CPGmatters: PepsiCo Urges Industry to Focus on ‘Speed’ to Spur Growth
Through a special arrangement, presented here for discussion is a summary of a current article from the monthly e-zine, CPGmatters.
At the Food Marketing Institute (FMI) Midwinter Executive Conference in Orlando, John Compton, chief executive officer, PepsiCo Americas Foods and Global Snacks Group, called on the food industry to speed up the way it collects data, develops products, reduces days of inventory, and deals with the convergence of online and in-store shopping.
Greater collaboration is more critical with the rapid convergence of online and in-store. He remarked how fast shoppers can research and buy products with smartphones and computers compared with traditional shopping in stores, and pointed out the growth seen in e-commerce sales.
“Speed will be a future currency for growth and profitability,” he said during a presentation. “It requires us to re-think old habits and to embrace the speed at which the world is changing.”
Mr. Compton said about $10 billion is spent on insights across multiple industries, including half spent on collecting and analyzing data. He said, “In our industry, the transaction cost alone of buying and selling data is over $5 billion. Do we really need to spend all that money on data when it’s two and three weeks old? Surely there is a better way. In traditional businesses like ours, we should share information. We can get a competitive advantage by the way we interpret that information.”
Better insights can lead to more innovation in the form of blockbuster new products, he claimed, lamenting that the shrinking center store of supermarkets is home to too many new SKUs that are mostly “cannibalistic line extensions.” He added, “We are being challenged to bring you innovation that drives category incrementality. Many of you want innovation that differentiates you from your competing retailers. We can change these trends of innovation. We just have to act fast.”
“Can we imagine a supply chain with seven to 10 days of inventory, not 60?” he asked. “I know we can’t get there tomorrow or next year or five years from today. But can’t we start to paint that vision? Can’t we start to think about how to reset shelves in a more virtual basis instead of once a year?”
Discussion Questions: What do you see as the biggest hurdle to improved inventory management in food retailing? Do you agree that speed is the “future currency for growth and profitability”?