Executive Briefings

CPG: Consumer Products Companies, Are You Ready For 2010?

Analyst Insight: 2009 painfully taught organizations the value of having a flexible, modular, agile supply chain - from planning through to execution. Companies learned that being prepared for uncertainty with the right people, processes and technology can be the key to business survival. CPG companies that have maintained and developed their talent, redefined their processes and strengthened their supply chain capabilities can look forward to a rewarding, yet challenging, 2010.

The past year has been a year of "big changes to big things," like the downward spiraling worldwide economy, unemployment and the unpredictable impact of consumer spending habits. While many indicators point to economic improvement and gradually reduced unemployment, spending habits for consumer goods will be:

• Restrained as consumer confidence slowly improves;
• Focused on low-priced products at the expense of other criteria such as quality and features;
• Directed at store branded products; and
• Increased growth in product sales fitting a direct to consumer model.

    At the same time, consumer goods companies face significant challenges to their already slipping margins. Compliance and product security issues will intensify as time passes. Consolidations in many industries will heighten competition, especially in the global consumer products marketplace. Consumer spending has also shifted market share to private-label products, which has distinct impacts on many companies' supply chains. Finally commodity prices are projected to increase, and product availability may also tighten in 2010, adding further stress. 

    Consumer products companies will have a challenging year, but one that holds the promise of recovery and comeback for those that have made supply chain excellence a priority.

    The Outlook

    In 2010, expect to see strong, supply-chain-oriented consumer product companies experience profitable growth, and weaker, less capable supply chain companies falter. This is really not the story of the rich get richer and the poor get poorer, but instead a matter of preparation, building a solid foundation and focusing on what is important for success with the consumer of 2010.

    The past year has been a year of "big changes to big things," like the downward spiraling worldwide economy, unemployment and the unpredictable impact of consumer spending habits. While many indicators point to economic improvement and gradually reduced unemployment, spending habits for consumer goods will be:

    • Restrained as consumer confidence slowly improves;
    • Focused on low-priced products at the expense of other criteria such as quality and features;
    • Directed at store branded products; and
    • Increased growth in product sales fitting a direct to consumer model.

      At the same time, consumer goods companies face significant challenges to their already slipping margins. Compliance and product security issues will intensify as time passes. Consolidations in many industries will heighten competition, especially in the global consumer products marketplace. Consumer spending has also shifted market share to private-label products, which has distinct impacts on many companies' supply chains. Finally commodity prices are projected to increase, and product availability may also tighten in 2010, adding further stress. 

      Consumer products companies will have a challenging year, but one that holds the promise of recovery and comeback for those that have made supply chain excellence a priority.

      The Outlook

      In 2010, expect to see strong, supply-chain-oriented consumer product companies experience profitable growth, and weaker, less capable supply chain companies falter. This is really not the story of the rich get richer and the poor get poorer, but instead a matter of preparation, building a solid foundation and focusing on what is important for success with the consumer of 2010.