{"id":22232,"date":"2017-11-14T13:39:39","date_gmt":"2017-11-14T18:39:39","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/industry-4-0-revolutionizing-a-giants-supply-chain\/"},"modified":"2017-11-14T16:55:11","modified_gmt":"2017-11-14T21:55:11","slug":"industry-4-0-revolutionizing-a-giants-supply-chain","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/industry-4-0-revolutionizing-a-giants-supply-chain\/","title":{"rendered":"Industry 4.0: Revolutionizing a Giant\u2019s Supply Chain"},"content":{"rendered":"<p>Digitalization creates a disruption and requires companies to rethink the way they design their supply chain [1]. With this definite trend of digitalization and growing customer expectations, how can a brick and mortar CPG giant adapt to <strong><u>supply chain 4.0<\/u><\/strong> [2]?<\/p>\n<p style=\"text-align: center\"><a href=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2017\/11\/Exhibit01_Industry4-930.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-medium wp-image-22522\" src=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2017\/11\/Exhibit01_Industry4-930-300x152.jpg\" alt=\"\" width=\"300\" height=\"152\" srcset=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2017\/11\/Exhibit01_Industry4-930-300x152.jpg 300w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2017\/11\/Exhibit01_Industry4-930-768x388.jpg 768w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2017\/11\/Exhibit01_Industry4-930-600x303.jpg 600w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2017\/11\/Exhibit01_Industry4-930.jpg 930w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><\/a><\/p>\n<p>From the customer perspective, there are growing service expectations towards customization, full transparency and easy access to channel and SKU mix. Such changes would reflect on the supply front with stronger need of constant changes to the SKU portfolio, need to transform the supply chain to cope with a faster and more efficient system of delivery.<br \/>\nThe new digital-driven chain poses a lot of questions [3]:<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"size-medium wp-image-22529 alignleft\" src=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2017\/11\/Exhibit03_Industry4-930-1-270x300.jpg\" alt=\"\" width=\"270\" height=\"300\" srcset=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2017\/11\/Exhibit03_Industry4-930-1-270x300.jpg 270w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2017\/11\/Exhibit03_Industry4-930-1-768x855.jpg 768w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2017\/11\/Exhibit03_Industry4-930-1-920x1024.jpg 920w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2017\/11\/Exhibit03_Industry4-930-1-539x600.jpg 539w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2017\/11\/Exhibit03_Industry4-930-1.jpg 930w\" sizes=\"auto, (max-width: 270px) 100vw, 270px\" \/><\/p>\n<ul>\n<li>Can P&amp;G move from a demand\/supply model to customer-centric supply chain?<\/li>\n<li>Can the system be agile enough to incorporate analytics to deliver products faster? Can it meet Amazon\u2019s \u201cpredictive shipping\u201d, where products become available before the customer\u2019s reaches the purchase intent phase.<\/li>\n<li>Would it be able to respond to ad-hoc changes in demand and supply- minimizing planning cycles and frozen periods?<\/li>\n<li>Can P&amp;G provide full visibility to customers and end-to-end transparency throughout the supply chain, ensuring that all stakeholders base their decisions on the same set of facts?<\/li>\n<li>When can P&amp;G push its products from store-basis to digital? [4]<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<p><strong>Digitalized Value Chain<\/strong><\/p>\n<p><strong><u>Supply chain 4.0<\/u><\/strong> comes with impacts on all areas of supply-chain management. It ultimately enables a step change in service, cost, capital, and agility, with changing a lot of improvement levers (outer circle) and value drivers (inner circle) [1].<\/p>\n<p><a href=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2017\/11\/PNG-Ops-Supply-Chain-4-in-consumer-goods-Ex2-2.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\" wp-image-22250 aligncenter\" src=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2017\/11\/PNG-Ops-Supply-Chain-4-in-consumer-goods-Ex2-2-240x300.jpg\" alt=\"\" width=\"469\" height=\"586\" srcset=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2017\/11\/PNG-Ops-Supply-Chain-4-in-consumer-goods-Ex2-2-240x300.jpg 240w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2017\/11\/PNG-Ops-Supply-Chain-4-in-consumer-goods-Ex2-2-768x961.jpg 768w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2017\/11\/PNG-Ops-Supply-Chain-4-in-consumer-goods-Ex2-2-818x1024.jpg 818w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2017\/11\/PNG-Ops-Supply-Chain-4-in-consumer-goods-Ex2-2-480x600.jpg 480w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2017\/11\/PNG-Ops-Supply-Chain-4-in-consumer-goods-Ex2-2.jpg 1536w\" sizes=\"auto, (max-width: 469px) 100vw, 469px\" \/><\/a><\/p>\n<p><strong>The Game Plan<\/strong><\/p>\n<p>P&amp;G has laid out a long-term plan to tackle the different levers that need to be balanced to reach a fully digitized value chain. It is operating with a mission to become the most technology-enabled business globally. In the short term, P&amp;G is building the intimate relationship with consumers through one-on-one relationships enabled by technology. They have recently developed \u201cconsumer pulse\u201d; utilizing Bayesian analysis to categorize consumers\u2019 feedback allowing real-time reaction. This plays on the \u201ccollaboration\u201d driver, pulling the level of end-to-end collaboration. This is coupled with efforts to accelerate the movements of goods from the factory to shelf. Using digitalization as a source of competitive advantage, P&amp;G is digitizing their operations in all parts of the supply chain- from manufacturing to point of sale. On the manufacturing front, front-line employees are using iPads to pull off real time data from manufacturing lines. There\u2019s currently strong systems, \u201cControl Tower\u201d and \u201cDistributor Connect\u201d, allowing for efficiencies on logistics and transportation. Such move resulted in a 15% cut in \u201cdeadhead\u201d movement [3].<\/p>\n<p>In the long-term, P&amp;G envisions a system where visibility of a certain product on a certain manufacturing line in real-time is possible and accessible. Furthermore, they\u2019re looking into integrating such system with costing control system, thus integrating accounting and manufacturing. They are also planning to be digitally connected to retailers, allowing a streamline movement of products, common data warehouse, and minimal errors between suppliers and retailers [3].<\/p>\n<p>&nbsp;<\/p>\n<p><strong>Need for a further leap?<\/strong><\/p>\n<p>Such plan seems well-structured and planned. However, to accomplish a fully digitized factory to shelf system, a lot of interventions need to take place. P&amp;G needs to start from the base of the pyramid to be able to climb to the top of the digital space. Sales and Brand teams need to pivot their strategies towards maximizing value to consumers, and not for the company- only then, will real transparency occur. The age of digitization requires agility in internal and external operations. To be able to execute with agility on manufacturing and customer interface, internal processes need to be as agile and flexible to cope with ad-hoc requests and changes.<\/p>\n<p>In developing countries, further efforts are needed to enable a connected digital trade. On-ground training for sales representatives and retailers is needed. Without such training, getting data from the trade will be almost impossible.<\/p>\n<p>&nbsp;<\/p>\n<p><strong>Future Outlook <\/strong><\/p>\n<p>A deep-dive into the future of the digitalization of retail supply chain leaves a series of unanswered questions. What is the intention of building a personalized channel with each consumer? To provide real-time data that drives further product innovation or to alter the marketing strategy to tackle the customers concerns? There is no doubt that digitalizing the manufacturing processes would allow production efficiencies, higher utilization and faster delivery, but what about digitalizing the shelf space and planogram? Is it maximizing value for consumers or pushing products that maximize value for the company?<\/p>\n<p>In a developing country like Egypt with fragmented retail space and a universe of millions of touchpoints, how feasible is it to be digitally connected with retailers? With sales representatives incentivized to stock-up retailers, how doable is it to streamline movement of stocks?<\/p>\n<p><em>(Words: 774)<\/em><\/p>\n<p><strong>References<\/strong><\/p>\n<p>[1] Knut Alicke, Daniel Rexhausen, and Andreas Seyfert, \u201cSupply Chain 4.0 in consumer goods,\u201d McKinsey&amp;Company, April 2017, <a href=\"https:\/\/www.mckinsey.com\/industries\/consumer-packaged-goods\/our-insights\/supply-chain-4-0-in-consumer-goods\">Link<\/a>, Accessed November 2017.<\/p>\n<p>[2] Stefan Schrauf, Philipp Berttram, \u201cIndustry 4.0: How digitization makes the supply chain more efficient, agile, and customer-focused,\u201d Strategy&amp;, September 2016, <a href=\"https:\/\/www.strategyand.pwc.com\/reports\/industry4.0\">Link<\/a>, Accessed November 2017.<\/p>\n<p>[3] \u201cInside P&amp;G\u2019s digital revolution,\u201d McKinsey&amp;Company, November 2011, <a href=\"https:\/\/www.mckinsey.com\/industries\/consumer-packaged-goods\/our-insights\/inside-p-and-ampgs-digital-revolution\">Link<\/a>, Accessed November 2017.<\/p>\n<p>[4] \u201cThe future of retail supply chain\u201d, McKinsey&amp;Company, November 2011, <a href=\"https:\/\/www.google.com\/url?sa=t&amp;rct=j&amp;q=&amp;esrc=s&amp;source=web&amp;cd=1&amp;ved=0ahUKEwjDnKe-2L7XAhUH34MKHc1GAPQQFggsMAA&amp;url=https%3A%2F%2Fwww.mckinsey.com%2F~%2Fmedia%2Fmckinsey%2Fdotcom%2Fclient_service%2Fretail%2Farticles%2Ffuture_of_retail_supply_chains.ashx&amp;usg=AOvVaw0Sw7FOA6qDkEA8jWBuWon4\">Link<\/a>, Accessed November 2017.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>During my 2-year tenure at P&amp;G, I\u2019ve always wondered whether digitalization can shake the retail industry in Egypt; an industry primarily controlled by wholesalers with an ultimate power of market disruption in split of seconds and an industry where price wars is a norm and tricking consumers is the way to sell&#8230;<\/p>\n","protected":false},"author":10238,"featured_media":22233,"comment_status":"open","ping_status":"closed","template":"","categories":[430,17],"class_list":["post-22232","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry","category-cpg","category-supply-chain","hck-taxonomy-organization-pg","hck-taxonomy-industry-consumer-products","hck-taxonomy-country-egypt"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-rctom\/assignment\/rc-tom-challenge-2017\/","yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - 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