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Five Forces to Understand and Leverage in CPG Industry

Analyst Insight: Years ago in the consumer products industry, the "supply chain of the future" looked much like today's supply chain. Industry change was gradual and incremental. But the pace of change today demands a more proactive and aggressive approach to future logistics planning. Market and competitive forces are completely reshaping how supply chains need to operate in the future. There are several opportunities for companies to improve their market position by improving internal operations. - Charles Trimarco, Managing Consultant-Supply Chain Management, Capgemini Consulting

Five Forces to Understand and Leverage in CPG Industry

The use of Big Data to develop a collaborative supply chain is imperative for consumer products companies to remain competitive. Today, there is an ever-increasing volume of data to analyze and turn into a practical go-forward plan. However, the focus for many shippers is on siloed data, which points to the need for a better understanding of supply chain visibility or analytical tools that drive impactful cost and benefit solutions. Managing data from different sources through a supply chain control tower is a requirement that a consumer products company must consider.

All-channel fulfillment gives the consumer the ability to shop anywhere and receive their product at a desired time. This model for fulfillment is both customer- and cost-driven and, therefore, is the new de facto standard for the retail supply chain. Taking an integrated approach to all-channel fulfillment can help drive sales. For example, Capgemini's Digital Shopper Relevancy study indicated 56 percent of consumers would spend more money at a bricks-and-mortar store if they had used digital channels to research their products. In addition, 55 percent would spend more money with a particular retailer if products are available anytime via any channel.

Several years ago, the idea of companies measuring and managing their impact on social and environmental issues was not a priority. But today attention to these topics, as well as related issues such as using reusable and recyclable material to reduce waste, is rising at a rapid pace. Sustainability is a critical component of supply chain strategy because it aligns economic, social and environmental interests. Companies have shown that there is a connection between sustainability and financial gains. This is achieved by analyzing the supply chain and identifying areas where operational improvements can produce profits.

Trends in social media will continue to have a significant impact on consumer products companies as they manage their supply chains. For example, Facebook, Twitter and LinkedIn all play a significant role in the sharing of information. Sourcemap, which calls itself a social network for supply chains, allows users to edit and view maps that detail the supply chain and carbon footprint for a variety of products. Locations of suppliers, descriptions, photos and videos can be shared through the free service. Social media is also creating more visibility into supply chains by providing product information or indicating the product source.

Third-party logistics providers have served consumer products companies for decades, primarily as tactical partners in warehousing and delivery. But the strategic role of 3PLs is changing as they expand capabilities and position themselves upstream and downstream in the supply chain. Sophisticated, full-service 3PLs provide an interesting option to consumer products logistics organizations that want to adapt quickly and decisively to market changes.

                                                    The Outlook

Consumer products companies are constantly looking for ways to improve their performance as they face significant competition. The ability to maintain a competitive edge going forward will depend on how well a company's strategic plan is developed and implemented. The ability of a consumer products company to identify major trends that shape the way supply chains will operate in the future is a critical part of this process.

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