• Implications of the

    Implications of the "Winning with Digital" Study

    By working together, consumer packaged goods manufacturers and retailers can make a difference.

    Abstract | More | PDF

    To shed light on retailers’ shift from traditional to digital marketing vehicles, the National Association of Chain Drug Stores asked us to conduct a study. The results of that study are outlined in the companion white paper Results of the NACDS “Winning with Digital” Study. But as we conducted that study, and reflected on our years of experience working with retailers and consumer packaged goods (CPG) manufacturers, we came to believe that beyond those concrete results this digital transformation has far-reaching implications worthy of further discussion.

    It's not just that CPG manufacturers can help retailers gain insights into consumer digital behavior, nor merely that manufacturer offers need to shift to more targeted, mobile-friendly formats (although these are important findings that are fully explained in the companion paper). It's also that the transformation changes both business needs and power dynamics within and across organizations. These changes may threaten the traditional forms of collaboration between retailers and their CPG partners. At the same time, however, the more complex and demanding new environment will require that collaboration become ever more effective. In this paper we explain our perspective on how companies can use that collaboration to succeed in a digital world.

  • Results of the NACDS

    Results of the NACDS "Winning with Digital" Study

    To better understand social media users, retailers are open to ideas from consumer packaged goods firms.

    Abstract | More | PDF

    Broadly speaking, advertising trends are dramatically shifting from traditional, print-based media to newer, more effective digital channels. But which specific digital marketing vehicles do retailers find most attractive? What are their digital goals, and which techniques are proving to be the most successful? And what are the implications of these trends for consumer packaged goods manufacturers (CPGs)?


    To answer these questions, the National Association of Chain Drug Stores and global management consulting firm A.T. Kearney conducted a digital marketing study. The study’s results show that in trying to better understand social media users, retailers are open to insights from CPG firms. Retailers currently use digital marketing to drive traffic and brand awareness, though in the future they may harness it for community-building tools. And retailers’ current priorities involve mobile and tablet applications, as well as integrating digital with traditional marketing functions

    This white paper discusses the results of the study. In a companion piece, Implications of the “Winning with Digital” Study, A.T. Kearney consultants discuss their interpretations of how individual CPG manufacturers and retailers can use these study results to prepare for the future.

  • Agroindustry Investment in Mexico: New Models for Success

    Agroindustry Investment in Mexico: New Models for Success

    Javier Delgado, former director general of Mexico's Capitalization and Investment Fund for the Rural Sector, discusses his role in transforming the country's agricultural sector.

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    Javier Delgado, former director general of Mexico’s Capitalization and Investment Fund for the Rural Sector (FOCIR), with 40 years of experience in the area of rural and agro-industrial finance, pioneered the concept of using investment funds to support agricultural projects in rural Mexico. At a recent conference hosted by A.T. Kearney on behalf of the United States-Mexico Chamber of Commerce to discuss social impact opportunities in Mexico, partner Ricardo Haneine met with Javier Delgado to discuss some of the innovative ways in which FOCIR helps small farmers.

  • Fuel Management: Securing Value Across India's Coal Supply Chain

    Fuel Management: Securing Value Across India's Coal Supply Chain

    Adopting the correct fuel management practices can help control value loss.

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    Coal is the single biggest cost component for thermal power generators, typically accounting for 60 to 70 percent of input costs. And managing coal is complex, with players facing an array of issues across the supply chain—from sourcing to logistics management, bulk handling, yard management, and overall quality management. In emerging markets such as India, the addressable value loss can reach 7 to 12 percent of the total cost of coal across the entire chain.

    Where is value lost? To begin with, in coal sourcing. Many power companies, unable to fulfill requirements from long-term standard contracts with domestic sources, are relying on alternative routes such as spot and short-term coal contracts or imports. This adds to logistical challenges in the form of capacity constraints (including rail and port) and sizable quantity losses because of poor external infrastructure. In addition, managing quality losses across the supply chain is a huge challenge, amplified by improper quality measurement and inefficient yard and stockpile management practices.

    The right suite of fuel management practices across three dimensions—planning and sourcing, coal quality, and logistics and inventory management—can help plug the value loss.

  • The Arrival of Sub-Saharan Africa on the Global Economic Stage?

    The Arrival of Sub-Saharan Africa on the Global Economic Stage?

    As the first U.S.-Africa Leaders Summit gets off the ground, we assess Sub-Saharan Africa's place in the global economy.


  • Who Will Unlock the Power of Consumer-Led Digital Health?

    Who Will Unlock the Power of Consumer-Led Digital Health?

    Digital Disruption

    Apple, Google, and Samsung are all vying to win over the health-conscious consumer. Will they manage to disrupt the healthcare business model?

    Abstract | More | PDF

    Health is rapidly emerging as the new frontier for disruptive consumer technology. There is little doubt that consumers are hungry to use digital technologies to help manage and improve their health. Experts project that 500 million smartphone users worldwide will be using a healthcare app by 2015, and 50 percent of the more than 3.4 billion smartphone and tablet users will have downloaded mobile health apps by 2018. Clearly, there is high potential in the B2C model of digital health, where consumers are starting to actively manage their health to stay well and keep away from the doctor’s office. 

    To date, the majority of health apps have been quite basic, with mostly manual input of biometric data and limited ability to integrate and analyze data streams from multiple apps and devices. However, this is all set to change with the entrance of some of the market’s biggest technology and digital players. 

    Apple recently announced the launch of “HealthKit,” which aims to bring together biometric and other health data into a single platform. Samsung launched Simband, a smart health device that will enable constant biometric monitoring from the consumer’s wrist and real-time feedback on how the body is performing. Samsung is also creating a secure open-data platform to allow developers to download data from any device or digital source, effectively creating a health data powerhouse. Google is launching Google Fit, an open-source Android platform approach to track health and fitness biometric data, compatible with a host of monitoring devices and its own smart watches. 

    This is lining up to be the next battleground for these giants. The question is, will this wave of digital innovation have the same disruptive impact on healthcare as it has on other industries, undermining the business models of established players but offering unrivaled opportunities for new innovators? And ultimately, will the consumer win?

  • Preparing the Supply Chain Pharma Needs

    Preparing the Supply Chain Pharma Needs

    A.T. Kearney Pharma Supply Chain Panel 2014

    Pharma supply chain managers should have complexity reduction, end-to-end inventory management, supply chain segmentation, and greater agility at the top of their agendas.

    Abstract | More | PDF | iPad | Kindle

    We asked the participants in the A.T. Kearney 2014 Pharma Supply Chain Panel—more than 30 large global pharmaceutical companies, representing six of the world’s 10 largest companies in the sector—about their supply chain performance and priorities for the year ahead. Our study shows that many pharmaceutical firms have significant potential to improve across the main supply chain areas:

    • Customer service levels at the best pharma companies are world-class, at just a shade below the best consumer goods companies. Average levels, however, are 5 percent lower, and even seemingly small service-level differences of just 2 percentage points can translate into 80 percent fewer stock-outs at non-generic prescription drug firms.
    • Forecast accuracy is important to keeping inventories low—and production stable. Volatile demand and complex finished goods portfolios can make this a daunting challenge. Several companies (particularly non-generics) seem to have mastered the art, but the average pharmaceutical firm is far from a state of excellence. 
    • Total inventory at best-in-class consumer goods firms accounts for 70 percent fewer days of sales than at most pharma companies. Even the highest-performing members of our panel have not managed to reduce the gap to fewer than 61 days (that is, about 34 percent).
    • Total supply chain costs (as a percentage of COGS) at average performers present a 40 percent difference from the best pharma industry supply chains—which, at around 10 percent, are comparable to those of best-in-class consumer goods companies. Thus, supply chain costs at most pharma companies could be reduced by as much as 7 percentage points.

    While our study may have provided participants with concrete evidence of where and by how much they can improve their supply chains, most already have an intuitive sense of the areas that need to be addressed. More than three out of five respondents said that they will initiate or reinforce initiatives to reduce complexity and optimize inventories across the supply chain. Nearly half intend to address supply chain segmentation, and more than two in five will tackle agility. Customer centricity and emerging markets, although not on our panelists’ list of top five priorities for 2014, are two important topics that supply chain organizations in the pharmaceutical industry need to have on their radar screen.

    Addressing these topics is challenging indeed, but it is the only way to reach best practices. Industries such as consumer goods have proved that the effort pays off.

  • Want to Engage Consumers in a Digital World? Don't Think Digital, Think Human

    Want to Engage Consumers in a Digital World? Don't Think Digital, Think Human

    Leading companies are capitalizing on three basic human needs.

    Abstract | More | PDF | iPad | Kindle

    With access to virtually anything anytime, consumers have the power in their fingertips to move through large numbers of offers and, in short order, settle on what suits them best. Businesses and brands are watching in awe, using terms like “disruption” and “challenging times” to describe their new reality—one that is changing fast and giving the word “competition” a whole new meaning. In this context, the quest for consumer engagement is becoming the holy grail of business.

    Whether they try to protect store traffic or increase the time consumers spend on their websites, everyone is seeking to engage: more people, more time, more often.

    To achieve this, businesses must first understand why consumers are so devoted to digital technology in the first place—this is something much deeper than affordability, accessibility, or simplicity. Simply put, digital technologies have caught fire because they address three core human needs: the need for connection with other humans, the need for self-expression, and the need for exploration. Understanding the human side of the digital revolution will be a key success factor for businesses trying to compete in a digital world.

  • Shifting Labor Relations

    Shifting Labor Relations

    Mastering Disruptive Change in Manufacturing

    A collaborative labor relations strategy can help manufacturers to successfully manage the growing patchwork of stakeholders and union representatives.

    Abstract | More | PDF | iPad | Kindle

    Despite increasing automation, human labor remains one of the most important resources in any manufacturing operation. The hype around 3D printing and robotics may be taking up most of the airtime in manufacturing-related discussions, but there are plenty of reasons why management should start paying more attention to interactions with workers.

    One reason is that since the financial crisis, unions and workers’ representatives are back in the game. Specialist unions are growing and starting to exercise their muscle, especially in some Asian countries where the creation of smaller unions has been partially prescribed by law. China is also a prime example of where Western-style labor demands have begun to take hold, requiring management teams to develop excellent labor relations capabilities. As all this plays out in the context of skilled labor shortages in many industrialized countries and significantly rising unit labor costs in both developed and low-cost countries, understanding and addressing the forces that drive fluid labor relationships will be just as crucial as thinking through the impact of technology shifts. We recommend that forward-thinking manufacturing executives place four topics at the head of their agenda:

    • Establish global labor relations strategies that address workers’ representatives in recently unionized areas.
    • Conduct risk assessments and develop contingency plans jointly with all value chain partners to minimize potential disruptions.
    • Craft and flawlessly execute creative labor relations and communication strategies that balance the different interests of the company’s numerous employee stakeholder groups.
    • Launch collaborative relationships with unions and workers’ representatives based on transparency and open dialogue, as they can open the spectrum of solutions and be a key to sustainable success.
  • Global Truck Industry

    Global Truck Industry

    Perspectives toward 2030

    Joint study by A.T. Kearney and the German Association of the Automotive Industry (VDA) finds the truck manufacturing industry is on the cusp of major change.

    More | PDF

  • Procurement: How to Stand Out from the Crowd

    Procurement: How to Stand Out from the Crowd

    Is your company ready to change its procurement approach and gain competitive advantage?

    Abstract | More | PDF | iPad | Kindle

    Procurement is well known for its role as the “hatchet,” slashing costs of goods and services with a little arm-twisting of suppliers as necessary. Yet there is a smarter, more innovative way to cut costs. One that harnesses the power of procurement throughout the product life cycle.

    Innovative materials and groundbreaking components are vital ingredients in the products of a range of modern industries from chemicals, oil and gas, and energy to food and high tech. These industries all have something in common—a well-defined product life cycle that moves in stages from product launch, growth, and maturity to ultimate decline.

    Leading companies in these industries do two things simultaneously: They focus on today’s realities (product launches, marketing, market share, and margins) while planning for the future by continually exploring new markets, new products, and new business models. This concurrent view requires all parts of the business to be in sync. It won’t work if procurement is merely a buying exercise that is isolated from R&D, marketing, and sales. It won’t work if procurement continues to be tasked with cutting costs. Today, more companies are creating significant, quantifiable value by giving procurement a seat at the strategy table—and creating value at every stage in the product life cycle.

  • Prospering in a New Age of Medical Innovation

    Prospering in a New Age of Medical Innovation

    Health providers need to focus as much on influencing patients’ beliefs and behaviors as on treating their ailments.

    Abstract | More | PDF | iPad | Kindle

    Today, we are squarely in the third age of modern medicine, when the affordability and value of treatments have come to the forefront. So although the pharmaceutical industry is rightly upbeat about many of the innovative medicines coming through in areas such as cancer and hepatitis C, long-term prosperity can only come from exploiting the changing technological and social landscape to create far greater value.

    The growth of chronic disease has been largely driven by the behavior and lifestyle choices of an increasingly affluent world. The only way to control the growth is to modify these behaviors. Treatments in the third age will need to become much more holistic and seek to actively involve patients in their own treatment. Interventions will consist of a combination of pharmaceutical, behavioral, nutritional, and digital technologies.

    In sum, a far broader view of medical innovation will be required—one that encompasses new technologies based on fields of science that are barely understood or not yet widely accepted as part of the medical paradigm.

  • Wealth Management: How Smart, Collaborative Partnerships Can Lead to Growth and Profits

    Wealth Management: How Smart, Collaborative Partnerships Can Lead to Growth and Profits

    Success in wealth management is simple: Deliver the high-quality products that your clients need and want. 

    Abstract | More | PDF | iPad | Kindle

    Times are tough in wealth management in Europe. Revenues fell once again in 2013 due to a range of persistent issues—low interest rates, rolling waves of regulation, more cautious clients, less profitable customized solutions, and digital and multichannel offerings. Today, roughly one in eight wealth managers in Europe loses money every year, forcing major players out of the market and others to consolidate.

    Yet for all the troubles, wealth managers have still-untapped sources of value at their disposal. For example, wealth managers that build more collaborative relationships and partnerships—going beyond the traditional boundaries of today’s silo organizations to build a strong client base and solid value propositions—can maximize the value available for themselves and for the entire banking ecosystem.

    Wealth managers can tap three sources of value from improving partnerships with adjacent business units: serving the right clients (in the right channels and with the right offers), tapping into the client reservoir of the commercial bank, and strengthening in-house products. This paper offers insights on these three areas.

  • New Manufacturing Technologies

    New Manufacturing Technologies

    Mastering Disruptive Change in Manufacturing

    With manufacturing technology heading in dramatically new directions, executives need to keep their eyes wide open and be ready for whatever comes.

    Abstract | More | PDF | iPad | Kindle

    Stories about new manufacturing technologies and their possible applications are dominating the news. Enabled by intelligent manufacturing systems, technologies such as collaborative robots or 3D printing could potentially transform—or even replace—conventional manufacturing operations and lead to "fab labs" popping up everywhere. As usual with new developments of this magnitude, skeptics will be eager to point out that there’s much more hype than real opportunity, but nobody disputes that these new technologies are worth paying attention to.

    With manufacturing technology heading in dramatically new directions, keeping pace with the latest developments is more important than ever. To be successful in the future, manufacturing executives will want to keep the following advice at the top of their minds:

    • Continue to actively and systematically scan the new technology frontier, taking advantage of, for example, supplier and customer know-how and industry panels. 
    • Develop a clear road map to test and adopt the most promising. 
    • Assess your own operations and prepare them to quickly adopt the new technological direction. 
  • Confronting Electricity Costs in the United States

    Confronting Electricity Costs in the United States

    As consumption patterns change, U.S. companies can mitigate the shock of soaring electricity costs in a number of ways.

    Abstract | More | PDF | iPad | Kindle

    America’s previously biggest electricity consumers are being overtaken as technological transformations and shifting energy sources continue to be the engines for economic growth. Today’s major wireless providers spend hundreds of millions of dollars on power annually on sending signals to the nation’s mobile devices, while the IT revolution is pointing to Google and Facebook as two of tomorrow’s largest power consumers. Manufacturing is changing as more processes become further automated and add greater value.

    While these rapid developments in usage trends have caught many off guard as they grapple to control rising energy costs, players that capitalize on the formidable complexity of the electricity value chain can capture sizable savings. Long-term advantage can be found by first establishing your actual consumption profile and then using that profile to build a procurement strategy that capitalizes on the volatility and uncertainty of the nation’s electricity markets to supply your power needs.


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