Fast Moving Consumer Goods in Spain Innovation Observatory 2018
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Fast Moving Consumer Goods in Spain Innovation Observatory 2018
© Institut Cerdà | February 2018 Numància, 185 · 08034 Barcelona · Tel. +34 932 802 323 Diego de León, 30 · 28006 Madrid · Tel. +34 915 639 572 Avenida Suecia 414. Providencia, Santiago de Chile www.icerda.org @InstitutCerdà InstitutCerdà
Letter from the You have in your hands the first Fast Moving Consumer
Goods in Spain Innovation Observatory. This is the fruit
Director of a long process designed to highlight the huge amount
of work that goes into innovation in a key sector of the
economy in Spain. It is a result of the determination of
A living tool to Institut Cerdà to develop and promote tools, projects
and proposals that embed innovation as a stable and
keep making permanent commitment in all the areas where we operate.
progress The work has involved specifying the 10 most important
challenges for the large consumer chain, identifying 200
innovative projects and actions, pre-selecting 65 and
selecting 20 for their inclusion here – in the present
survey. As a result we can confidently state that the FMCG
sector in Spain is a reference in terms of innovation. It
is making very significant contributions to technological
development, process improvement, enhanced efficiency,
quality and the creation of new products.
André Gide, French writer and winner of the Nobel Prize
for Literature, said that “man cannot discover new oceans
unless he has the courage to lose sight of the coast.” This
is the philosophy that has spurred us to create the FMCG
Innovation Observatory. We want to open up new paths
in a sector that has been rather shy of publicising all the
progress that it has made. Furthermore, we want to do
this from a perspective new: exploring all these advances
in a transversal and global way and without limits.
This is just the beginning, a first step along the road and
I am sure we have much to learn. We intend to go far,
to identify, analyse and disseminate the most significant
advances that are being made in the FMCG in Spain.
Carlos Cabrera
General Director, Institut Cerdà
Executive Summary
1. Introduction Institut Cerdà is a private independent foundation established
in 1984. Its purpose is to advise and accompany public and
private organisations in the strategic decision-making process
related to social and economic development through innovation
and sustainability.
In line with this purpose, Institut Cerdà has developed the first
Fast Moving Consumer Goods in Spain Innovation Observatory.
This brings together the most relevant challenges and the most
outstanding projects from a transversal and multi-sectorial
perspective.
2. Characteristics of the new
Fast Moving Consumer Goods Innovation Observatory
6 Objectives Structure
Executive Summary
The Observatory aims to provide a spotlight for the The present report is organized in the following sections:
achievements in innovation of all the agents in the value
chain, not only with repercussion within the sector, but >> Overview of the FMCG supply chain in Spain
also throughout the economy. It also aims to stimulate Brief outline of the relevant factors of the context, of the sector
change at each link of the value chain. The idea is that itself and of the consumer behaviour, all of which directly
this transversal approach will simultaneously enrich influence the evolution of the agents throughout the supply chain
professionals throughout the sector and generate enough and trigger the challenges described in the following chapter.
movement to encourage them to promote innovative
strategies and projects in their companies.
>> The top 10 challenges of the FMCG supply chain
Scope of the analysis A description of each of the top 10 challenges selected as the
most relevant in the year examined, 2017. This section describes
The scope of study of this Observatory is the entire FMCG some developments in Spain and also includes international
supply chain: from the primary sector, such as agricul- achievements and references.
ture, livestock and fisheries, through the entire industry,
logistics operators, distributors or wholesalers, to the di- >> A description of the 20 most innovative practices in the
fferent forms of trade that finally serve consumers with FMCG supply chain in Spain
the products and services. FMCG here are understood to We only consider practices taking place in Spain and related, at
be non-durable goods with a high turnover. This defini- least, to one of the top 10 challenges chosen for this edition.
tion covers the following categories of goods:
• Food (ambient, chilled or frozen)
• Drinks
• Personal care and beauty
• Household cleaning products
• Pet products
The period analysed is 2017. Some initiatives that
started a few years ago are also included, if they have
reached a higher degree of maturity in 2017 (start-ups,
for example, or projects related to the primary sector).
Methodology and 7
references consulted
This report is the result of a project developed in four phases:
IDENTIFICATION AND IDENTIFICATION AND EVALUATION AND
PHASE
SELECTION OF PRE-SELECTION OF THE SELECTION OF THE ELABORATION
CHALLENGES INNOVATIONS INNOVATIONS OF THE REPORT
RESULT
10 CHALLENGES 200 CASES 20 CASES REPORT
OF INNOVATION IDENTIFIED OF INNOVATION SELECTED
65 PRE-SELECTED
In order to achieve the expected results, general local and inter- This Observatory plans to be a dynamic report that will
national press and public resources have been consulted, as well innovate in each edition, incorporating new challenges that
as specialised sources and publications such as Alimarket, Distri- will undoubtedly be engines of further innovation.
bución y Actualidad, Mintel Global Database of New Products, as
well as over 200 active companies in Spain.
Panel of experts
The following 14 experts, all with extensive experience in the sector, have been involved in the work:
Begoña de Benito (Director of Institutional Relations, Ecoembes), Eduard Calvo (Associated Lecturer in Production
management, Technology and operations, IESE), Ignacio Cruz-Roche (Professor of Market research and Commercialisation,
UAM), José Luis García del Pueyo (Commerce Management expert and lecturer, San Telmo International Institute), Albert
Girbal (Lecturer of Production management, Technology and operations, IESE), Ignacio García Magarzo (General Director,
ASEDAS), Jaume Hugas (Permanent Lecturer, Department of Operations, Innovation and Data Sciences, ESADE), Fernando
Móner (President, CECU and AVACU), Pablo Maella (Senior Lecturer in Personnel Management in Organisations, IESE), Abel
Mariné (Professor Emeritus in Nutrition and Bromatology, Campus of Alimentation, Universidad de Barcelona), Josep Maria
Monfort (Managing Director, IRTA), Josep Puxeu (President, ANFABRA), Pere Roca (Executive President, ICIL), Frederic
Sabrià (Lecturer of Production, Technology and management of operations, IESE).
3. Overview of the FMCG
supply chain in Spain
The FMCG supply chain in Spain does not stand aside from the
changes that are happening in both global and sectorial terms. The
internationalisation of distribution is well consolidated but still has
room for further growth. Proximity to the consumer is no longer a
9
guarantee of service and, from the sectorial perspective; all the
agents in the supply chain are being forced into permanent innova-
tion in order not to lose competitiveness.
PRODUCTION
>> In the last 5 years, the primary sector has become the priority
focus of innovation, due to the increasing limitation of resources,
climate change and its significant interrelation with the rest of
the agents in the chain.
>> Costs reduction and time pressure have forced logistic operators
to integrate technological and knowledge-based innovation in
order to offer better service at lower cost.
>> The vectors of change are not only those within the sector, such
as shorter delivery times, more health and convenience, increa- MANUFACTURING /
singly demanding customers, but also external vectors such as TRANSFORMATION
environmental, social and those related to medium and long
term economic sustainability.
>> Commercial distribution in Spain also faces a much greater cha-
llenge; omnichannel, in which any distributor can offer any pro-
duct, anytime and anywhere.
LOGISTICS
In this context, innovation should be seen,
not as an element of competitiveness, but
rather as a requirement for survival.
And now, more than ever, innovation
should integrate 4 basic components:
product, processes, organization and the RETAIL
customer experience.
4. The top 10 challenges
of the FMCG supply chain
10 According to the context described above, this In some of them, FMCG companies are already
section describes the 10 main challenges that the responding well, in others there is still a long
Executive Summary
companies and links in the supply chain ought to way to go.
take into account in their long term strategies.
1. Digitalisation, connectivity
and automation:
tools for real time
DCA, which is still in an early stage of
development and implementation in
most sectors, provides powerful means
Examples of pioneering application of
these technologies in the food and mass
consumption sectors are:
of control and management: it allows
autonomous management • In terms of automation, sorter robots
more integration of the supply chain, for e-commerce logistics, or autono-
bringing the producer and consumer mous tractors.
The category digitalisation, connectivity closer and allowing processes to be
• The use of the blockchain for food
and automation (DCA) includes new te- improved in terms of effectiveness and
traceability.
chnologies such as sensorization, inter- efficiency. Introducing such technologies
net of things (IoT), blockchain, augmen- will very soon become mandatory for • Store connectivity based on the use
ted reality, drones and robots. those companies that do not want to lose of the mobile technology throughout
positions in the market in the long term. the purchase process, for a more agi-
le and comfortable experience.
2. Data mining The main challenge is not so much the Examples of the use of this type of
integration of these tools as being able to tools are:
for decision making:
transform the data into information, and
knowledge as a source information into ordered and hierarchical
• Intelligent software for the optimisa-
of competitive advantage tion of production performance.
knowledge that is useful for business
management. • The use of artificial intelligence to
Data processing tools such as big data, guarantee food safety or for the pac-
and more recently artificial intelligence, Nowadays there are techniques to com- kaging process.
machine learning or cognitive computing bine the internal data (industrial, logistic,
• The use of machine learning to opti-
facilitate gaining the knowledge for busi- commercial, financial, etc.) with external
mize routes or to measure customer
ness decision-making. data (meteorology, traffic, etc.) that can
behaviour at the point of sale to im-
help to take better production or distri-
prove the shopping experience and
bution decisions.
increase sales.4. THE TOP 10 CHALLENGES
OF THE FMCG SUPPLY CHAIN
3. Efficient and responsible
management of the supply chain:
an individual and shared issue given
All this results into an ever greater de-
mand on the agents of the chain, to im-
prove efficiency and responsibility, both
• Examples in terms of efficient chain
management are the incorporation
of information systems such as the
11
individually and jointly. Vendor Management Inventory (VMI)
the complexity of the chain In Spain, following the recent economic or Collaborative Planning Forecasting
crisis, the supply chain agents have Replenishment (CPFR), which allow
On the one hand globalization, delo- faced the challenge of combining their the management of stocks and pro-
calization of production, increasingly needs for economic recovery with a mo- cesses in real time, interconnecting
shorter chains, call for responsible use del of safe, transparent and sustainable suppliers and customers.
of resources and energy, and the need development
• In relation to responsible manage-
to reduce emissions. On the other hand
ment, local procurement policies,
there is a consumer demand that is in-
animal welfare measures, logistical
creasingly aware of social and environ-
strategies for reducing the carbon
mental impacts. Also, purchasing and
footprint and eco-design for the mini-
consumption patterns that are increa-
mization of materials and packaging
singly influenced by the health vector.
are more and more common, espe-
cially in large companies.
4. E-commerce
distribution models:
consumer convenience
Currently, the main areas of work of
those involved in online distribution of
FMCG are the integration of the physical
Examples of areas of work in e-commer-
ce distribution are:
• Warehouse automation to reduce costs
and online channels, last mile logistics
at the epicentre and lead times
and the definition and implementation of
new delivery options offering maximum • The incorporation of multichannel pur-
E-commerce, formerly restricted to lei- convenience to the customer. chase options in physical retailers, with
sure and transport, is gradually beco- This translates into the need for maxi- the advantage of increasingly faster
ming consolidated in FMCG distribution. mum interrelation and coordination of delivery or delivery at night-time or
In this case, the balance between cost the agents of the distribution chain, holidays.
and level of service becomes the key to which sometimes leads to their integra-
• New business models that engage the
competitiveness and economic sustai- tion.
mobility sector players.
nability for the supply chain agents in-
volved in last mile distribution.5. Omnichannel In Spain 28% of the population already In this context, the frontier between
12
buys food online, 38% in the case of physical distribution actors and online
purchasing and distribution:
health and beauty products. The online actors is blurring: the leading companies
Executive Summary
satisfying consumers who no longer channel accounts for 1,358 M€ of inco- in each type of channel are invading the
distinguish amongst channels me in food and cleaning products and other.
annual growth of 7% to 11% is expected
Due to the emergence of large e-com- over the next 5 years. In short, the ma-
• Examples of O2O movements (Online
merce Players (Amazon in the USA and jority of the population is used to combi-
to offline): Amazon purchased Whole
Europe, Alibaba, JD and Rakuten in Asia) ning both channels either to get informa-
Foods in 2017, Alibaba have opened
physical retailers are being forced to tion and to do their shopping.
the network of Hema stores;
provide versatile solutions that offer the All this requires supply chain agents
same quality, reliability and speed as to integrate physical and online supply • In the opposite direction, most retai-
these so called “pure players” and to and distribution chains, involves more lers are adapting to an omnichannel
take advantage of the online channel, to complex planning with tighter deadlines, purchase. Walmart, ASDA, Monoprix,
offer the customer greater convenience. demands maximum flexibility at the lo- and in Spain El Corte Inglés, are some
gistical level and, undoubtedly, relies on of the leading brands that are being
greater supplier-client collaboration in transformed.
the management of both demand and
production.
6. Transformation and digitalisation Although the physical channel conti-
nues to be the main shopping mean, in Examples of the evolution of spaces and
of the physical point of sale:
Spain as in most countries, the retail incorporation of digital media in stores
providing added value
trade needs to adapt products and sales are:
in the digital age spaces and to take advantage of digital
• New premium concepts based on
media, so that the customer has a con-
sensorial experience, warmth and
With the adoption of online as an in- nected experience -at least at the same
lighting.
formation and purchasing channel, the level of performance and simplicity as
physical point of sale is assigned new through the online channel. It also has • The inclusion of new multichannel
requirements related to aspects such as to emphasize its differential value as a spaces and services, adjacent to the
the ease of product selection, depth and channel. stores or in other complementary lo-
transparency of information about the cations.
products and overall experience. This
last aspect is especially relevant in food • ‘Digital stores’ and ‘connected spaces’
distribution, where the consumer makes that incorporate interactive devices for
purchases in a highly recurrent way due digital assistance - smart shopping
to the need to stock up on short shelf life carts, screens with ‘augmented
products such as fresh food. labels’, product location applications,
or applications that offer customized
promotions based on the customers’
profiles.4. THE TOP 10 CHALLENGES
OF THE FMCG SUPPLY CHAIN
7. Products for new
segments and niches:
towards healthier and more
On the one hand, an increasing awa-
reness of the effects of food on health,
together with population aging and the
• Examples of new dietary patterns are
‘veggies’*, which promote new reci-
pes in which animal protein is repla-
13
appearance of restrictions related to ced by vegetable protein, or athletes,
convenient everyday products certain foods and ingredients, leads to who demand products with a high
more preference for innocuous products protein content.
(WITHOUT fat, sugar, additives , etc.),
In Spain there is a wide range of high • In personal homecare and cosmetics,
functional (WITH vitamins, minerals,
quality consumer goods. However, de- the growth is of multipurpose or mul-
etc.). Also, new styles of diets emerge.
mographic trends, cultural changes, new tifunction products that are compact
Shoppers want their shopping to be eco-
lifestyles and changes in the purchasing and in mono-dose packages.
nomical, but at the same time also rich
power of consumers create new scena-
and complete at a nutritional level.
rios and lead to the appearance of new
segments and niches. On the other hand, the trends of ever
smaller family units, less time dedicated
to the preparation and consumption of
food and the culture of ‘immediacy’ and
‘minimum effort’, accentuated by the
convenience of the online channel, fa-
vours the purchase of individual formats
and of products designed for convenien-
ce, comfort and fast consumption.
8. Social innovation:
improving wellbeing For this reason, the development of prac-
tices and business models in the FMCG
Areas of action specifically oriented to
the creation of social value are, by way
at a local level supply chain that open up the possibili- of example:
ties of the most vulnerable groups, and
grant equal opportunities, has a special • Cooperation within the supply chain
The FMCG supply chain is the main impact. In addition, it is a key sector for with local producers, contributing to
source of employment in the Spanish the prescription of healthy food con- the promotion of sustainable agricul-
industry and one of the main economic sumption habits among the population. ture, livestock or fisheries.
areas in terms of contribution to GDP.
• Programs aiming to hire people from
In this context, the sector is of particu-
vulnerable groups and promoting
lar structural importance in rural areas,
equal opportunities.
where primary production is the main
economic activity. • Initiatives to raise awareness about
food insecurity and to promote healthy
nutrition habits, often (especially in
the case of the industry link) part of
corporate strategies committed to
improving the nutritional quality of
products.
* ‘Veggies’ are the people who base their diet on vegetable products. The term covers vegans, which completely eliminate the consumption of meat,
fish, milk, eggs and honey; vegetarians, who consume neither meat nor fish but some products derived from animals such as dairy, eggs or honey;
and flexitarians, or “part-time vegetarians,” who occasionally consume animal protein.4. THE TOP 10 CHALLENGES
OF THE FMCG SUPPLY CHAIN
14
9. Management of food waste:
Raising awareness and efficiency
The waste occurs throughout the chain,
although the last links are worth highli-
ghting: homes and restaurants, which
Examples of collaboration amongst di-
fferent agents of the supply chain aiming
to reduce food waste are:
Executive Summary
respectively waste 58% and 21%.
• Producer-retailer programs, through
which the retailer provides informa-
In Spain, more than 7 million tons of food Therefore, actions to reduce waste need tion to the producer on ways to redu-
are wasted every year, with an associa- to start with each the agents individually, ce waste.
ted cost of 3 Billion Euros per year. The and also with joint initiatives.
economic cost and the ethical dimension • Applications developed by manufac-
of wasting food when part of the popu- turers to enable the diagnosis of the
lation has difficulties accessing food is waste generated in the restaurant
not the only implication; there is also sector.
an environmental impact related to the
• Applications offered by retailers to
consumption of natural resources and
consumers to warn them about pro-
the need to manage uneaten food.
ducts close to sell-by dates or recipe
suggestions to cook with these pro-
ducts.
10. Towards a low carbon
circular economy:
improving products lifecycle
In contrast, the new circular economy
model prioritises efficiency in production
and distribution processes, thus redu-
Companies in the sector are taking va-
rious steps to consolidate these new
practices. Some of the action lines in this
cing the consumption of resources and respect are:
encouraging the manufacture of pro-
• The collection and recycling of used
ducts with a longer life cycle and with
The linear conception of production and products by the manufacturer.
the possibility of end of lifecycle reco-
consumption systems-extraction of re- very. • The manufacture of containers from
sources, production of goods, consump- recycled plastic, decreasing raw ma-
tion and conversion into waste is rea- In Spain there is still a long way to go in terial use and waste.
ching a limit due to resource depletion terms of reducing the waste that ends up
and the related environmental impact. • Energy generation from the organic
in landfills.
waste produced by the companies
themselves.5. Outstanding innovative practices
in the FMCG supply chain in Spain
1. New 4.0 Factory Model 15
New Factory 4.0 model, considered the most innovative in Europe, that incorporates
advanced technological tools and systems such as robotics, IoT and Internet of People
applications and cyber management systems.
Challenges
being met
2. New high pressure processing technology
New high pressure processing technology applied to the beverage and juice industry that
simplifies the process, makes it more flexible and multiplies its productivity and efficien-
cy, preserving the organoleptic properties of the product.
Challenges
being met
3. Digital Transformation “Digital Acceleration Team”
Creation of a ‘Digital Acceleration Team’ through which the digital transformation of the
entire company is promoted, building new digital capacities of Nestlé professionals in
Spain through training programs in specific skills and involving them in the implementation
of digital projects related to the company’s brands.
Challenges
being met
4. The Globalviti project to address climate change
A joint industrial research and experimental development project, involving 21 public and
private entities, providing new technological solutions in the wine sector, with the aim of
improving wine production in the face of climate change.
Challenges
being met
5. Origins Programme for raising livestock animals
without antibiotics
A comprehensive counselling program for breeding animals sustainably and without
using antibiotics. By using a predictive mathematical tool to analyse historical data, farms
can improve production parameters and reduce the use of antibiotics.
Challenges
being met5. OUTSTANDING INNOVATIVE PRACTICES IN THE
FMCG SUPPLY CHAIN IN SPAIN
16 6. COVAP 45, a model of sustainable livestock production
Executive Summary
A livestock production initiative that, through the collection of data on-site on farms, and
through measurements and formulations of production models, contributes to the econo-
mic, social and environmental sustainability of dairy cattle farms.
Challenges
being met
7. Origins Farmer Programme for sustainable rice growing
A training and assessment project for farmers and technicians, developed with IRTA,
about sustainable cultivation of rice from the Ebro Delta. In the so-called “parcelas vitrina”
(showcase plots) trial measures are being taken to improve the quality and productivity
of the crops.
Challenges
being met
8. The domestic appliance that does
the grocery shopping for you
The appliance scans the empty containers in the home and adds the product to a virtual
shopping list. The list can then be modified by the consumer via a mobile application who
then formalises the order digitally. The consumer receives the delivery when and where
it suits him.
Challenges
being met
9. The New Efficient Store Model
The new efficient store model, already implemented in more than 150 stores, offers a
better customer experience, improves the quality of the work environment for staff and
achieves greater eco-efficiency, achieving savings of 40% compared to the conventional
model.
Challenges
being met
10. Garden Gourmet, vegetable protein based dishes
Pre-cooked, ready to eat, 100% vegetable based dishes, made with wheat and soya
proteins with spices. This new range introduces vegetable protein options in the
pre-prepared dishes range of the non-specialized food distribution chain, making them
accessible to a wider audience.
Challenges
being metDIGITALISATION, DATA SUPPLY E-COMMERCE OMNICHANNEL TRANSFORMATION PRODUCTS ON SOCIAL FOOD WASTE CIRCULAR AND LOW
CONNECTIVITY AND ANALYSIS CHAIN DISTRIBUTION OF POINT OF SALE OFFER INNOVATION MANAGEMENT CARBON ECONOMY
AUTOMATION
11. New Flora 100% vegetable based margarines 17
100% vegetable margarines made with natural oils that provide essential nutrients for a
healthy and balanced diet. They provide a distinct flavour and superior nutritional charac-
teristics, whilst maintaining the creamy texture expected of margarines.
Challenges
being met
12. Hacendado Yoghurt Jelly 0% fat and 0% added sugar
Yoghurt jelly as a new dessert concept, made from a base of gelatine, milk and fruit. It
combines pleasure, due to its texture and refreshing taste, with health care, due to its
nutritional value and low calorific content as well as avoiding sugar, fats and gluten.
Challenges
being met
13. Palettas Biox Fruit and vegetable ice cream
Fruit and vegetable ice cream made with crushed vegetables: 100% natural, lactose-free,
gluten-free, fat-free and low in sugars. This is a new ice cream concept being introduced
in the mainstream distribution chain that allows the consumer to enjoy a product that is
both pleasant and healthy at the same time.
Challenges
being met
14. Orache compact, multipurpose disinfectant tablets
Compact, multipurpose disinfectant tablets that substitute bleach. They are effervescent
and suitable for use in multiple domestic cleaning and disinfecting situations. The format
facilitates the use, transport and storage of the product, whilst also representing a signi-
ficant reduction in the use of plastic.
Challenges
being met
15. Sustainable production of Dodot nappies
P&G is promoting more sustainable production of nappies by eliminating cellulose from
the absorbent core, reducing the use of materials of the product itself, reducing factory
generated waste and increasing recycling. It now has “Zero Waste Factories” “
Challenges
being met5. OUTSTANDING INNOVATIVE PRACTICES IN THE
FMCG SUPPLY CHAIN IN SPAIN
18 16. The GIRA project, promoting employability
Executive Summary
An initiative to boost employability and/or entrepreneurship among groups with difficul-
ties to access the labour market, especially young people and women. The platform,
through its own programs, promotes actions that transcend the company itself and be-
nefit society as a whole.
Meeting the following
challenges:
17. Supermarkets staffed entirely by people with disabilities
This is a commitment to the integration of people with disabilities through the creation of
supermarkets staffed entirely by people with these profiles. The initiative contributes to
improving the visibility and perception of the competence of such people in the workplace.
Meeting the following
challenges:
18. An App to reduce food waste
Mobile application designed to reduce food waste in small businesses, making it easier
for perishable foods, soon to be removed due to their imminent sell-by date, to be reser-
ved and purchased at a cheaper price.
Meeting the following
challenges:
19. Sustainable mobility as a strategic pillar
With sustainable mobility established as a strategic pillar, Calidad Pascual has redesigned
the logistics and mobility processes of all its industrial, logistics and commercial activi-
ties, with the aim of achieving the highest level of eco-efficiency and reducing polluting
emissions.
Meeting the following
challenges:
20. Eco-efficient, low-carbon, supermarket chain
Creation of an eco-efficient, low-consumption chain of supermarkets through investment
in energy efficiency measures, in emission reduction and in waste minimization, which
allows the responsible management of resources and energy.
Meeting the following
challenges:DIGITALISATION, DATA SUPPLY E-COMMERCE OMNICHANNEL TRANSFORMATION PRODUCTS ON SOCIAL FOOD WASTE CIRCULAR AND LOW
CONNECTIVITY AND ANALYSIS CHAIN DISTRIBUTION OF POINT OF SALE OFFER INNOVATION MANAGEMENT CARBON ECONOMY
AUTOMATION
The table below lists the cases selected, from among 200 projects, as being the most highly innovative 19
and responding to one or more of the challenges described above:
COMPANY HIGHLIGHTED INNOVATIVE PRACTICE CHALLENGES BEING MET
1 Campofrío New 4.0 Factory Model
2 Hiperbaric New high pressure processing technology
3 Nestlé Digital Transformation “Digital Acceleration Team”
4 Torres The Globalviti project to address climate change
Origins Programme for raising livestock animals
5 Hipra without antibiotics
COVAP 45, a model of sustainable livestock
6 COVAP production
Origins Farmer Programme for sustainable rice
7 Kellogg’s
growing
The domestic appliance that does the grocery
8 Wipiip shopping for you
9 Mercadona The New Efficient Store Model
10 Nestlé Garden Gourmet, vegetable protein based dishes
11 Unilever New Flora 100% vegetable based margarines
Hacendado Yoghurt Jelly 0% fat and 0% added
12 Schreiber
sugar
13 Penalva Palettas Biox Fruit and vegetable ice cream
14 Orache Orache compact, multipurpose disinfectant tablets
15 Procter Gamble Sustainable production of Dodot nappies
16 Coca-Cola The GIRA project, promoting employability
Iberian Partners
Supermarkets staffed entirely by people with
17 Eroski
disabilities
18 Tapper An App to reduce food waste
19 Calidad Pascual Sustainable mobility as a strategic pillar
20 Consum Eco-efficient, low-carbon, supermarket chainFast Moving Consumer Goods in Spain Innovation Observatory 2018 Report
23
INTRODUCTION
Over 30 years fostering innovation
Institut Cerdà is a private independent foundation advances in innovation are generally unknown and
established in 1984. Its purpose is to advise and escape public attention. Likewise, when innovation
accompany public and private organisations in the in FMCG is mentioned, the focus is most often on the
strategic decision-making process related to social product or the needs of the consumer. However, the
and economic development, through innovation and FMCG value chain is much broader and more global
sustainability. than this. It ranges from the primary sectors, such as
agriculture, livestock breeding and fisheries, through
In line with this purpose, Institut Cerdà has developed the entire industry, logistics operators, distributors
the first Fast Moving Consumer Goods in Spain or wholesalers, to the different forms of trade that,
Innovation Observatory. Just as the Institut has done ultimately, put the products and services in the hands
in other areas, where it has also acted to envision, of the consumer.
promote, follow and analyse innovative processes,
this Observatory brings together the most relevant It is not just about identifying advances, it is also about
challenges and the most outstanding projects, from a raising awareness, by putting this sector on the map
transversal and multi-sectorial perspective. of innovation. This is necessary as the FMCG supply
chain, despite its dynamism and dimension, has far too
Today, companies within the FMCG supply chain are often had a backstage role in society.
at the forefront of innovation in areas as diverse as
technological development, efficiency of production This, to be precise, is one of the main aims of Institut
processes, advances in logistics or the creation of Cerdà’s mission: to accompany the private sector,
new products that are more in line with the needs and and also the public sector, in its positioning and
requirements of the society. development, in those matters where its activity or
commitment imply a clear social advance. The FMCG
We tend to think of innovation in terms of very specific Innovation Observatory is the first step towards filling a
sectors, those closely linked to new technologies. This gap that definitely needs to be filled.
way of thinking creates a gap in other areas where the25
CONTENTS
01. Institut Cerdà’s FMCG
Innovation Observatory ..............................27
02. Overview of the FMCG
supply chain in Spain ..................................31
The top 10 challenges
03. of the FMCG supply chain............................35
Outstanding innovative practices in the
04. FMCG supply chain in Spain.........................5727 01 INSTITUT CERDÀ’S FMCG INNOVATION OBSERVATORY
Objectives With this report, Institut Cerdà presents the Structure of the content
first edition of the FMCG Innovation Observa-
tory, a sector whose contribution to Spanish The present report is organized in the fo-
GDP exceeds 10%. llowing sections:
The economic, social, cultural and environ- >> Overview of the FMCG supply chain in
28 mental transformations that have taken place Spain: Brief outline of the relevant factors of
in the last decade have inevitably affected the the context, of the sector itself and of the con-
configuration of the supply and distribution sumer behaviour, all of which directly influen-
Fast Moving Consumer Goods in Spain Innovation Observatory 2018
chains: they are increasingly interdependent ce the evolution of the agents throughout the
and integrated and, therefore, increasingly supply chain and trigger the challenges des-
shorter, with a smaller number of intermedia- cribed in the following chapter.
ries.
>> The top 10 challenges of the FMCG supply
The Observatory aims to provide a spotlight chain: A description of each of the top 10 cha-
for the achievements in innovation of all the llenges selected as the most relevant in the
agents in the sector and for the repercussion year examined, 2017.
of this innovation, not only within the sector,
but also throughout the economy. It also aims This section describes some developments in
to stimulate change at each level of the sector. Spain and also some international achieve-
The idea is that this transversal approach will ments and references.
simultaneously enrich professionals throu-
ghout the sector and generate enough move- >> A description of the 20 most innovati-
ment to encourage them to promote innovati- ve practices in the FMCG supply chain in
ve strategies and projects in their companies. Spain: Here the results of a rigorous pro-
cess of evaluation and selection are pre-
Scope of the analysis sented. The cases are required to happen
in Spain and respond to, at least, one of
The scope of study of this Observatory is the the 10 challenges exposed in the previous
entire FMCG supply chain: from the primary chapter.
sector, such as agriculture, livestock breeding
and fisheries, through the entire industry, lo-
gistics operators, distributors or wholesalers,
to the different forms of retailers that finally
serve consumers with the products and servi-
ces. FMCG here are understood to be non-du-
rable goods with a high turnover. This defini-
tion covers the following categories of goods:
• Food (ambient, chilled or frozen)
• Drinks
• Personal care and beauty
• Homecare cleaning products
• Pet products
The period analysed is 2017. We also cover
some initiatives that started a few years, if
they have reached a higher degree of maturity
in 2017 (start-ups, for example, or projects
related to the primary sector).01. INSTITUT CERDÀ’S FMCG
INNOVATION OBSERVATORY
Methodology and references
consulted
This report is the result of an 8-month project, divi-
ded into 4 phases, through which a process has been
carried out to identify and select the main challenges
and innovative practices: 29
IDENTIFICATION AND IDENTIFICATION AND EVALUATION AND
PHASE
SELECTION OF PRE-SELECTION OF THE SELECTION OF THE ELABORATION
CHALLENGES INNOVATIONS INNOVATIONS OF THE REPORT
RESULT
10 CHALLENGES 200 CASES 20 CASES REPORT
OF INNOVATION IDENTIFIED OF INNOVATION SELECTED
65 PRE-SELECTED
In order to achieve the expected results, the fo- • Begoña de Benito
(Director of Institutional Relations, Ecoembes)
llowing sources have been consulted:
• Eduard Calvo
(Associated Lecturer in Production management, Technology
• general local and international press and public and operations, IESE)
resources
• Ignacio Cruz-Roche
• specialised sources and publications such as (Professor of Market research and Commercialisation, UAM)
Alimarket, Distribución y Actualidad, Mintel Glo- • José Luis García del Pueyo
bal Database of New Products, (Commerce Management expert and lecturer,
• more than 200 companies working in the su- San Telmo International Institute)
pply chain in Spain • Albert Girbal
(Lecturer of Production management, Technology and
operations, IESE)
This Observatory plans to be a dynamic report
that will innovate in each edition, incorporating • Ignacio García Magarzo
(Managing Director, ASEDAS)
new challenges that will undoubtedly be engines
of further innovation. • Jaume Hugas
(Permanent Lecturer, Department of Operations, Innovation
and Data Sciences, ESADE)
In this respect, we welcome any suggestion for • Fernando Móner
future editions (institut.cerda@icerda.org). (President, CECU and AVACU)
• Pablo Maella
Panel of experts (Senior Lecturer in Personnel Management
in Organisations, IESE)
Both the selection of the challenges (Phase 1) and • Abel Mariné
(Professor Emeritus in Nutrition and Bromatology,
the selection of the cases of innovation that are
Campus of Alimentation, Universidad de Barcelona)
exposed in this document (Phase 3), have invol-
• Josep Maria Monfort
ved the collaboration of 14 experts, all with ex- (Managing Director, IRTA)
tensive experience in the sector:
• Josep Puxeu
(President, ANFABRA)
• Pere Roca
(Executive President, ICIL)
• Frederic Sabrià
(Lecturer of Production, Technology and
management of operations, IESE)31 02 OVERVIEW OF THE FMCG SUPPLY CHAIN IN SPAIN
Fast Moving Consumer Goods in Spain Innovation Observatory 2018
02. OVERVIEW OF THE FMCG
SUPPLY CHAIN IN SPAIN
Overview of The FMCG supply chain in Spain does not stand In the FMCG industry, the vectors of change
aside from the changes that are happening in are not only those within the sector, such as
the FMCG both global and sectoral terms. The interna- shorter delivery times, more health and con-
supply chain tionalisation of the big supply chains is well
consolidated but has no yet peaked. Proximity
venience, increasingly demanding customers,
but also external vectors such as environmen-
in Spain to the consumer is no longer a guarantee of tal, social and those related to medium and
service and, from the sectoral perspective; all long term economic sustainability. 33
the agents in the supply chain are being forced
into permanent innovation in order not to lose Commercial distribution in Spain experienced
competitiveness. a revolution at the end of the last century at
the local level and now faces a much greater
challenge: omnichannel distribution, in which
“The agents in the supply any retailer can offer any product, anytime and
chain are forced to innovate anywhere.
permanently innovation in order In summary, all the agents of the FMCG su-
not to lose competitiveness.” pply chain in Spain are being immersed in a
process of permanent change, where innova-
tion should be seen not only as an element of
In the last five years the primary sector, which competitiveness but also of survival. And now
was previously a sector averse to change, more than ever, innovation addresses and
has become a prime focus of innovation. This must integrate four basic FMCG components:
change is due to a variety of factors: increa- product, processes, organization and custo-
sing limitation of resources, climate change mer experience.
and accelerated integration with the rest of the
agents in the supply chain, be the industry, the In this context, the 10 main challenges that
distributor or the consumer. companies and links in the value chain must
take into account in their long-term strategies
Cost reduction and time pressure have pushed are presented below. In some of them, FMCG
logistic operators to integrate the big techno- companies are already responding well, in
logical and knowledge advances, in order to others there is still a long way to go.
offer higher levels of service at lower cost. In
the “last mile” a battle is going to be waged
that shall balance the different distribution
models with the needs of urban areas.35
03
THE TOP 10 CHALLENGES
OF THE FMCG SUPPLY CHAIN
1 Digitalisation, connectivity and automation
2 Data mining for decision making
3 Efficient and responsible management of the supply chain
4 E-commerce distribution models
5 Omnichannel purchasing and distribution
6 Transformation and digitalisation of the physical point of sale
7 Products for new segments and niches
8 Social innovation
9 Management of food waste
10 Towards a low carbon circular economyDIGITALISATION, CONNECTIVITY
1 AND AUTOMATION
Tools for real time autonomous management
36
Why in the FMCG Why in Spain
supply chain? and why now?
Fast Moving Consumer Goods in Spain Innovation Observatory 2018
New technologies such as sensorisation or the We are in the earliest stages of application Moreover, it is now that the risk of intermediation
Internet of Things (IoT), blockchain, augmented of the DCA, both in Spain and globally, of technological actors who until now were not
reality, drones and robots, among others; which with sensorisation, IoT and automation or involved in the FMCG supply chain is increasing.
are grouped under the category of digitalization, robotisation in farms, crop-collection and Improving efficiency and effectiveness involves
connectivity and automation (DCA) and which factories. However, the potential of DCA extends integrating the chain whereby producer and
are clear applications in the industry in general; to all links in the chain, individually and jointly. consumer are ever closer. This is where
are able to respond to the five elements that companies pioneering the development of new
characterize the FMCG industry: In the United States is where its introduction is technologies have their great opportunity.
being most intense.
>> Perishable goods
>> Highly recurrent purchasing The different agents of the FMCG supply chain A large part of
>> Globalization of supply are facing a challenge. In an industry with
technological innovation
>> Product traceability requirements mature and proven processes, DCA offers a
>> Multiple agents response to the five characteristic elements of in capital goods is
FMCG, optimises costs, offers better customer aimed at granting food
The applicability of these new technologies service and allows the product to get to the security and transparency
extends to all agents in the chain, from the shelf faster, offering the customer more time throughout the chain.
producer to the consumer. to enjoy it. The long term risk of not taking
advantage of these technologies is the loss of J. M. Monfort, IRTA
competitiveness.
APPLICATIONS IN THE FMCG SUPPLY CHAIN
• Plant automation and integration
• Sensorisation of products and processes
• Interaction with/ tracking of customers
• Real-time management ORGANISED DISTRIBUTION
• Smart sales
INDUSTRY • Integrated marketing
PRODUCERS LOGISTICS WHOLESALER DISTRIBUTOR STORE HORECA CONSUMER
• Autonomous farms and
• Fleet / load tracking (the food service • Augmented reality
harvesting industry: HOtels,
• Autonomous driving / • Fleet / load tracking REstaurants and • Purchasing automation
• IoT measurements (climate,
platooning CAfes) • Connected feedback (IoT)
temperature, humidity, • Robotic storage and replacement
nutrition, ripeness, etc.) • Quality and product lifetime control through IoT
• Visual control / safety with
drones
• traceability and certification throughout the supply chain
ALL THE SUPPLY CHAIN • connectivity and process automation among supply chain agents03. THE TOP 10 CHALLENGES OF THE FMCG SUPPLY CHAIN
What is happening? Robots for logistics and distribution away. The Tesco App, activated by the beacons
Amazon Pantry is a premium service of online in the store, sends position based discounts,
Some examples of applications in different coupons and special promotions to the customer
shopping and home delivery of pantry products.
agents of the supply chain are highlighted
In order to make it possible, Amazon has depending on where they are in the store.
below.
installed the first robotic logistics warehouse in
Spain. The main innovation consists in the use Augmented reality for the consumer
Autonomous tractors for production of robots (Kiva system, acquired by Amazon Danone’s brand of probiotic products, Actimel,
CNH Industrial, a spin-off of the industrial Robotics) that move articles to be packaged and has focused on customer experience at home. It
branch of Fiat, manufactures autonomous prepared for shipment to the picking area. The offers a 3D battle game for its largest customer
tractors under the Case IH brand. These tractors time from when a customer clicks to confirm segment, young children. It started as an
are guided by satellite and equipped with until the order is sent is just 15 minutes. augmented reality application and has evolved
multiple sensors and on-board computers.
into a game. The packs contain cards that, when 37
They are already used in farms in Hertfordshire,
In-store connectivity scanned by the Actimel Team app on a mobile
England, enabling farmers to fertilize or harvest
Large companies are also investing in customer phone or tablet, reveal several warriors that can
remotely.
experience at the point of sale. For example, face each other in battle.
for some years now, Tesco has been using
beacons in their stores. These are small, low
consumption, Bluetooth based devices that emit
a signal that can be received up to 50 meters
Autonomous tractors
Amazon Warehouse - Amazon Robotics (www.expansion.com)
(www.Hibridosyelectricos.com)
DETAIL
WALMART AND IBM DARE TO USE BLOCKCHAIN
Walmart has developed two pilots related to real-time food
traceability through Hyperledger Fabric. This is an open source
modular platform that builds and houses blockchain tools. It was
originally created by IBM, and now is under the umbrella of The
Linux Foundation. IBM is working on this platform, demonstrating
its multi-sectoral versatility with companies from various sectors
(banking, government, healthcare, etc.). Hyperledger Fabric, IBM and Walmart with blockchain
technology (www.kippel01.com)
Walmart‘s goals are to reduce the time taken to obtain
information on the traceability of food from weeks to seconds,
and to increase the reliability of the food treatment and processing The second pilot started in December 2016, when the CEO of the
system. This difference not only offers cost savings for the company company gave his team a mission: to trace the origin of some
and its suppliers and increased resilience of the value chain; it mangoes purchased at Walmart. The team took 6 days, 18 hours and
can also save lives in cases of contamination of batches of food 26 minutes to get an answer. Alarmed by the result, they proceeded
products. For example, in the case of E .coli bacteria contamination, to identify the mangoes from their origin until their arrival at the
data such as the origin of the food or the treatments received along supermarket by means of a blockchain based labelling and control
the chain can be recovered in an instant. The first pilot, launched in system along the entire value chain. Now the same traceability
October 2016, is a traceability project for pork in China. exercise takes two seconds.
The pilot intends to digitally collect in a blockchain the origin and With these two projects, Walmart provides a paradigmatic example
route of this type of meat throughout the country, as well as the of the integration of DCA technologies along the whole FMCG supply
treatments to which it has been subjected. This represents an chain. There are clear benefits for both the agents involved -such as
improvement over radio frequency (RFID) or paper based traceability saving cost and time in cases of food crisis- as for the consumer, in
systems that are vulnerable to attacks or fraud. terms of reduced risk.DATA MINING
2 FOR DECISION MAKING
Knowledge as a source of competitive advantage
38
Why in the FMCG In this context, and thanks to sensorisation and Currently, the key is in how to deal with this
supply chain? connectivity, consumers themselves become the large volume of data. Various disciplines have
generators of large volumes of data that, when emerged to help with this that provide new ways
Fast Moving Consumer Goods in Spain Innovation Observatory 2018
FMCG is characterized by a high frequency treated properly, can shed light on preferences, of detecting and quantifying physical and written
and repetitive purchases by customers. This habits, profiles, brand loyalty, etc. External data, emotions, of generating and completing partial
generates high product rotation at the point of such as climatic data, accidents or hold-ups in data, of classifying data automatically without
sale, which causes stress in the chain. Thus, the programmed delivery route, consumption knowing in advance which classification is the
any information that allows making the right statistics according to the time of year, should best for the solution being sought, of creating
decisions to be made in record time becomes a not be forgotten either. algorithms that evolve by themselves without
factor of competitive advantage. These decisions human help, to predict the demand or customer
can range from when best to harvest a crop for The challenge is to avoid getting buried by an behaviour, etc.
optimal performance, to which shop-floor shelve avalanche of disconnected and meaningless
a new product shall be placed, through which data and, instead, to obtain quality information They include:
distribution routes optimise delivery times. in a reasonable time period. In other words, >> Artificial intelligence (AI)
it is about knowing how to scale from data to >> Machine learning
information, from information to knowledge, >> Cognitive Computing
Companies must be able to and from there to useful knowledge for decision
making. These disciplines allow data exploitation to take
exploit all knowledge about
off as a key tool for decision making. However,
the customer, their products Why Spain and why now? they also pose a new short term challenge: the
and their brands. The need for new professionals with digital profiles
issue is not to manage the The first applications of the massive exploitation that until now did not exist. This challenge is
of data - Big Data - started in Europe and North being met by professionals now being forged in
information, but to manage
America and later spread to emerging countries companies and universities.
the right information. such as China or India. Spain is not alien to this
Ignacio Cruz-Roche, UAM trend.
IMPLICATIONS IN THE FMCG SUPPLY CHAIN
• consumer preferences • traffic • climate, temperature, humidity
• type of consumption (place, moment, dose ...) • accidents • seasonality
• segmentation by socio-economic variables • road works • weather forecasts
• other variables that define consumption patterns • ... • …
• ...
EXTERNAL DATA
DECISIONS THAT CHANGE WITH DATA EXPLOITATION
• distribution of products in • dynamic stock • dynamic route • variable production according • optimal time for planting and
shelves management optimization according to demand forecasts harvesting
• predictive stock management • optimal routes for picking to traffic / incidents • selective packaging based on • dynamic irrigation and fertilization
• pricing and dynamic offers orders product quality • control of microbes and bacteria
• resource management • land uses
according to customer
behaviourWhat is happening? Artificial intelligence for food safety
IBM and Cornell University (United States),
Data exploitation for decision making is
leader in dairy products R & D, announced a
applied, throughout the FMCG supply chain, as
new project in June 2017: the creation of an AI
shown in the examples below. monsanto-monsanto.com
model aiming to avoid food crises by identifying
gaps in the supply chain of production & Improved shopping experience
Cross-checking data to optimise production
processing of milk and dairy products. In Walmart is using machine learning, AI, IoT
Monsanto has introduced data analysis in its
addition to AI, the disciplines involved include and Big Data to unify its customers’ online and
business lines. Since 2014, it integrates data
genomic sequencing of microbes and bacteria, physical shopping experience. During summer
from some of its producers into a software
and machine learning. 2017 the company launched an in-store pick-
platform that also includes data such as those
related to weather, sales or market trends. up system for customers who prefer to order 39
Artificial intelligence applied to the packaging on-line and pick at the store. After scanning the
Thanks to this platform it is possible to identify
process corresponding bar code, the user can extract
the best exploitation solution for each of the
TOMRA, a Norwegian multinational specialized his order from a conveyor belt just one minute
plots of land owned by the producers.
in the manufacture of machines and sensors for later. From analysis of user opinions, Walmart
sorting and recycling, has devised a sorter for food has been able to assess that the system has
products that incorporates artificial intelligence. a positive impact on the shopping experience
There is great potential and The sorter decides in real time whether each and improves the traditional order picking
road ahead in the use of data piece -such as a fried potato- should be included process. Based on this, the company will
for farm management in the in the package or discarded for other uses, decide whether or not to implement the system
according to previously established standards of
primary sector. size and/or quality.
globally.
Josep Puxeu, ANFABRA Since 2015 Walmart has been working on the
development of facial recognition technologies
to prevent theft. Currently, the company is
considering using the same technology to
identify levels of frustration among queueing
customers, as the basis for dynamic and
automatic decision of the human resources that
need to be dedicated to the check-out tills.
DETAIL
TESCO EXPLOITS DATA THROUGHOUT THE SUPPLY CHAIN
Monitoring consumer behaviour
TescoLabs, Tesco’s R & D department aims to improve the Tesco-slideshare.net
company’s operations by adapting and using emerging technologies.
Tesco labs (www.youtube.com)
70% of their team (50 of 70 people) are data analysts with scientific
backgrounds.
TescoLabs is implementing data exploitation initiatives in three of the For example, the purchase of salads goes up by 42% during the
links of the FMCG supply chain: logistics, store and consumer. hottest summer weekends.
Logistics On the other hand, in order to minimize food waste, Tesco uses real
In the field of logistics, Tesco uses machine learning to establish the sales data to determine the sensitivity of customers to the price of
most efficient routes and times for delivery vans, based on data of products close to their sell-by date.
real deliveries. Likewise, with this type of algorithms the routes are
also optimized for the personnel that carry out the in-store picking Customer
of Tesco Online, reducing the average time that they spend walking Tesco monitors consumer behaviour: how many people visit a store,
from one product to another by up to 20%. how often, what repeat purchases are made, which products are
bought together, etc. Exploitation of this type of variables allows
Store the company to identify sets of products, not correlated a priori,
Tesco has tested computer vision algorithms on data provided by the and adjust their offers based on the results. For example, Tesco
video surveillance cameras, with the aim of alerting employees about discovered -and translated into more sales- that people who have
empty shelves as soon as they become empty. recently become parents tend to buy more beer in the supermarket,
In terms of product inventory, Tesco uses predictive analytics to because they have less time to go out.
determine which orders should be made from each store to optimize
the stock, all based on weather and demand related data.You can also read
