Delivering growth through game-changing innovation at Danone

PL Staff

New trends and consumer concerns are fundamentally changing the food industry. To stay at the forefront of this revolution, Danone is looking to evolve its products, but in order to do that the business knew it needed to better tap into the knowledge and resources that existed within its supply base.

Within the food and beverage industry, a new generation of consumers are asking for a fresh approach and challenging the mainstream players. They have changed the way they see food, health and the impact of what they eat on the planet. As a consequence they are increasingly scrutinising products and reading the small print in an effort to understand who the people behind the brand are, how the food was prepared and where the ingredients were sourced from.

In order to keep up with this revolution, Danone knows that it needs to continually evolve its products. There is widespread recognition within the business that the supply base represents an untapped resource when it comes to product evolution. Suppliers having their own R&D departments and their own expertise means that they can be a source of new ideas, but the challenge is to enable that to happen through collaboration, which requires the right processes and structures in place to make that happen.

What did they do?

In order to put these processes and structures in place, the company launched a procurement transformation journey. This focused on increasing efficiencies, supporting organisational growth as well as plugging in to the sustainability ambitions of the company.

The team’s specific focus was on:

  • Growth: Top-line growth and brand equity to make Danone the most innovative food and beverage company in the world.
  • Efficiency: Risk mitigation, cost savings and cash improvement to amplify future ambitions around compliance and supply security, market risk management and productivity.
  • Sustainability: Inclusiveness and commitments to the environment

To deliver this, they focused on three elements:

  1. Working to utilise new supplier capabilities and services
  2. Accessing a broader and more diverse set of suppliers
  3. Connecting suppliers to the growth agenda

How did they do it?

It was from this that the team developed and launched its Connect For Growth programme (C4G), with the aim of keeping the business at the forefront of this change. It was a project that began with the team running a review of the current state of play.

This revealed a lack of visibility around potential growth spaces and business needs, only limited use of supplier capability reviews and no strategic planning meetings with suppliers to access game-changing innovations, limited collaboration between Research & Innovation (R&I) and procurement and no access for startups into the business.

On the back of this review, the team began making a series of changes. This included:

  • Setting a new three-tier horizon view, which would help the team focus their innovation efforts
  • Creating a new integrated team between research and innovation and procurement with aligned priorities.
  • Establishing a new innovation development process
  • Developing a supplier segmentation model to identify the right suppliers to engage

A view from the CPO

Jean-Yves Krummenacher, Danone’s chief cycles and procurement officer, has played a pivotal role in driving this programme forward and he is in no doubt about the importance it will play for Danone.

As a business we are wholly focused on profitable growth and in order to deliver that we have to deliver fewer small tactical innovations and instead more game-changing innovations. We cannot do it alone and strong collaboration with our ecosystem is a key competitive advantage. We know how to do it with our main suppliers but this is more difficult to integrate other types of players. To do so, our SEI programme is clear: identify roadblocks, identify where we want to play and a how to win roadmap, develop innovative commercial models, sprints, long-term collaboration and of course utilise our supplier segmentation model,” he says.

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