COVID-19 has compelled the Consumer Packaged Goods (CPG) industry to take a long hard look at existing systems and processes, and re-prioritize for the next phase of growth. Even as the demand for consumer products continues to soar, disruptions to global supply chains have translated into bare shelves and increased risk exposure for businesses.
These risks will continue to be a factor given the uncertainties arising from black swan events, trade disputes, and geopolitical instability. However, as the world slowly returns to normalcy, business leaders and Supply Chain Officers (SCO) in CPG companies must move fast to modernize the supply chain to be able to mitigate the next disruption.
Yet on the ground, things are moving slowly. A commissioned global analytics study conducted by Forrester Consulting on behalf of WNS, 2021, re-affirms that the sector has low maturity in data and analytics practices, with 20 percent of them just making it to the beginners’ level. However, as the study reports, the future looks promising as CPG companies recognize the criticality of investing in modern data capabilities and have identified it as a top priority. In fact, 62 percent of surveyed decision-makers expect a significant increase in their organization’s spending on data analytics in the next 12 months.
Modernizing Supply Chain for the Next Normal
Ecosystems equipped with end-to-end information in real-time will enable supply chain organizations to provide better support, with fast responses to unexpected changes in supply or demand.
SCOs must hence urgently build a high level of flexibility and agility into systems, and be better prepared to manage change in the next normal. For instance, a Gartner survey on the future of supply chain finds that 69 percent of supply chain organizations expect a decrease in consumer willingness to visit stores over the next five years.
As organizations adjust to such new realities, operational changes must coincide with process and technology changes, such as integrating the supply chain systems with core IT systems. More importantly, these efforts must be backed by a modern data platform and analytics to empower decision-making. This requires upgrading the underlying data architecture to equip SCOs with agility and flexibility in product sourcing, manufacturing and delivery processes.
Data modernization efforts must include the following elements:
Integration of Data Silos: Data is now streaming from multiple sources – point of sales, order fulfillment, inventory management, enterprise systems, and Internet of Things (IoT) sensors. Decision-making hence cannot be effective without a single view of data, which makes a data lake or an analytics platform critical. Our analytics study shows that while 39 percent of CPG organizations are planning to implement data virtualization tools, 33 percent are prioritizing investment in data lakes.
Automation: Data pipelines that fetch and clean data, transform and store it at a central location must be automated to eliminate data duplication, human error and delay in providing access to real-time data.
Scalability: Given the large volume of structured and unstructured data, infrastructure resources such as storage and compute must be scalable. Such modernization projects are incomplete without cloud adoption that provides high elasticity and scalability.
Governance: CPG companies need a governance framework with advanced capabilities, such as role-based access to data, automated pipelines, and monitoring systems that facilitate high-quality data, ensure regulatory compliance and offer robust data security.
Implementing a Robust Data Analytics Strategy to Fuel Winning Insights
Armed with learnings from surviving the pandemic, CPG organizations are better placed to understand risks and dynamically re-calibrate the supply chain. They are increasingly leveraging analytics for critical insights in supply chain management.
Organizations at different levels of data analytics maturity face distinct challenges and must adopt tailored approaches. Our analytics study recommends CPG companies to have a clear data and analytics strategy with the requisite buy-in from the C-suite. Data-driven business transformation must start at the top and having leadership-level buy-in ensures necessary investments, alignment and coordination across the organization to effect the changes.
While COVID-19 has helped accelerate the adoption of digital supply chains, leaders must remember that the bar has been raised with changing expectations of the connected customer.