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Food industry growth opportunities - Increasing adaptability and responsiveness - EY - Global

Food industry growth opportunities

Increasing adaptability and responsiveness

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Our clients want to make their supply chain the 'spine' of the organization enabling both margin enhancement and acting as a catalyst for growth.”Mike Sills,
Co-Global Food Leader

The food sector is highly vulnerable to changes in consumer demand and commodity price shifts.

Success in emerging markets requires quick decision-making and the capacity to experiment, learn and scale at speed. At the same time, developed markets require an approach based on efficiency and slower, incremental growth.

Optimizing structure to boost competitiveness

In pursuit of adaptability, many companies are favoring simpler, flatter structures with an increased external focus. Local autonomy brings the company closer to the consumer and local market needs and changes, while a globally consistent strategic direction gives the ability to draw on capabilities and resources from anywhere in the world.

The opportunities to improve competitiveness are multi-faceted, including:

  • Clarifying which functions should be in-country and which should sit above market
  • Driving global business services
  • Creating the right level of understanding of customers and consumers — ensuring the model understands who they are and what is needed to serve them
  • Creating a tax-efficient supply chain
  • Buying and selling the right assets

Turning your supply chain into a cash contributor

Food companies need to ensure that the supply chain acts as a strategic business enablement vehicle that can really drive top line growth. Businesses are typically aiming to create long term, sustainable cost savings to support margins in mature markets that can generate funding to drive growth in emerging markets.

In emerging markets a different dynamic dominates — namely establishing cost effective and reliable delivery of product to customers and consumers.

There are seven specific challenges facing food executives operating across these two market groupings:

  • Improving operational agility and responsiveness
  • Managing environmental and sustainability expectations
  • Establishing effective supply chain model and infrastructure
  • Enabling new revenue sources
  • Managing operational, tax and regulatory risk
  • Re-configuring supply chain to create cost competitiveness
  • Optimizing global spend

Matching innovation to the pace of change in consumer demand

The key trend is for manufacturers to deliver fewer, more significant innovations or renovations of brands, with a faster rollout.

Companies are increasingly setting up multiple innovation hubs in key strategic markets, rather than innovate centrally and then adapt products to suit different price points.

The approach is to stay close to consumers, accelerate access to market and consumer data, and build in supply chain flexibility and efficiency to introduce new products rapidly as requirements change.

How we can help

We have a proven record of helping food businesses to stay fit and adaptable. Issues we can help with include:

  • Redefining organizational structures and business models
  • Introducing common regional and global processes
  • Supply chain transformation
  • Tax efficient supply chain management (TESCM)
  • Identifying and executing on new strategic relationships
  • Improving the effectiveness of R&D program management in developing new products

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