Digital Supply Chains Change the Game in Consumer Goods, Part 1
In a series of blog articles, the Product/Solutions Marketing team explores new business challenges and innovation solutions to change the game and manage disruptions. The following are insights gained from my discussion with Shri Hariharan, who leads Blue Yonder’s Consumer Manufacturing Industry Strategy, during a recent Blue Yonder Live.
Consumer packaged goods manufacturers are simultaneously managing changing market dynamics and pressures that require very careful consideration and management to drive sound business decisions and outcomes. Improving supply chain competitiveness, profitability and sustainability are now key considerations for the CXOs (which includes CEOs, CFOs, CIOs, and Chief Supply Chain Officers), not just Chief Planning Officer.
Key Trends and Opportunities
Terence: In your engagement with customers, what are the most striking trends and opportunities?
Shri: These are the best of times; these are the worst of times. As we have seen over the last 24 months, the disruptions that the global industries and consumers have gone through have made things markedly different now. Businesses are seeking to wrestle back control at the edge of instability, but the problems have not gone away. However over this period, companies have also learned to adapt.
We at Blue Yonder have the privilege of serving hundreds of consumer goods companies globally. From my discussion with company leadership and from a lot of literature:
- CEOs and CFOs are continuing to look at the moments of disruptions and great changes as tremendous opportunities.
- CXOs are always trying to find the right recipe for growth and market opportunities that can be capitalized. If they build the right capabilities and the right offers for their customers and end consumers, their companies can leapfrog and leave competition in the dust.
Terence: I hear a “but” coming. What is coming out of these leadership conversations?
Shri: Yes, but there are also some pressures that are keeping them up at night. Companies are still not out of woods from disruption, both on the demand and supply side. In the last 18 months, CXOs have seen continued inflationary pressures, higher input costs, and ramifications of global conflict. At the same time, supply chain challenges and pressures, as indicated by the supply chain pressure index, while decreasing in a small extent, are still persistant.
When we think about growth, the conversation shifts very quickly to how to improve the customer experience that can drive this growth. How do we drive better visibility into the risks and disruptions? More importantly, how do we drive better responses? In order to grow the business, how do we predict better, anticipate better, and detect risk better?
The key trends that we are seeing is the need to build flexible supply chains and then really bringing talent and workforce in concert with automation and decisions to improve performance.
Terence: What are the important business needs that CXOs are addressing right now?
Shri: I will start by connecting the continued concern around high level of inflation and supply chain pressures. The situation is slightly different now than it was even 12 months ago. What we are finding is while looking for growth and opportunity companies are being a little bit more careful about investments. There is a lot more scrutiny; projects that can demonstrably determine return on investment will be funded. Therefore, we are seeing that mindset and we are seeing tremendous focus on managing the cost to serve.
Consumer goods companies are:
- Reviewing working capital investments and their CFO’s are speaking to us about our industry-leading multi-echelon inventory optimization.
- Rethinking how cross-functional teams work together for producing an integrated plan from month six to month 48. Integrated planning is a hot topic.
- Continuing with identification of alternate sources with the sourcing transformation.
- Exploring the tremendous opportunity with improving and digitalizing first-to-last mile fulfillment and within the four walls of a distribution center.
Key Supply Chain Capabilities
Terence: As you mentioned, the CXOs are looking for ways to leapfrog their competition and are rethinking their supply chain, profitability and customer service. What is the one key investment they are making and what are the results they are trying to achieve?
Shri: Consumer goods companies arenow looking for capabilities that work specifically for their industry. For a long time, supply chain software was available for the general market and companies could customize it, configure it the way they wanted it.
But now with the need for speed, especially with growth and the opportunities companies see, they are requiring an entire set of supply chain capabilities that are pre-configured or really in the mold of their industry.
We are therefore bringing the cloud into manufacturing and distribution for consumer industries, as you know, with a large set of prepackaged use cases. That is really becoming the ask from the CXOs because they do not want to wait for a long time for ROI. We are rolling out our “Manufacturing Industry Cloud for Consumer Industries” with over 40 pre-configured use cases by persona for end-to-end supply chain planning.
The expected areas of benefit is within the operational total shareholder returns.
Terence: Can you expand on this?
Shri: It means companies are being able to service and measure service levels to their customers. They are changing to this service paradigm, and as you know, service really equals revenue. They can drive these two aspects together.
In addition, it is the best way that they can service the demand from the customer perspective while managing their own cost-to-serve. They can refine their cost-to-serve, which is really driven by how they orchestrate their supply network, suppliers, and logistics in the most optimal way. They can consider sustainability and carbon emissions as optimization goals even.
More Insights to Come
In an upcoming Part 2 article, we will get more insights from Shri about inflation, sustainability, innovative solutions, and more!