Consumers today are impatient, and their standards are demanding. Modern customer service is no longer simply about selling products; it’s about offering an entire experience. And people expect that experience to be personalized, seamless and, perhaps most important, responsive.
The shift toward a consumer-centric business model is particularly challenging for consumer packaged goods (CPG) companies. The main difficulties they face center on finding inventive ways to address consumers’ needs and desires through technology. Leading-edge tools such as artificial intelligence (A.I.), cloud, blockchain and virtual reality can help companies streamline operations and deliver results faster, at scale and more cost-effectively. But applying the right tools and applications in the right environment can yield complexities.
While they know that transitioning to newer technology can help make the consumer experience more fluid, dynamic and seamless, many CPGs struggle with where exactly to begin. Accenture research suggests the most strategic place to start is the supply chain. However, our findings also reveal that many companies overlook the supply chain’s potential to be a critical piece of a stronger business strategy. To continuously innovate and streamline operations for long-term success, we uncovered five key steps CPGs can take to harness the supply chain’s true power.
Update Your Technology
Intelligent technologies such as A.I. and blockchain are some of the supply chain’s most important enablers. Consequently, this tech is a vital component to transforming into a truly modern CPG.
One critical component to success is balancing entrenched, traditionally successful elements of the operations with new, innovative processes. For example, Michelin uses robots (called cobots) to work on factory floors alongside its employees. The cobots complete onerous, repetitive manual tasks, allowing workers to use their time more effectively.
Focus on Individuals
Today, companies understand that the consumer is still king, and that offering a tailored, bespoke experience is critical to pleasing those consumers. According to our research, 72 percent of executives say they’re investing in new technology to capture and integrate consumer insights into the development of new and personalized products.
Look at Zara, a company under the Inditex brand, which essentially revolutionized the fashion industry. By shifting operations from a traditional pre-planned clothing line to delivering trend-driven fashion at speed, the company can more accurately track and respond to disruptors, reduce inaccuracies, and improve cost efficiencies. For example, Zara ensures its retail sites are equipped with appropriate products in near real-time, as styles change due to shifting weather patterns.
Renovate Traditional Systems
Simply by the nature of their size, smaller companies have at least one major edge over larger companies: agility. Small companies typically possess the nimbleness to streamline and adopt new technology quickly and affordably. Larger, entrenched CPGs, on the other hand, often come with more complex processes and outdated technology and software.
To stay competitive and relevant, legacy CPGs seek to reinvent processes and traditional functions. For example, PepsiCo, Inc. invested heavily in technology to considerably improve its direct store delivery distribution model. If a store is running low on a certain product, Pepsi’s updated system quickly and seamlessly replaces it before it disappears from shelves. As a result, the global food, snack and beverage company is on the road to boosting consumer satisfaction levels.
Similarly, in China, Danone Waters partnered with JD.com to build a modern tech-driven warehouse. Among other features, the company’s new facility uses analytics to replenish inventory more quickly and efficiently before consumer need develops. Danone’s goal is to streamline the entire production process.
Stay Ahead of Trends
Today, consumer brand loyalty is all but nonexistent. That’s why CPGs that want to stay ahead of — and in some cases predict — new trends in adopting the technology to power their supply chains. The true vanguards in this arena will not just predict trends but create them.
Our research shows that 68 percent of CPG executives invest in new technology to determine demand and predict new trends. Specifically, these companies combine consumer insight with A.I. and external demand signals to anticipate market variables and consumer desires.
For example, French gaming company Voodoo combined 3D printing, robotics and custom software to create an agile, iterative design and production process. Unshackled from the tyranny of traditional production lines, Voodoo responded to the fidget spinner trend two months before Chinese manufacturers entered the market.
Shorten Delivery Time
Two-day delivery speed has evolved from a luxury to a necessity. Consumers today expect no less.
Advanced technology, and analytics in particular, is crucial to accelerating response times, improving fulfillment models and promoting faster inventory turnover. Accenture research shows that 64 percent of CPG executives now invest in new technology to distribute through direct-to-consumer channels. Companies in Australia and China across industries as diverse as dairy, government and telecom use Internet of Things (IoT) sensors to reduce delivery time from weeks to hours.
By updating supply chain technology, focusing on the individual consumer, renovating processes, mastering trends and shortening delivery times, CPGs will set themselves on the path to becoming modern and agile organizations, positioned to move seamlessly into the future.
Mohammed (Mo) Hajibashi is managing director and lead of supply chain and operations global consulting with Accenture.
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