Building a consumer-centric supply chain in CPG

The supply chain, traditionally viewed as a cost center, can help a CPG organization pivot to growth. Those CPG companies that do not invest in essential capabilities that enable resilience are, essentially, holding growth hostage.

Our analysis indicates a $10B CPG company that develops an intelligent supply chain could grow revenues up to 3% through improved availability of the right products, better customer service and reduction in lost sales. It could increase profitability up to 4% through cost reductions and improve working capital by almost 3%. Furthermore, the company could also increase trust and sustainability through reduced energy consumption and carbon emissions.

Accenture’s 2020 Supply Chain Survey of 178 supply chain and operations executives in consumer goods shows a small group of companies that have excelled versus their peers. These leaders have prioritized for the next three years consumer value propositions including: Connected customer experience, price competitiveness, and trust and sustainability.

Supply chains that are agile and responsive are more resilient to disruption and better equipped to deliver on a variety of customer value propositions. But CPGs must make choices about what’s most important. They should prioritize desired outcomes per segment and then build the right capabilities to deliver them. Only a small number of companies have successfully done this.

Building a consumer-centric supply chain calls for rethinking the supply chain configuration, advanced technologies and people. Our research showed CPGs’ legacy supply chain operating models and organizational structures are a barrier—so it’s time for change.

Configuration

CPGs need to establish a set of supply chains with a network and assets that meet the needs of each segment. The supply chain assets need to be leveraged at scale across these segments, where possible, to manage the cost base and adjust dynamically to enable responsiveness and resilience. Some companies are adopting more asset-light structures in which they outsource a significant portion of assets and use an ecosystem to be more flexible.

Advanced digital technologies

Customer and product segmentation, collaborative and agile innovation and other mature capabilities rely on digital technology. Companies we surveyed say they lack the right digital architecture and digital capabilities to be connected across the enterprise and ecosystem. This connectivity is needed to enable cross-functional decision making that leads to a consumer-centric supply chain.

People

Many CPG organizations are siloed, with accountability that is process-based and domain-oriented versus demand-driven, cross-functional decision making. These silos trickle down into the way talent is skilled. Many employees are skilled for a single functional domain and don’t have access to analytics and capabilities that will support strategic decision making.

RELATED WEBINAR: The Consumer Brands Association (CBA) is hosting an industry solutions webinar on November 16, 2021. Join Accenture’s Chris McDivitt and Maria Rey-Marston, along with David Simchi-Levi from MIT, to learn about the Accenture-MIT “stress test” and building supply chain resiliency.