Manufacturing, retail and Consumer Packaged Goods (CPG) are complex, fast-moving industries that are process and consumer driven while being operations-heavy. Transformation in these sectors is often the cost of staying competitive. Yet, many large-scale transformations lose momentum just when their benefits should begin to materialize.

The challenge often emerges in the critical middle stages, when execution becomes complex, employee fatigue sets in and the intended value erodes. Research indicates that as much as 40 percent of the potential impact is lost during this phase, with only a limited number of organizations sustaining change beyond 3 years.¹

Organizations that succeed follow a different discipline. They embed adoption at the center of execution, ensure consistent leadership commitment and build resilience into the workforce. By treating change as a capability rather than a one-time effort, these organizations capture value early, sustain impact and strengthen their competitive position for the long term.

Frontline Adoption: The Deciding Factor in Enterprise Transformation

The true test of an organization’s transformation is not the launch of new systems or processes but ensuring that frontline employees embrace them in daily operations. However, across industries, roughly 70 percent of large-scale transformations fail to meet their objectives, often because new ways of working never reach the frontline.²

Three core realities highlight why such adoption determines transformation success.

The frequency of change has increased

A study revealed that an average employee faced 10 planned enterprise changes in 2022, up from just 2 in 2016. The rising rate of change stretches capacity, making adoption management crucial.³

Resource and capability constraints are major blockers

In 2023, the manufacturing sector faced significant challenges in digital transformation. Talent shortages were a critical issue, with turnover rates reaching 36.6 percent on average, leading to increased training and supervision costs and weakening productivity.⁵ Structured change management, including role-based training and feedback loops, is essential to overcoming these constraints.

The willingness to support change is shrinking

Gartner reports that employee willingness to support organizational change initiatives dropped from 74 percent in 2016 to 38 percent in 2022. Fatigue also impacts retention: 43 percent of highly fatigued employees planned to stay with their organization, compared with 74 percent of employees with low fatigue.⁴ When people are less willing to embrace change, even well-designed programs risk failing to achieve anticipated benefits.

Closing the Execution Gap in Transformation

With large-scale transformation initiatives, achieving long-term impact is challenging. While 56 percent of organizations report meeting most or all transformation goals, only 12 percent sustain these gains for more than 3 years.⁶

Even when organizations aim for transformation success, predictable challenges frequently undermine outcomes. Addressing these failure modes with countermeasures is critical.

• Managing transformations like a finite IT project:
  plan, build, handover and then assume adoption. This leaves pilot projects stranded and value unrealized.

• Treat change as a continuous process.

• Build operating rhythms, involving Centers of Excellence (CoE), benefits-realization cadences and role-based performance indicators, so adoption is managed, measured and iterated after going live.

• Absent or inconsistent sponsors relying on top-down broadcasts stall frontline adoption.

• In retail and CPG, store managers, category leads or production supervisors may not reinforce new ways of working. Mixed messages can create hesitation and slow adoption.

• Mobilize active, visible sponsorship and convert sponsors into sponsor-coaches who model new behaviors and unblock barriers.

• Sponsorship and engagement with frontline employees correlate strongly with project success.

• New tools and initiatives are often rolled out without mapping adoption journeys, role-based learning or time to build competency.

• Users revert to familiar processes, such as shop-floor routines, merchandising practices or forecasting spreadsheets, eroding ROI.

• Plan out the adoption journeys and engage people managers early and throughout the rollout.

• Being closest to employees impacted by change, people managers can drive awareness of the change’s impact, the business rationale and the need for structured change management.

• The “more is better” mentality often turns into cognitive overload for teams.

• Employees and leaders face multiple concurrent transformations, from Enterprise Resource Platform (ERP) upgrades and sustainability reporting to new customer experience initiatives, creating fatigue that undermines adoption, productivity and retention.

• Leaders should prioritize and sequence initiatives, focusing on one or two major changes at a time.

• Align transformations when employees are naturally energized, for example, at the start of a fiscal year, and build in recovery periods to maintain morale and resilience.

• Proof-of-concept works, but scaling up is hampered by fragmented governance, poor measurement and lack of operational handoff.

• This can affect regional retail rollouts, multi-site production or supplier network-wide adoption.

• Design pilots with scale in mind, including measurable success criteria, repeatable playbooks, automation and Service Level Agreements (SLA).

• Programs with scale-ready governance are highly likely to achieve complete rollout success.

• Assuming advanced tools automatically shift behavior is a common trap.

• Predictive demand planning, Internet of Things (IoT)-enabled quality systems or digital merchandising platforms tend to under-deliver because frontline behaviors do not change.

• Pair technology with adoption blueprints involving role re-design incentives, embedded nudges and contextual learning support.

• Success depends on aligning digital tools with human workflow at every level.

Domain, Digital and Human: The 3 Pillars of Lasting Transformation

Long-term transformation in the manufacturing, retail and CPG sectors requires more than just isolated initiatives. It calls for an integrated approach that combined deep domain expertise, digital accelerators and human-centered adoption and decision-making. Each pillar strengthens the others, ensuring that change occurs in practice and persists over time.

Successful transformations start with well-defined domains, whether it is a manufacturing line, a retail customer journey or a CPG supply chain. Domain expertise provides the operational insight needed to design initiatives that matter, from Stock Keeping Unit (SKU) management and promotions, omni-channel store operations to predictive maintenance and line-level workflows in manufacturing. Program managers, business / solution architects and business analysts translate this domain knowledge into deliverable change – structuring scope, test cases, timelines and benefits realization, so that initiatives become operational routines.

A domain-first approach focuses transformation on a limited set of end-to-end business domains like a production process or a supply-chain node, rather than distributing effort across disconnected projects. Re-anchoring the scope to a few well-defined domains is a common pattern in successful digital and AI transformations. McKinsey finds that as many as 80 percent of successful interventions re-focus on clear domains, and that domain-based programs are designed to deliver meaning value in the short term of 12-18 months and transformational value in the medium term of 3-5 years.⁷

That said, domain expertise is an accelerant, not a substitute for disciplined delivery. The best way ahead is to choose a niche that moves the needle, design it end-to-end and staff it with the right mix of domain experts and broad transformation capability so change persists.

Digital accelerators deliver rapid transformation by combining advanced technologies like Artificial Intelligence (AI), Machine Learning (ML), cloud computing and data analytics along with process re-design to respond quickly to market changes, streamline operations and improve customer experiences. In the MRC sector, this might mean leveraging predictive analytics to optimize inventory in retail, implementing cloud-based platforms for production scheduling or deploying analytics dashboards to monitor SKU performance in real-time.

The real impact comes when digital initiatives are closely tied to measurable business outcomes. Clear objectives, such as reducing customer churn, improving supply chain efficiency or boosting production yield, allow organizations to sequence initiatives for both short and long term transformation. This requires engaging stakeholders across the organization, assessing current capabilities and identifying gaps where digital tools and skills are needed.

With a roadmap anchored in a digital-led mindset, organizations can embed change into everyday operations through experimentation, continuous learning and cross-functional collaboration. This approach leads to better digital capabilities which then turn into tangible improvements, such as faster product launches, optimized warehouse operations or better consumer insights, all of which create value that persists beyond the initial rollout.

Transformation is often approached through technology or business-centric lenses. However, the human element plays an equally crucial role in the design, implementation and operation of digital capabilities in a business. How well employees and stakeholders are supported through the change process can make or break even the most advanced digital initiatives.

In one case, a leading global food delivery platform re-imagined its grocery ordering process by embedding AI and Natural Language Processing (NLP) into product matching. The differentiator was not blind automation but a smart process leveraging the human-in-the-loop model. When exceptions arose, they were manually reviewed, validated and fed back to the AI engine creating a continuous learning cycle. This AI + Human Ingenuity (AI+HI) approach delivered 40 percent efficiency gains and ensured contextual nuance, improved search accuracy and built a scalable knowledge base.

The example shows that digital acceleration reaches its true potential only when guided, corrected and reinforced by human oversight. Technology sets the pace, but people are the linchpin holding it together. Successful adoption depends on designing roles that evolve with digital systems, building new capabilities at every level and creating sponsorship models where leaders act as coaches too. Clear adoption metrics further help employees see progress and value in real time, ensuring that change is embraced and sustained.

Putting the Pillars into Practice: Real-world Case Studies

The 3 pillars – domain, digital and human – create measurable impact when applied in real business contexts. Across manufacturing, retail and CPG, leading organizations demonstrate how this integrated approach turns transformation into tangible outcomes.

Building Continuous Transformation

The difference between stalled programs and lasting impact lies in the long road of execution. Top performers know that success is sustained when leaders stay visibly engaged, rigor is maintained beyond early wins and talent is upgraded and empowered to own the change.

Looking ahead, the pace of disruption in manufacturing, retail and CPG industries will only intensify, driven by shifting consumer behaviors, supply chain volatility, sustainability pressures and rapid advances in AI and automation. The organizations that win will be those that treat transformation as a long-term journey, continually refreshing their operating models to stay ahead of market shifts. By getting the balance between efficiency, effectiveness and embedding adoption into everyday routines, organizations can equip their workforce not just to adopt change, but to sustain and amplify it under any conditions.

Talk to our experts today to explore AI-powered, human-led strategies to accelerate sustainable transformation across your enterprise.

References

1. https://www.mckinsey.com/capabilities/implementation/our-insights/how-to-implement-transformations-for-long-term-impact

2. https://www.mckinsey.com/capabilities/transformation/our-insights/common-pitfalls-in-transformations-a-conversation-with-jon-garcia

3. https://hbr.org/2023/05/employees-are-losing-patience-with-change-initiatives

4. https://www.gartner.com/en/articles/this-new-strategy-could-be-your-ticket-to-change-management-success

5. https://www.mckinsey.com/capabilities/operations/our-insights/automation-and-the-talent-challenge-in-american-manufacturing

6. https://www.mckinsey.com/capabilities/implementation/our-insights/how-to-implement-transformations-for-long-term-impact

7. https://www.mckinsey.com/capabilities/tech-and-ai/our-insights/rewired-to-outcompete