Looking at transformations

On June 2nd, global management consulting firm Kearney released its newest supply chain and transformation paper, More than half of all CPG companies on track to grow below the market by 2027, which analyzes supply chain inefficiencies and gives strong guidance on how CPG companies can look to transformative models to win in the current climate of change and uncertainty

“Top performing companies today have supply chains that are built around speed, resilience and especially customer service,” said report co-author Arun Kochar, a partner in Kearney’s Strategic Operations practice. “Most big transformations fail because people don’t like to change, but with $800 billion in top-line growth at stake, there’s a compelling case for CPG companies to make the necessary changes.”

The report lays out a model for supply chain transformation that includes an exhaustive three-step approach and a rationale for exactly what must change and why. It also analyzes economic supply chain opportunity in terms of:
• Quantifying expected market size in five years
• Identifying relevant peer sets by fast-moving consumer goods (FMCG) sector, and dividing it into quartiles
• Understanding quartile growth relative to market compound annual growth rate (CAGR)
• Estimating gain or loss of market share by quartile over the next five years

“Transformations are rarely easy,” said study co-author Greg Portell, lead partner in Kearney’s Global Consumer and Retail practice. “Half of all transformations are stopped; 80 percent are proven ineffective. Success requires building the required support in the organization and, at every step of the way, ensuring that the proposed changes are still relevant along the entire 12 to 24-month journey.”