Technology as Trust Enabler
The Critical Role of Digital and IT
We believe that technology can help us build trust with consumers by providing more transparency and traceability across our supply chain.”
To demonstrate just how important digital capabilities are in today’s consumer products industries—and to show how far we’ve come—it might be an interesting exercise to take a step back in time.
In the early 20th century, Radithor was a radioactive drink marketed as a cure-all for a wide range of ailments, including arthritis and fatigue. The product contained radium and was advertised as a health tonic that could boost energy and vitality. However, the product was later found to be extremely dangerous, and many people who consumed it suffered from radiation poisoning and other serious health problems. Radithor remains one of the best examples of quackery in that period.
But what if those buyers of Radithor could suddenly know every ingredient in the product, understand the health effects of each ingredient, and be familiar with where each ingredient was sourced? What if they could also know where the packaging materials originated and whether the bottle containing the drink was recyclable? Imagine that these buyers could then enter a worldwide platform where they not only rated the product but urged others not to buy it. In this scenario, it’s likely that Radithor would not have been trusted as a safe or viable product.
Fast forward a hundred years, and such is the environment today when it comes to our consumer packaged goods, foods, beverages, and chemicals. This isn’t to say that mistakes or recalls don’t happen—they certainly do—but the pace of information and awareness has increased exponentially. All stakeholders can now make more timely, informed decisions than ever before. This is in large part made possible by technology, and consumer products companies must move at the speed of digital to maintain and grow trust.
Today, every organization sharing the consumer products space, from suppliers to manufacturers to retailers and distributors, must rely on technology—and deliberate digital transformation strategies—to deliver safe products people trust. Innovation, forecasting and predictability, regulatory and compliance, data, social media, and more are all part of a greater digital picture that continues to evolve.
In 2021, Gartner categorized the consumer products industry as a “follower” in terms of technology adoption.34 Even some of the largest, most successful enterprises in this space continue to use siloed communications, legacy or on-prem tools, Excel spreadsheets, and even pen and paper to keep up with critical information and updates. In this rigid, fragmented environment, it’s almost impossible to collect, understand, or analyze the increasing amounts of data. As one Syngenta executive told us, “You’re not really excelling if you’re using Excel. Once that information is entered or written down, it’s just a moment in time and almost unusable to anyone else and certainly hard to access. What happens if you have a fire?”
A majority of our respondents agreed that true trust was likely not possible before the advent and adoption of technology. In previous decades, there was only the word of the company or any other entity that played a role from sourcing to shelf. To build trust across the ecosystem today—and gain trust with all stakeholders—consumer products leaders need to consider every product touchpoint. The right technology allows information to flow freely across the supply chain.
“Before technology enabled environments, enterprises like pharmaceuticals used to rely on standard continuous improvement models, drawing information from the field and using it to either improve the manufacturing process or draw certain conclusions to improve the R&D process for developing better products,” said Sam Venugopal, PwC. “There was a lot of talking the talk, but not much materialized because of multiple challenges. Today, technology lets us walk the walk. Cloud-based and cloud-powered analytical tools allow for greater information sharing, analytics, and stronger insights that improve products and customer experiences.”
34. Hype Cycle for Consumer Goods, Gartner, 2021.
Benefit 1: Data and insights
In the last two years since Gartner labeled consumer products industries as “Followers,” there have been big strides in some areas. For instance, leading consumer products organizations are much more likely to invest in data capabilities and share more data with consumers and partners, which can power smart labels that help consumers make better decisions and assist supply chain partners in coordinating and optimizing logistics. Also, companies that invest in data capabilities are likely better positioned to meet tracking and traceability requirements. And these investments enable other capabilities, such as assessing supply chain carbon footprint and monitoring and complying with ethical working practices.35
There’s a significant push to move to solutions that unify data, processes, and documents related to a business or functional area, which have traditionally been fragmented. This allows consumer products organizations to gain new visibility into what’s really happening, connect the dots, and work systemically, driving insights that weren’t previously achievable. Citing the adage “an ounce of prevention is worth a pound of cure” and becoming richer in the data they are collecting lets these companies move from a reactive approach to a preventative one.
“There’s also the opportunity for insights to drive innovation,” said Rita Iacoviello of Veeva Systems. “Many consumer goods companies are currently using tech in a linear or fragmented model, like food safety, or compliance, or regulatory, but the opportunity lies in mining all the rich data to understand whether there are markets where consumers are willing to pay more for this particular form of compliance, what claims consumers are responding to, and what bits of compliance they want to see at the base level.” In regions like China and Singapore, data and insights show that if a food company can claim fresh, chilled products like meat, consumers are willing to pay a certain percentage more than for a frozen product.
Data also comes in the form of consumer feedback from the field. The right technology allows complaints to be logged, understood, analyzed, and trended, all of which can lead to insights that flow back to R&D. Creating a feedback mechanism and removing guesswork is much more effective in driving continual improvements.
All of these data-driven initiatives—data sharing, data consolidation, analytics and insights, innovation, customer feedback mechanisms—help to build trust across the value chain and among all stakeholders.
35. 2023 Consumer Products Industry Outlook, Deloitte, 2023.
Benefit 2: Traceability
A robust data strategy also drives transparency and traceability. “Apart from a commodity, almost every product consists of dozens of specialty ingredients from suppliers,” said David Maher of Veeva Systems. “Each one of these can be further composed of dozens to hundreds more raw materials from another group of suppliers. Truly understanding with confidence what’s in a product requires a sequence of information that must be maintained and validated along the value chain.” This is a major challenge for companies, requiring detailed documentation and near-constant communication. Even then, the accuracy of shared information is not always guaranteed. “Traceability is only truly possible through technology,” he said.
In the F&B space, companies are expected to be able to trace everything from source to shelf, which can only be done with modern, cloud-based technology that allows them to have all the data available and connected. Digital traceability systems using RFID tags, barcodes, and GPS are all at play here. One example is the use of traceability QR codes in Korea. A dedicated code on a milk product can tell consumers the entire story from left to right, beginning with the farm from which it originated all the way through to where the product was bottled and shipped. In this scenario, if something goes wrong at any point along the supply chain, the company can act quickly. If a product can cause harm to consumers, companies must have the data to show exactly where the product is made and to root out the cause of the problem.
Consumer products companies also need to be able to trace back their claims and communications to prove to authorities and all stakeholders what’s been done to substantiate those claims. Without proper traceability measures, the brand is at risk of losing trust. “Traceability is critical for food safety, quality, and sustainability, as well as for building consumer trust,” said Paul Bakus, former President of Corporate Affairs at Nestlé. “Technology can help us track products from farm to fork, providing transparency and accountability throughout the supply chain. By using data and analytics, we can identify and address potential issues before they become problems, and we can also substantiate claims about the origin, quality, and safety of our products.”
In a post-pandemic world where consumer brands need to establish a more direct connection with their consumers and regulators are demanding greater transparency about products, their origins, and ingredients, many consumer products organizations are looking to connected packaging. This technology-driven mechanism allows consumers to interact with products by scanning a code on the package with their smartphone. It provides access to information, personalized experiences, and e-commerce options and allows consumers to engage with the product in-store or post-purchase.
As brands typically control product packaging and labeling, the interactive code creates a direct connection between the brand and the consumer, regardless of retail channel. This enables the brand to collect data directly from the consumer, influence and originate transactions, and establish a first-party connection with the consumer.
Connected packaging is becoming the norm as brands strive to meet consumer demand for authenticity, transparency, and personalized experiences. In the US and Canada, more than 60 CPG companies, including Reckitt, Colgate-Palmolive, Nestlé, Procter & Gamble, and Unilever, are now giving shoppers access to product information through a digital platform.
Benefit 3: Supplier collaboration
Technology is helping consumer products companies build trust and stronger relationships with suppliers by providing new tools and platforms for communication, data sharing, and collaboration. Many use cloud-based platforms to connect with suppliers and share information in real-time. These platforms allow for seamless cooperation across geographies and time zones and enable suppliers to access up-to-date information about product specifications, orders, and delivery schedules. Electronic Data Interchange (EDI), a technology that enables the automated exchange of business documents between trading partners, is being used to streamline communication with suppliers, reduce errors and delays, and improve the efficiency of supply chain processes.
Supplier portals provide a centralized platform for suppliers to access information, submit orders, and communicate with the company. These portals can also be used to share best practices, collaborate on product development, and coordinate supply chain activities. Advanced technology like blockchain is being explored as a way to improve collaboration and transparency in supply chain relationships. Creating a decentralized, tamper-proof record of all transactions related to a product, from its creation to its sale, can help to build trust and improve collaboration between CPG and food companies and their suppliers.
Benefit 4: Employee productivity and retention
According to recent studies, Gen Z and millennials currently make up approximately 38 percent of the global workforce, and this percentage will rise to about 58 percent by 2030.36 These are the generations that have come of age with smartphones and social media and are heavy users of digital technology.
A 2019 survey conducted by Dell Technologies and PSB Research, polling more than 12,000 individuals across 17 countries, turned up some key findings about what these important generations think about technology in the workplace: 80 percent of Gen Z respondents said that technology offered by an employer would influence their decision to take a job, while 63 percent of millennial respondents said the same.37
Millennials and Gen Z employees expect the technologies that empower their personal lives to also drive communication and innovation in the workplace. They’ve been outspoken that access to the technology they like to use makes them more effective at work.
“Outdated technologies that might have been tolerated by previous workforce generations may quickly become a thorn in the side of younger staffers and, in turn, drain employee morale,” wrote Forbes Councils Member David Karandish.38 “Technology is crucial in order to transform your business into a place where Gen Z wants to work and would like to stay.”
It’s not surprising that generations that have been able to access cutting-edge digital technologies—or were born with them—would expect to use them for 40-plus hours per week. Consumer products companies interested in growing and retaining talent among current workers and future leaders are wise to invest in digital tools to enable them better. This means moving away from static, fragmented, on-prem tools and systems that decrease productivity and job satisfaction and toward digital, cloud-based, unified tools and systems that do the opposite.
36. “How prepared are employers for Generation Z?” PwC, 2021. 37. “Gen Z: The Future Has Arrived,” Dell and PBC Research, 2019. 38. “Technology Is Critical To Recruit And Retain A Workforce That Is Only Getting Younger,” Forbes, 2019.
On the cutting edge: How consumer products companies are using technology to bring safe, trusted products to market faster
“Supply chains are at the center of challenges consumer goods are facing in today’s strained landscape. From inflation driving skyrocketing pricing to material and labor shortages slowing down processes, these brands are having to get inventive,” wrote Liz Dominguez, Managing Editor, Consumer Goods Technology. “In response, Unilever has been transforming its supply chain strategy, embracing what it calls ‘groundbreaking technologies’… that are improving transparency and traceability with sustainability at the forefront.”39
To ensure effective quality management, Unilever is employing disruptive technologies that enable supply chain evolution and implementing digital tools. One lesson the organization learned during the pandemic was that agility trumps forecasting. According to Marc Engel, former chief supply chain officer for multinational consumer goods at Unilever, the company found that its investment in agility probably had a return ten times that of its investments in scenario planning.40 An example of that agility in action stems from Unilever’s work with one of its key grocery customers. That customer provided access to its point-of-sale scanning data. The company quickly realized that if one of its core products hadn’t been over the scanner for four hours, odds are that it wasn’t on the store shelf. “Every time that happens, we assume they’re out of stock, so we automatically ship,” Engel said. “It’s those kinds of things that really drive change, but you need digital fluency in your organization.”
Unilever is also on a mission to reach a deforestation-free supply chain for many of the ingredients and materials it relies on, such as palm oil, paper, tea, soy, and others. To achieve this ambitious goal, Unilever relies on bleeding-edge technologies like AI and satellite imaging. Leveraging Google Cloud technology, Unilever can monitor its supply chain using a combination of satellite imagery, data storage, and machine learning that gives the company a 360-degree view of its supply chain. This allows Unilever to estimate which farms and plantations are supplying the mills and to monitor mills, landscapes, and farms to prevent deforestation. In addition, Unilever uses anonymized data signals from mobile devices to detect potential sourcing links.
According to one Clorox Company researcher we spoke to, “Claims were a challenge at Clorox. We had disjointed spreadsheets in the areas of innovation, claims substantiation, and marketing communications. No matter how large the company, things are being handled in Excel spreadsheets across disconnected hard drives.” In an effort to make sure that the technology it uses to manage its products, chemistry, and all data is ready for the twenty-first century and beyond, The Clorox Company has made a deliberate and critical commitment to investing $550 million in IT systems over five years.
With these systems coming into place, the company can now address important issues like information about what ingredients and chemicals are in each of its products and operations data for its retailers. The Clorox Company is also able to communicate with its consumers through tools like Smart Label, a common platform that gives consumers and other stakeholders richer information about the company’s product down to SKU level, its ESG initiatives, and more. “Technology is helping us to build more transparency than ever, which in turn drives more trust,” said one Clorox executive.
Agricultural science and technology company Syngenta is a frontrunner in adopting new technologies. In some ways, crop protection is even more highly regulated than the pharmaceutical industry since there is both a human health component and an environmental component. Having access to the right technology gives Syngenta a simpler, more real-time way to find studies and data and help track when and where materials are produced, as well as recognize requirement triggers. This brings a compelling advantage when it comes to traceability and transparency, which regulators expect today. “Without the right technology, it would be a nightmare,” said one Syngenta executive. “The duration of the slow part is the criticality because an organization like Syngenta can lose years getting to market or even getting data and information to regulatory bodies. It’s highly critical because, without technology, the slow down would be measured in years, not days or months.”
One of the ways Syngenta has embraced technology is in the development of a digital platform called “Syngenta Digital,” which allows farmers to access information on Syngenta’s products and services, including product labels, safety data sheets, and regulatory information. The platform enhances transparency and enables farmers to make informed decisions about using Syngenta’s products. Syngenta also leverages technology to track the entire supply chain of its products, from production to distribution to consumption to provide detailed information about the origin, quality, and safety of its products, which helps to build trust with consumers and regulators. Syngenta is using technology to develop sustainable farming practices that reduce the environmental impact of agriculture. For example, Syngenta’s “Good Growth Plan” aims to improve the sustainability of farming by reducing greenhouse gas emissions, conserving water, and enhancing biodiversity. By using technology to develop and implement sustainable farming practices, Syngenta is building trust with stakeholders who are concerned about the environmental impact of agriculture.
39. “Unilever’s ‘Groundbreaking’ Supply Chain Investments Lean Into AI and Geolocation,” Consumer Goods Technology, 2022. 40. “The Supply Chain Evolution in the Era of Disruption,” Veeva Industries Blog, 2022.
As an implicit currency, trust can only truly be driven and fostered by the right technology. In the integrity-plus-transparency equation, digital becomes a critical enabler of trust. It activates integrity and drives real-time transparency and visibility on every level, at every point of the value chain. However, investing in technology doesn’t build trust in and of itself. It must be part of a sound digital transformation strategy. As one consumer products executive told us, “The right tech is the tool that helps you execute it.”
Here are some questions that leaders might ask when it comes to using technology to build trust among all stakeholders.
How can we use technology to increase transparency and traceability in our supply chain to ensure responsible sourcing and reduce the risk of unethical practices?
Are we using technology to better communicate with our stakeholders and respond to their concerns and feedback, both online and offline?
How might technology help us to empower our employees better, make them more productive, and provide them with the tools and resources they need to make ethical and responsible decisions?
What digital tools are we using to improve our environmental and social impact and track our progress towards our sustainability goals?
How can we use technology to ensure data privacy and security for our customers, suppliers, and employees and build trust in our brand?
How can we use technology to innovate and develop new products and services that meet the changing needs and expectations of our stakeholders while also aligning with our values and mission?
