While compliance is often seen as a hindrance to market and product agility, CPG quality management and compliance align company operations with market expectations, and aids in building and maintaining strong customer relationships. Additionally, quality and compliance functions can be sources of competitive advantage when approaches are adjusted to organizational risk profiles. An overarching consumer-centric quality strategy aligned with targeted actions in quality, supply chain, and data management/analytics provides critical insight into consumers, their demands, and impacts on your organization.
What’s the Value of Operating This Way?
Everyone knows it is cheaper to keep existing consumers rather than acquire new ones. To earn their loyalty, consumers expect a robust and focused commitment throughout the entire consumer journey. Research shows that 73% of companies delivering an above-average consumer experience perform better financially than their competitors.
Integrating CPG quality management and compliance in operations helps ensures a positive consumer experience. Understanding the cross-functional impact of the quality strategy improves speed and agility and expedites product launches. The American Society for Quality quantifies this advantage, stating “Operations teams ultimately have less rework, and those in quality and product development roles can spend more time working on innovations.”
Being proactive with data quality provides two key benefits:
- Risk Management – Gartner’s Data Quality Market Survey estimates the average annual financial cost of poor data at $15 million
- Competitive Differentiation – The more an organization knows about its consumers, the more it can understand their needs, buy signals, and demand. These insights can be used to create positive consumer experiences and marketing that ultimately leads to higher consumer retention and stronger relationships. However, a lack of trust and confidence in the information consumers believe a company holds about them leads to a decline in overall confidence in the organization.
How Do We Implement Consumer Centric CPQ Quality Management?
Consumers demand visibility into supply chain and quality practices. Delivering that requires a cross-functional effort between manufacturing, distribution, and marketing/sales. Successful companies achieve this by launching a strong organizational change management strategy, hiring a Chief Consumer Officer, leveraging internal data for analytics, and focusing on transparency for their consumers.
Organizational Change Management
System implementations and culture change yield better adoption when people at all levels understand the personal impact and value of the change. Change management can significantly increase the success of an organizational change, especially one that will impact the core culture and daily operations. To successfully implement a consumer-centric culture, identify the right leadership at the highest level to drive the initiative and set the tone. Identify super-users for new technologies to provide SME-level information and feedback, and incorporate the perspectives of those impacted most by the change. Communications should include what benefits will be gained from the change, what they can expect moving forward, and when. Providing support through the change is vital to increase adoption.
Chief Consumer Officer
Companies are adding a Chief Consumer Officer (CCO), someone “who draws insights to inform the rest of the leadership team about how decisions they make will impact the Consumer and the impact that will have on the organization as a whole.” The CCO can drive the cross-functional activities and decisions required to adopt a consumer-centric culture in supply chain and quality. With or without a CCO, define and measure KPIs. When strong product quality or exceptional customer service is a corporate priority, customer retention scores may be a metric worth tracking.
Data Management and Analytics
Data drives direction and tracks success. It is important to understand what information about consumers provides the most insight and knowledge for your organization and where that data will come from. Utilizing a variety of data and analytics tools allows organizations to track quality scores, categorize sensitive information, monitor data’s location, establish access rights, and enact usage restrictions. Technological solutions are the key to accurate and cohesive data to identify consumer expectations and requests regarding product quality. For example, if your consumers want to support brands that practice sustainability in sourcing and production, tracking data for every point in manufacturing and supply chain captures and analyzes waste-cutting or emission-reducing practices. Data technology such as graph databases can help point out where products flow to pinpoint quality defects and help improve or avoid those issues.
Damaging incidents such as Chipotle’s E-Coli outbreak sparked consumer demand for supply chain transparency for visibility into the origins of products and raw materials. Your organization must know what is happening upstream and communicate this knowledge to internal and external audiences. Unfortunately, it can be difficult to manage and gain access to data from suppliers. Technology can help you manage external supplier data, trace products, track materials, share data and enable better risk management.
A clear CPG quality management strategy that centers the consumer, aligns with an organization’s business model and risk profile, and is implemented throughout company operations delivers numerous benefits. By establishing a consumer-centric approach to quality, an organization can gain a competitive advantage in the trust and loyalty of its consumers.
Subscribe to Clarkston's Insights