Manufacturers of consumer products — including packaged goods, food and beverages, and life sciences — face both opportunities and challenges. Product sales figures are on the rise, with the consumer packaged goods (CPG) sector realizing 10% growth in 2023. But much of this growth can be attributed to price increases. Consumer companies also need to achieve volume growth.
However, several challenges stand in their way. First among these challenges is supply chain disruption. Whether caused by more frequent extreme weather events, blocked shipping routes and geopolitical events, or labor shortages, disruptions have the power to throw the most carefully defined demand and supply plans into disarray. We all know the frustration of knowing demand is out there — but simply being unable to move products from point A to point B to capture that revenue.
Equally frustrating for consumer products companies? Market volatility. Continuing inflation, unyielding interest rates and other economic trends affect consumers’ buying behaviors and preferences, sometimes in surprising ways. While some shoppers switch to private labels, others indulge in “little luxuries” during tough times. Adding to the confusion, robust job growth means many consumers have increased spending power.
Consumer products manufacturers want nothing more than to accurately predict future demand. But the incredibly unpredictable nature of today’s business landscape, coupled with dynamic consumer behaviors, represent significant obstacles.
When market volatility and other disruptive forces cause consumer products companies to get the delicate demand-supply balance wrong, the costs are high. They can include product shortages, excess inventory, lost sales, markdowns, and damage to both retailer and consumer relationships. It’s never been more important to achieve accurate demand and supply plans, but it’s likely never been more difficult.
What can consumer products manufacturers do to achieve more certain supply chain performance — and financial results — amid all this uncertainty? The answer lies in achieving a more dynamic match of demand and supply via planning processes, enabled by advanced artificial intelligence (AI) and machine learning (ML).
At Blue Yonder, we call this approach Demand and Supply Planning, and we’ve seen it create truly transformative results for our customers in consumer packaged goods, food and beverages, and life sciences.
Transformed planning, for transformative results
What exactly is Demand and Supply Planning? It’s an approach that involves aligning supply chain functions across the value chain seamlessly with changes in market conditions, as well as eliminating functional siloes and replacing them with end-to-end planning orchestration.
Achieving a unified demand and supply plan across the entire value network is at odds with the traditional siloed approach to supply chain management. But this more fluid, dynamic approach is quickly becoming imperative for manufacturers who want to weather the storm of constant disruptions and ongoing market volatility.
Processing demand information in near real time, at high levels of granularity — then dynamically and fluidly re-planning across the supply chain — requires a complete digital transformation. It demands the most advanced AI, ML, analytics and a technology architecture that works in real time and can support massive computational needs.
