I go I go back a step and say when you're defining success, it needs to be done early on as part of that preparation.
Too many organizations I think in implementations that I've been involved with confuse the business case with the definitions of success and they tend to assume that they're one and the same thing. And the reality is that you have to have some milestones along the way.
So you have to be and say, so if after eighteen months You're saying you won't have completed the transformation completely. You will not have reached the business case but there should be some milestones along the way which were defined against time windows and which everybody is part of the governance process early on signed up to. Instead of starting to squabble about them and that's usually because you mix up the business case and the and the definitions of success.
There's also one particular one, I think that these is always important and Michael referred to it a little bit.
There and this is always the question of cost avoidance.
So there always is cost avoidance and there is cost reduction.
And cost avoidance is is just as important as as cost reduction if it comes the way.
But it needs but people tend to squabble about them after the event and use it to almost retrospectively justify the project. And I think you can see ahead where there are cost avoidance it might be that people are being reinvested into another project or onto another function, or it may just be that you would have had to take other people on board, let's say, because of a regulatory change that are avoided by having the project, but it's important to define what those cost avoidance and cost reduction figures are.
And, I mean, to build on add quiz, I'd also say like value added opportunities, because any client we have to go into is always a list of I'd love to do actions six, seven, eight, nine, ten if I only had time to get through five in my day, right? And it's got to be believed that actions six, seven, eight, nine, ten, which will ability from an organizational standpoint have value. And if I'm an unlocking bandwidth to be able to do that, there has to be some business value in that. And I would just build off of also the comment around definition of success, to Chris' point, like a lot of our clients are super successful yes, they have business case objectives, but they also have personal objectives for the development and capabilities of the people.
They have objectives with regards to the level of systematic adoption of the new process. They have objectives with regards to the level of low and no touch planning for significant portions of their portfolio, right? And those metrics, if incorporating the personal incentive plans or even project rewards or project type spiff programs, I think those are the clients that we see by far the most successful because now they have an incentive and they have some forcing factors, so those key team members that we would call like the mighty middle or the historical SMEs that you're actually asking to do the greatest level of transformation you're asking him to come out of firefighting day to day instead of being in the business, look on the business and also drive systematic solving.
Well, today, they're powered and they're the only ones that institutionally know how to solve the problem. You're now starting to align all the incentives, right? And if you start measuring does that individual who's the lead in demand planning get the rest of the demand planning teams to abide and buy into the process and adopt it? And that person's metric is are you truly a change evangelist?
It starts to shift the conversation. And I think those are measures of success that companies kind of fly by, they might give some lip service to, but they don't measure, retain, and then compensate on it through the transformation.
Yeah, Michael, that's good insight because we have also seen that if you try to have personal objectives or incentives together with business objectives, that has for a positive impact doing the journey and keeps a team motivated as well that they are growing in their career and doing more than words needed. And that makes even a good transition to our next topic that what are the key trends we see that contribute to successful transformation over coming years.
And John Yeah. I think we wanted to kick this over to Michael. Right? I mean, obviously, companies are gonna continue to invest in new technology, whether that be the next AIML tool out there, whether that is, you know, replacing legacy spreadsheets, etcetera. Right? But but what are some of the trends that you think leaders are are gonna start place where where the leader is gonna start placing their bets as they look, you know, moving forward into really transforming their operations.
I'll keep my trend specific to CPG obviously because it's a CPG panel. Some of them do have transformation in the light sciences and semi and discrete industrial manufacturing, but CPG specific, I'd say we see four key trends of both drivers for investment as well as strategic objectives of companies as well as kind of what we see consistently being developed or attempted to be communicated in vision statements with supply chain executives in the CPG space.
Number one first and foremost is a concept of hypokin activity. So managing the volatility inside the four walls of your business is no longer considered sufficient. We can say it's was highlighted through COVID and the broken processes of supply chains that have always been built on efficiency.
Not necessarily considering for redundancy, for risk and resiliency, and where companies have moved to more funnel packaging and manufacturing, the idea that I just send something is a transactional relationship. It's not a collaborative relationship, I'm not facilitating the plans of my command copacts with my tier one, tier two suppliers. Whether it's issues with port freezers geopolitical concerns, climate changes which are impacting some source of all materials, you name inflection point, the external inflection point, but that concept of having to be able to coordinate not just what's happening inside my own four walls, coordinate a greater portion of the value chain and have visibility to it and be able to then collaborate on decisions that impact the enterprise holistically, not just supply chain, I think that's a huge trend.
And you see that with O9's expansion into the supply of collaboration in the SRM space, you see that with regards to engagements and sustainability as well, revenue growth management, trade promotions, but it needs to be able to extend outside your own full walls as well as outside the business function.
Second thing I would say building on to that is that degree of hyper connectivity across the internal four walls, right? And what I mean by this is we're seeing continuous evolution of more stakeholders getting involved in the supply chain, right? Whether that's the CFO, whether that's the chief revenue officer, So, how do we make sure that as you're doing supply chain transformations, that transformation becomes a single source of truth, or a north star or a flag that the entire enterprise can center around and not just stop at planning but move into execution and then also move all the way upstream into customer collaboration.
So I would say that's a second area that we see a lot of companies pushing to. They're no longer saying, I just need an SNOP process, I need SNOP plus SNE. I need SNE to connect into my four PL network, I need it to connect into my warehousing network, I need to take advantage of some of this IoT logistics to imagery to get new to him sensing signals. So, the expectation, not necessarily that the platform can do it, but the platform can ingest that information and ingest it in a right time, maybe that's new real time, but a right time process to enable decision making is a key trend.
The third one I'd highlight is a greater shift in focus on organization.
With all this, with the speed of innovation, types of hard and soft skill sets required to be effective planners today has materially changed. The degree of transformation that is required has materially changed. Companies have either now looked for external third parties to help run some of their operations to supplement some of the advanced skill sets, particularly in the analytics space, or to provide staff augmentation during the transformation so they can truly free up their eight players to work on the project. That's one way of looking at org just in the implementation.
I would also say then in the final org solution, the organizational design principles have become more aggressive in their degree of transformation. So I mentioned a little bit earlier that concept of collapsing supply, demand, command, co pack, inventory capacity planners into one wall such as a network planner or a supply network planner, that's picked up a lot of speed, right? Three years ago, I think we had one CPG client do it. It's very common in other industries.
Where you have like a v shaped build material, so you're sharing a lot of the core like lowest level of bomb, raw materials, you're sharing capacity nodes, So you're having to do enterprise trade offs. So we see that a ton in like semiconductors because it all comes from one wafer we're starting to see that trend pick up, right? So Coox was one of the first companies out of the gate that did it during COVID, now we've seen multiple confectionery companies you know, we're partnered on one in Europe is moving in that direction, you know, food, beverage companies as well. So we see matching.
So I would say that third transition is a reevaluation of what the organization needs to look like as well as who are the players in it and expansion into external bodies as well. And then the fourth and final trend I would say is moving away from kind of POC.
So historically, like a lot of companies like, alright, we're gonna go do a POC. I think companies today have gotten smart enough to understand that when you do a POC, with a subset of data, what you experience from a user standpoint with regards to processing time, capabilities, analytics solve, is not realistic to what you see when you expand that POC. I think a lot of clients have also realized that when you do an eight to twelve week POC, you're basically building POC code. It is not necessarily designed and intended to be production ready it is not necessarily a foundation to be scalable, it is solving an individual pain point.
And to do that in eight to twelve weeks, you're literally solving typically tangential use cases that the company challenges or struggles with today. That's the exact opposite of transforming the business. That is renovating components of the house that you don't like. So I think we're seeing more and more companies get a little bit wiser that that doesn't really provide necessarily to write value, and it doesn't necessarily provide a foundation to build upon.
So we've seen companies go one of two directions like greater investment in sandboxes doing the evaluation and then when they feel confident that they've kind of passed no regrets, no oh my gosh, moments test of the technology, then picking individual regions within supply circles of bifurcation so that you're not conflicting with other regions or other nodes or other brands that use the same capacity and raw materials to be able to launch it in that you. So finding a change evangelist, finding business leaders that have social capital that represents the greater business, but is in a digestible amount.
To be able to build a vertically integrated solution across process, data, oil change and technology that's horizontally wide enough across business functions that it makes a statement, but not doing it across the globe, so getting more vertical in the solution and wider in the solution but continue it to a subset of the industry. So I'd say those are four key trends that we're seeing with a lot of our CPG clients today. Yeah. And we'll see one even an interesting one, right, where organizations spend a lot of time doing it point to point solution, and even sometimes even not ending up with right technology because it's really point to point not addressing the scalability and the performance of the system.
Okay. That's good maybe to wrap up the webinar, right, because we have only five minutes left.
Just want to hear from Gustavo and Chris how do you think the leadership point of view should change for a successful transformation going forward? What leaders should do differently versus today to set up for success.
Okay. If if if I just kick off and make it very quickly, I think visible leadership is is really important and to actually demonstrate the commitment that leaders have behind the projects.
It's not sufficient just to put your name to the project. It has to be visible there.
We have all the tools to be able to do it to talk to all hands meetings and show that you have you you invested your future, your personal your personal future in that project as well. And that will get people to do it. But also in doing so to to show very much what Michael was talking about earlier where the benefits for the individual are, where the benefits for the individual in the team are.
So those should be my my sort of key point to the remaining minutes. So then if gustavo would like to add.
Chris, this is exactly the same at that the the the way I express it, you really need to become a champion of this transformation. You cannot just be declare a sign, approve money, and then wait for the results. You really need to be involved and and get the pulse of it all the time. Have the responsibility to connect it to the business needs. You have the responsibility to to close gaps on on on on the execution and and capabilities specifically, skills, and the the process in general.
I think if we don't do that, we fail. And so Yeah. Well, you answer it so beautifully that I don't wanna mess off my answer.
Thanks. I mean, not, yeah, not to double down on the management, so I'll take a slightly different approach on the same thread.
I think it's the investment in the team. Right? And the investment in the team is in the development of the team readiness, established of new organizational roles like data business process to it. So we all talked about the criticality of data, But if the organization doesn't have data business process to it, in which to train, that's the expectation, that's the role they're prepared to handle it, the metric on it, it's not going to change.
We can, you know, it'll change to load the data and clean it one time to go live and then you'll just see continuous degradation of it. And as you see delegation, you'll see failed adoption. So I think it's the investment in the organization that includes selecting the right individuals, being honest with those kind of lead SMEs that don't really want to change because they've created job security in the way they operate today, finding the right path to facilitate that change, that does include the hand holding right to Chris's comment. It includes reevaluating what like do we actually have the right heart and saw skills to effectively operate in a new operating model.
And if not, how do I go and source those? How do I get the right bandwidth for the team to be able to focus on the transformation and the stamina stresses that come with the project without day to day firefighting of the in the business. And how do I train and develop them both in advance of the program as well as throughout it to solve some of that, what's in it for me aspect? So I think it's really the investment in the team and to focus on the organization because at the end of the day you can build the best ways can fill it with the most amazing gas.
You can put the greatest pit crew there, but if the driver isn't comfortable driving the race plan, they're never gonna be successful.
Yeah. Thanks, Michael, so because only one minute left. So for our audience, we would like to invite you to have a look at your white paper, which explains how to assess the health of our digital transformation.
And also please send your feedback to our community like what are the important lessons you have learned during your journey, what are the biggest challenges you have seen and how to keep your successful digital transformation.
So now at this moment, I would like to thank our speakers to bring your expertise and your experience to the discussion. So, Gustavo, Chris, Michael. Thank you so much. Great. And I would like to thank our audience as well to listening to us.
Thank you. Thanks so much. Yep.
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