"Our industry is going through as big a change as we've ever gone through," said Hambleton. Manufacturers are spearheading innovations in packaging, while competing with retailers' growing array of private brands. In the process, consumers are gaining a wealth of additional choices.
Suppliers are working to tailor more products to consumers' individual tastes and retailers' specifications. The result is an ever-increasing number of items moving through warehouses and the greater supply chain, "at a rate well beyond what any of us expected."
More items also means less inventory per item, creating new forecasting challenges for consumer packaged goods producers. Manufacturers and retailers alike are struggling with the problem of matching demand with supply, both of which have become highly volatile. The result can be greater numbers of stockouts and a higher level of consumer dissatisfaction.
There's been talk of retailers reducing the number of SKUs of some products on the shelf, but Hambleton hasn't seen that happening to any great degree. Instead, there is a constant churn of items, as product lifecycles shrink and impatient manufacturers embrace constant innovation.
Retailers and manufacturers need to collaborate to address the challenge. "They've got to start looking at sharing infrastructure and assets," said Hambleton. Each side maintains its own distribution network, making it difficult to control inventory at the various mixing and distribution centers.
One possible solution is to bring all of that inventory together. Hambleton cites the example of airlines, which don't go out and build new airports every time they launch a new carrier.
"They've got to start figuring out regional consolidation, and start collapsing stuff," she says.
