Consumer packaged goods companies (CPGs) are facing a tough new reality. Changing consumer behavior and an avalanche of new, disruptive competitors have led to reduced market share.
But when disruption changes everything, a world of opportunities can open up. Consumers now expect brands to meet them on their terms and deliver greater levels of speed, personalization and convenience.
When aligned with the business strategy, the supply chain powered by new IT will enable leading capabilities and differentiated brand experiences that help fuel growth. It makes the move to become a modern, fast CPG essential in the quest to unleash growth.
But where to start? There is no one-size-fits-all approach since it should depend on the company’s business strategy, market position and often, unique set of challenges.
Here are five ways a digitized and intelligent supply chain can help CPGs move to be modern and fast:
No. 1 - Sense, shape, and respond to demand
Having an intelligent supply chain that is smart, connected, innovative and agile from end to end enables CPGs to sense, shape and respond to changing consumer and market demands, and deliver seamless consumer experiences that will ultimately differentiate and grow the business.
Fashion is a great example of an industry that understands the importance of being fast and relevant. Where once brands had pre-planned and seasonal clothing lines delivered to stores at set times throughout the year, we have seen the focus shift to delivering fast and on-trend pieces on an ongoing basis. By having a slick supply chain in place, fashion brands have been able to sense and respond quickly to market and consumer demand—delivering greater stock control, improved inventory turnover and crucially, shopper satisfaction.
In the same way the fashion and cosmetics industries reinvented how they create relevance and appeal, we can expect to see CPGs move to become fast and modern by bringing more tailored products and services to market quickly.
No. 2 - Ensure relevancy
In this new era of digital-based competition and consumer control, people increasingly buy because of a brand’s relevance to their needs in the moment.
Modern and intelligent supply chains help identify changing trends as they happen, which can cut down on over-stocking issues from selling products that are not achieving the desired levels of consumer appeal.
For example, French gaming company Voodoo combined 3D printing, robotics and custom software to create an agile design and production process. Unburdened by the need for cumbersome production lines, Voodoo responded to the fidget spinner trend two months before Chinese manufacturers entered the market.
No. 3 - Delight the consumer
To succeed in a rapidly evolving environment, CPGs must continuously explore new technologies to aid and enhance their ability to engage with consumers in the most relevant and timely ways.
Consumers are no longer just buying products and services. They are buying experiences—and the supply chain can make or break those.
Becoming a modern and fast CPG better equips companies to surprise and delight consumers with varied offerings and experiences, such as personalized subscriptions and same-day delivery.
Coca-Cola is an example of a company that successfully aligned IT investments in the supply chain to the overarching business strategy to determine where the greatest impact could be achieved. It completely digitized its supply chain to provide consumers with a personalized experience through its Freestyle machines allowing them to access all Coke product options from a single source at the point-of-sale that are managed and replenished with raw material in an entirely new way.
No. 4 - Make smarter decisions
Implementing intelligent technologies and leveraging advanced data sciences in supply chains allows companies to manage significant amounts of data across many micro-segments and analyze results quickly and effectively. This enables executives to make informed decisions at each stage of the supply chain process from product design/development, planning, fulfillment, manufacturing, and sourcing & procurement.
Some consumer goods leaders are achieving success by placing the right bets on the right digital investments. Take PepsiCo as an example. It is investing heavily in the digital capabilities behind its DSD distribution model to improve how the company plans its business, segments customers and deepens relationships. Danone is co-building a new warehouse with JD.com that uses big data analytics to more precisely replenish and drive quicker inventory turnover for the Danone Waters business in China. These are the types of strategic investments that power differentiation and growth.
No. 5 - Create visibility and transform performance management
Intelligent technology allows companies to establish true end-to-end visibility and measure and manage performance in better, more accurate ways by providing a complete view of the impact on potential or even final business outcomes. Leveraging intelligent technology allows the supply chain to be evaluated through growth and differentiation instead of cost reduction—meaning operations can be more accurately evaluated.
Much of the success of a CPG depends on the agility and speed of its supply chain. By enhancing operations with a supply chain that is smart, connected and innovative throughout, CPGs can deliver increased value and boost profitable growth. It allows the company to adapt to shifting trends and habits, which ultimately drives greater success. While there are many ways to begin supply chain transformation, the most important step is to get started now.
Mo Hajibashi is Managing Director and Supply Chain & Operations Global Consulting Lead at Accenture.