Aldi Australia hit the sweet spot in October last year. The supermarket chain, which also sells goods produced by third-party brands under its own name, launched a new chocolate range that was not only $4 but also billed as “the fairest, most responsibly sourced chocolate bar Aldi has ever launched.”
Stacks of bars vanished from shelves within weeks as Aldi nailed the two things Australia and New Zealand (ANZ) consumers look for when they stroll past the aisles of food and grocery in a supermarket store: a good deal and a product that is sourced responsibly.
In a survey of 8,000 shoppers across six countries, Australians emerged as the most price-sensitive. In another report, nearly half said sustainability is an important factor when making a purchase. Delivering products that are both affordable and responsibly produced is the tightrope CPG companies in ANZ must walk on if they want to keep winning consumer trust.
Cost inflation squeezes margins as global giants count the price of operating in Australia
In a submission to a Senate inquiry last year, Mars, the global confectionery and food giant, noted that its Australian site is among the most expensive in its global network, driven by high wages, costly local raw supplies, and long supply chains required to import materials and ingredients.
Unilever, the parent company of brands such as Dove, Lynx, Surf, Hellmann’s, Rexona, and Ben & Jerry’s, echoed similar concerns in its own senate submission, pointing to steep cost surges since 2019.
CPG companies in Australia are struggling with rising energy bills, spikes in raw material prices, and increases in labor and freight expenses. Many are now looking for ways to drive efficiencies without compromising on cost or customer value.
AI-driven end-to-end supply chain management offers a lifeline in a high-cost market
As Australian CPG companies face their Mount Everest in balancing spiraling costs and customer satisfaction, many of them are banking on AI-based end-to-end supply chain management to help them edge past their competitors in a tight market.
A recent IDC InfoBrief, sponsored by Blue Yonder, has found that organizations in Australia and New Zealand are increasing their investment in artificial intelligence supply chain technologies to strengthen resilience, increase productivity, and address changing customer expectations.
How AI helps CPG companies drive more customer value and stay profitable
So, how does AI-based, end-to-end supply chain management work on the ground and help CPG companies control costs and stay profitable without compromising on customer experience? How can businesses keep the shelves of their retail partners filled with what the shoppers want and, more importantly, in the case of ANZ, at the price that they want?
- Smarter planning means fewer wasted goods: Using tools like Demand and Supply Planning, CPG companies can determine how much to produce so they don’t end up with stock sitting idle in the warehouse instead of on retailers’ shelves. Such tools use AI and ML to forecast demand and then quickly adjust supply to match changes in consumer demand.
- Warehouses run faster when AI takes charge: Harnessing AI-based Warehouse Management software, CPG companies can optimize picking, packing, sorting, and task assignment more efficiently than manual operations ever could. This leads to faster, smoother warehouse operations with fewer delays. Warehouse Management software also helps businesses gain insights into employee performance and use them to further improve processes.
- Inventory that adapts to shifting markets: Inventory Optimization solution helps businesses manage stock in a way that boosts financial performance. CPG companies manufacture different product lines — for example, one product might perform well in urban areas, while another may be seasonal. Rather than using a one-size-fits-all approach, inventory optimization uses AI and ML to redistribute stock between locations, channels, or customer segments.
- Connecting every player in the supply chain: A connected supply chain is an efficient supply chain. Solutions like the Blue Yonder Network bring together suppliers, manufacturers, carriers, warehouses, and retailers on a single platform. With a unified, multi-tier view powered by AI, CPG companies gain deeper visibility into their entire network and can make smarter, faster decisions to keep goods moving efficiently.
How AI is powering Electrolux’s smarter, faster supply chain
Electrolux is transforming its supply chain with AI agents from Blue Yonder, making operations faster, smarter, and more adaptable. By streamlining everything from planning to delivery, they’re ensuring appliances are always available when and where customers need them. It’s a game-changer in building a more efficient and customer-focused supply chain.
