For Consumer Packaged Goods (CPG) companies, launching successful products and maintaining market share means adapting to changing consumer demands. Beyond the typical desires for value, quality, and basic nutritional information, consumers now want to know ingredients’ place of origin, potential allergens, non-GMO or organic, or whether the ingredients were sourced from farmers using Fair Trade practices. Meeting these new demands means more data that CPG companies have to capture, and greater complexity for their supply chain partners trying to manage this growing body of information.
More Demanding Consumers and Retailers
Hershey, one of the leading proponents of greater transparency, noted in a recent annual Corporate Social Responsibility report that “…research also validates that transparency is key to building and maintaining consumer trust in brands and large food companies.” This level of transparency has now become the competitive “table stakes” for CPG companies large and small. Major retailers understand this and are now requesting even more detailed product information from their suppliers. For example, Kroger now requires up to 50 identifying attributes for each product. The basic challenge is that the physical product label is simply not designed to deliver all this additional information. Enter the SmartLabel™.
What is SmartLabel?
SmartLabels use Quick Response (QR) codes on the package that consumers can scan with a smartphone. The link embedded in the code takes the shopper to a unique web page for the specific product. Using standards created by the Grocery Manufacturers of America (GMA), the web page is organized with five tabs of product information. These tabs include nutritional facts, ingredients, allergens, other information (claims, certifications, instructions and sustainability), and company/brand information. To use one specific example, when you scan the QR code on Kings Hawaiian Rolls, in just the first two tabs you are presented with over 20 nutritional facts and over 30 ingredients, each with accompanying definitions.
In addition to Hershey, companies such as General Mills, Unilever and Campbell Soup already have SmartLabel web pages established for their products. GMA estimates that 34,000 products will be included in the program by the end of 2017.
With Promise Brings Potential Peril
All this new product data must be captured, coordinated and made available across the product lifecycle. Any changes to the product such as ingredient mix or sourcing must be quickly disseminated as these changes could have implications for certification, regulations or production capacity. Each of these processes has its own constraints and timelines, and communication breakdowns can be costly in terms of downtime or compliance costs. With SmartLabels now removing the constraint of the physical label, organizations are now subject to both consumer and regulatory pressure to provide an ever-growing list of product information. If there is missing, incomplete or inaccurate data consumers will know right away, as they are standing in the grocery aisle.
How to Get a Handle on Your Data
CPG companies need to turn their attention to data governance and master data management to start to address the complexity brought on by SmartLabel technology. Having data governance and master data management processes in place ensures you have the right information, with the right level of trust, and the right level of maturity, at the right points in the product lifecycle process. The data management problem can be particularly challenging during the new product introduction stages of development and ideation. This is when you have to reconcile the need to capture detailed reporting requirements (e.g. ingredients, sourcing) for the product while it is still in a state of flux. You might be able to provide an estimate or guidelines about ingredients or packaging size for planning, but these could obviously change based on market feedback and other inputs. In this instance, when you have a formal master data management process in place, you provide context for each data point. Everyone knows when the data is an estimate—it has a unique status designation, definition and business rules— indicating that you can only use it for certain processes, but can’t use it for ordering the product or packaging.
Having a formal data management process helps companies execute their product lifecycle processes, using master data management to create a level of maturity and trustworthiness in every step of the process.
For more information on data governance for CPG companies, check out our white paper: Leverage Data Governance to Drive Speed and Flexibility in New Product Introduction. This paper focuses on new product introduction (NPI) challenges created by the trend towards greater transparency and the use of SmartLabel technology. This paper also explores how effective data management and governance can support the coordination of activities required to impact key product lifecycle management metrics that drive speed and flexibility in the NPI process.