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CFOs of Consumer Brands: The Future Value Champion?

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CFOs of Consumer Brands: The Future Value Champion? 1

By Paul Prendergast, managing director for the Consulting practice in the products industry at Accenture.

We have seen huge disruption across a range of industries, with no signs of slowing down. For the big consumer brands, the relentless pace of change is creating higher consumer expectations and upending traditional certainties on an epic scale.

Consumers are firmly in the driving seat and looking for more than just a “product”. They’re using digital platforms to buy directly from manufacturers, bypassing traditional retail. They want services that bring convenience to their lives and searching for experiences that embody the brand purpose they’ve bought into. The challenge for companies is to deliver something that’s “just right” for each consumer, meeting their individual needs at the precise moment.

And the smaller players are giving them exactly what they want but turning “business as usual” on its head and creating new models on agile operating structures that engage in a larger ecosystem and accelerate innovation to satisfy growing consumer demand for low cost, personalized products and services.

The traditional consumer goods operating models simply weren’t designed for this level of complexities. Successful companies will be those who can achieve an incredible amount of organizational agility – something that many just don’t have yet. It also calls for a rethink of the entire value chain, all the way from developing new concepts, through manufacturing, to the store shelf and beyond.

To find new growth, brands must solve these challenges, injecting agility across the business, leveraging a wider ecosystem of partners, and delivering relevance at scale for a marketplace of millions of individuals.

Enter the CFO

Chief Financial Officers are uniquely positioned to help drive this journey forward. They have a crucial role in driving the efficiencies in the core business. They have the necessary insights to build the business case for change, targeting operational improvements and the use of new digital technologies to unlock value and drive more profitable growth.

Accenture’s research shows that CFOs see their role is changing. They’re now just as likely to view themselves as “value champions” and “transformation drivers” as their more traditional business functions. For instance, 81 percent of surveyed CFOs say targeting areas of new value across the business is a major focus, while 78 percent say they lead efforts to drive business-wide operational transformations and efficiencies through digital technology.

CFOs understand the need for speed and agility today, with over half those surveyed (58 percent) saying they’re working towards real-time analysis of business performance. Interestingly, that’s expected to rise to a massive 89 percent in three years’ time.

New roles, new skillsets

Delivering relevance at scale means adapting the consumer goods supply chain for new levels of personalization and multiple sales channels. Given the challenges of doing this alone, most brands will need to leverage a much wider ecosystem of partners across the value chain. And here CFOs have a vital role to play. They can bring a data-driven approach to selecting partners, while ensuring this complex endeavor remains focused on the value-adding outcomes the business is targeting.

We are seeing more CFOs actively taking a lead on data governance. They understand the value of data and see it as a strategic business asset, with 84 percent of finance departments taking responsibility for their organization’s data governance (higher than in any other industry surveyed). In fact, “inconsistent, inaccurate and inaccessible data” is viewed as the greatest challenge facing today’s consumer goods CFOs according to Accenture Research.

These new requirements are changing the CFO skills profile. CFOs themselves say that anticipating and managing risk, long-term strategic thinking, and insight into new technologies are now their most important capabilities. And they know the broader finance function needs to change too, with the ability to innovate now the most sought-after capability for junior finance staff.

Five actions every CFO should be taking today

So what are the immediate priorities for consumer goods CFOs as they drive relevance at scale for their brands? There are five actions every CFO should be taking today:

#1 Start with digitizing finance – then the company. Finance is an ideal testing ground for digital technology, automation, and AI. CFOs should be using their experience and lessons learned to drive a digital transformation across the business.

#2 Plan holistically and harness data for insights. CFOs know the value of data visibility and should champion the use of real-time analytics and insights across the C-suite and beyond.

#3 Develop the future finance workforce. CFOs should be planning holistically for their future talent needs, including promoting the greater use of AI and other innovative digital technologies.

#4 Drive a deep transformation of operations. CFOs should be considering zero-based budgeting as a means of creating spend visibility, driving the efficiencies that can fund a pivot to new growth.

#5 Be the architect of value. CFOs should be influencing decisions about ecosystem partner organizations, ensuring every move is focused on delivering ultimate value for the business.

Above all, CFOs need to put themselves at the center of business decision making as their companies pivot to the operating models that deliver consumer relevance at scale and capture new growth opportunities in a highly complex and uncertain marketplace.

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Boeing, hit with $6.6 million FAA fine, faces much bigger 787 repair bill – sources

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Boeing, hit with $6.6 million FAA fine, faces much bigger 787 repair bill - sources 2

By Eric M. Johnson and David Shepardson

SEATTLE/WASHINGTON (Reuters) – Boeing Co will pay a $6.6 million to U.S. regulators as part of a settlement over quality and safety-oversight lapses going back years, a setback that comes as Boeing wrestles with repairs to flawed 787 Dreamliner jets that could dwarf the cost of the federal penalty.

Boeing is beginning painstaking repairs and forensic inspections to fix structural integrity flaws embedded deep inside at least 88 parked 787s built over the last year or so, a third industry source said.

The inspections and retrofits could take weeks or even up to a month per plane and are likely to cost hundreds of millions – if not billions – of dollars, depending to a large degree on the number of planes and defects involved, the person said.

The Federal Aviation Administration said Boeing had agreed to pay $6.6 million in penalties after the aviation regulator said it failed to comply with a 2015 safety agreement.

The penalties include $5.4 million for not complying with the agreement in which Boeing pledged to change its internal processes to improve and prioritize regulatory compliance and $1.21 million to settle two pending FAA enforcement cases.

“Boeing failed to meet all of its obligations under the settlement agreement, and the FAA is holding Boeing accountable by imposing additional penalties,” FAA Administrator Steve Dickson said in a statement. Boeing, which paid $12 million in 2015 as part of the settlement, did not immediately comment.

Boeing engineers are working to determine the scope of inspections, including whether jets can be used as-is without a threat to safety, two people said. Boeing has not told airlines how many jets are impacted, another person said.

The FAA has been investigating instances of oversight lapses, debris left inside finished aircraft, and managers putting pressure on employees handling safety checks for the FAA, people familiar with the proceedings said.

For example, in August 2020, Boeing told to the FAA about the flaw involving structural wrinkling in the interior fuselage skin where carbon-composite barrels that form the plane’s lightweight body are melded together.

But the defect went unnoticed for months or longer because computerized safeguards that crunch data looking for quality flaws had not been programmed to look for the gaps, a third industry source said.

DELIVERY TARGET

The 787 production problems have halted deliveries of the jet since the end of October, locking up a source of desperately needed cash for Boeing.

The fuel-efficient 787 has been a huge success with airlines, which have ordered 1,882 of the advanced twin-aisle jet worth nearly $150 billion (74.7 billion pounds) at list prices.

But the advanced production process and sprawling global supply chain caused problems over the years.

As of February, Boeing had fixed the 787 production process causing the wrinkling defect, according to two people familiar with the matter.

However, planes rolled off the assembly line with the flaw for more than a year, at least, continuing even after the flaw was discovered in August 2020.

“It’s difficult to see a definitive fix that is agreeable by the aviation authorities and all going forward,” Boeing customer Air Lease Corp’s CEO John Plueger told analysts on an earnings call Feb 22. “I don’t think that we’re there yet.”

Boeing has been working on the fuselage problem, and two additional potentially hazardous defects that arose since 2019, as it charted plans to consolidate final assembly of the 787 in South Carolina starting next month, at a sharply reduced rate of 5 787s per month.

One senior supply chain source said they will have to cut rate again.

Boeing said last month it expects to resume handing over a small number of 787s to customers later this quarter.

It has an ambitious internal plan to deliver 100 of the jets this year, one person said. Analysts say deliveries are not expected to recover to 2019 levels until at least 2024.

‘OPEN-HEART SURGERY’

But before any jet is delivered, it must go through invasive inspections and costly repairs.

First, technicians must pull out the passenger seats, open up the floor paneling and use specialty tools to measure whether defects invisible to the naked eye are present, according to three people with direct knowledge of the process.

The repair work – already underway at Boeing factories in Everett, Washington and North Charleston, South Carolina – is even harder.

In the bowels of the jet, technicians have to remove multiple specialty fasteners on both sides of the inner fuselage skin, then install newly produced “shims” that fill out gaps and remove the structural dimpling. Workers then replace all the fasteners, re-paint, and re-install the interior, they said.

“It’s like open heart surgery,” one of the people said. “They’ll be retrofitting the fleet for potentially several years.”

(Reporting by Eric M. Johnson in Seattle; Additional reporting by Tim Hepher in Paris, David Shepardson in Washington, and Tracy Rucinski in Chicago; Editing by Nick Zieminski)

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On a retro style milk truck, London entrepreneur chases a ‘zero waste’ future

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On a retro style milk truck, London entrepreneur chases a 'zero waste' future 3

By Natalie Thomas

LONDON (Reuters) – Heralded by the whirr of its underpowered electric engine and the clink of bottles stacked in crates on the back, Ella Shone’s ‘Topup Truck’ started life ferrying morning milk to the doorsteps of bleary-eyed Londoners.

Twenty years on, and the light vehicle known as a ‘milk float’ – once a ubiquitous sight on British streets – is enjoying a second career selling a range of goods and serving the 32-year-old’s quest to rid the city of single-use plastic.

“The fact that I’m driving around in a milk float does a lot for raising awareness in the local area,” said Shone, wearing a black beanie during her rounds in the borough of Hackney last week. “So now I’m operating at almost full capacity.”

Furloughed from her sales job during the coronavirus pandemic last spring, Shone used savings to start her new business, aiming to meet growing demand for household goods free of the plastic packaging used in supermarkets.

Customers book a visit from the ‘Topup Truck’ online and then purchase goods such as lentils, pasta, olive oil, shampoo or washing up liquid using their own containers.

From a low base a decade ago, the market for such unpackaged bulk goods could hit at least 1.2 billion euros ($1.5 billion) by 2030 in the European Union, according to a report https://zerowasteeurope.eu/wp-content/uploads/2020/06/2020_06_30_zwe_pfs_executive_study.pdf by Zero Waste Europe, an anti-waste network.

While handling the logistics can be a challenge, Shone calculates that her service has eliminated the need for at least 12,700 pieces of plastic since it launched in August.

Planning a crowdfunder to retrofit her milk float to enable her to serve a greater range of products to more communities, Shone hopes her novel approach will inspire others to find creative ways to tackle waste.

“If we want to have real change, it has to be a collective effort,” she said.

($1 = 0.8218 euros)

(Writing by Matthew Green, Editing by Rosalba O’Brien)

 

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Lufthansa adds more summer holiday destinations in bet on recovery

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Lufthansa adds more summer holiday destinations in bet on recovery 4

BERLIN (Reuters) – Lufthansa is adding more holiday destinations to its summer flight schedule from Germany in anticipation of a strong rebound in bookings, it said on Thursday, betting COVID-19 vaccines and testing will soon make vacation travel possible.

Germany’s largest airline said it was planning to add around 20 new destinations from Frankfurt and 13 from Munich to locations such as the Caribbean, the Canary Islands and Greece.

COVID-19 vaccines and testing, along with strict hygiene rules at airports and on planes, will be prerequisites for travel this summer, it said.

“We expect many countries to relax travel restrictions towards the summer as more and more people have been vaccinated,” Lufthansa board member Harry Hohmeister said in a statement.

Hohmeister said the airline, which secured a 9 billion euro ($11 billion) state bailout last year, expects a sharp increase in demand once restrictions are lifted.

Concerned about more transmissible coronavirus mutations, many European Union countries have reinstated border controls in what is normally a passport-free travel zone.

“There is a great yearning for travel and we believe that the summer months will reflect this,” Hohmeister added.

In Britain, holiday bookings soared this week after the government laid out plans to gradually relax coronavirus restrictions, giving battered airlines and tour operators hope that a bumper summer could come to their rescue.

Plans for relaxing coronavirus travel restrictions have not been announced yet in Germany. Chancellor Angela Merkel is due to discuss lockdown options with the head of the regional governments next Wednesday.

Lufthansa, which said in January it was losing a million euros every two hours, is due to publish its fourth quarter results on March 4.

($1 = 0.8187 euros)

(Reporting by Riham Alkousaa and Ilona Wissenbach. Editing by Mark Potter)

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