Food Beverages And Hospitality October 2018

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industry has the largest bullwhip. Pervasive
bullwhip causes economic erosion. It leaves some of
the stakeholders suffering from excess or deficient
inventory.
A clearer collaboration will be forced from retailers
on one end and raw material suppliers on the other.
Real-time transparency of demand signals,
inventory positions, shipment status, in-transit
goods and actual sales will begin to occur—both
technologically and operationally. There will be
more shared protocols and common metrics to drive
collective success.
The next issue is fast payment cycles to the tier
suppliers. Extended payment cycles, such as 120-
day net, demanded by product manufacturers from
their suppliers will adversely affect the industry. It
will drive tier suppliers on an unhealthy borrowing
spiral, unable to meet working capital requirements.
The tier community includes packers, co-packers,
contract manufacturers and logistics providers. The
delayed payment practice can stymie innovation at a
macro level.
Innovation is being challenged in this hypercompetitive
market climate. Where do you see
product innovation going?
Innovation is business; innovation is revenue. It is
less about product creation than it is about value
creation. Companies will be forced to create
platforms rather than products per se. Future
innovation will be platform based. Corn is a
platform, potato is a platform and even chili pepper
is a platform. Infinite variations are possible based
on segmentation.
But the “Innovation Battle” will be fought at the retail
arena. That means companies must go beyond mere
product creation to success creation. That translates
to agile supply chains, service levels, timely
shipments and cost consciousness.
Yes, innovation cycles will get shorter and launch
windows will get narrower. It will behoove
companies to reverse engineer innovation from the
retail arena. Innovation must be bidirectional, from
concept-to-customer and customer-to-concept.
How is branding affected by so many choices for
the customer?
The runaway success of Cheetos is an object lesson
in branding. Frito-Lay turned corn puffs into an
attitude. The biggest consumers of Cheetos are the
Millennials. This product reflected the defiant,
different attitude of a generation with new spending
power. In essence, Frito-Lay created the product that
resonated with the zeitgeist of the times. It took the
values, attitudes and lifestyle of a dominant market
and answered with a product.
The creation of Jacked Doritos, big corn chips, once
again hit the male population with a love of sports.
The outsized corn chips bespoke to an audience of
male gatherers around big TV games.
Similarly, the popularity of Sriracha Hot Sauce
reflects more of an attitude and a sense of the outré.
Traditional branding percepts were turned upside
down. Enduring brands must be built out of
psychographic criteria to compete in a crowded
marketplace.
How is technology changing the food and beverage
industry?
With all the hoopla about the Cloud, the food and
beverage markets will benefit the most from
communalization of critical data among suppliers,
manufacturers, packers, wholesalers and retailers.
It means doing whatever is necessary to minimize
losses, opportunity costs and using information
systems as a tool. Such critical data would
encompass point-of-sale information, inventory
stock, demand signals, constraints and in-transit
notifications. Technology also means creation of
binding standards and protocol for collective
performance.
Companies must transform information technology
(IT) into a clear neural-network of data points and
decision points, and train people to understand
cause and effect along the entire business.
Technology alone cannot solve the problem—
training people is also required.
Is sustainability now mainstream or is it still
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October - 2018
Focus Food Beverages & Hospitality
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